Rapidly shifting market conditions, including evolving consumer expectations, are not new retail phenomena. They are among the few enduring constants in retail. The ability to deftly navigate these changes has, and will continue to, set strong retailers apart.
As more retailers re-open their doors and lockdown measures ease, adapting to change takes on new meaning. The stakes couldn’t be higher. The survival of many retailers and much needed jobs hang in the balance. As we size up the task ahead, are we dealing with long-term structural change or more familiar trends sent into overdrive?
Over the coming weeks, we are embarking on a quest to answer this, and other questions that will determine the fate of retailers during the post-coronavirus recovery. Our Retail Pathways series will assess the implications of major market shifts - from a breakthrough moment for online retail to forced change to the in-store experience.
To do this, and help chart a course for retailers, we will combine our own data and insights with views from leading retailers and experts from across the retail landscape.
The digital future arrives early
CommBank research from the Retail Insights survey conducted in July 2019 showed that online retail sales, relative to omni-channel retailers’ total sales, had almost doubled since August 2015.1 But from 2017, growth had tapered, with some shoppers still concerned about their lack of control over delivery, and the returns process.
With consumers confined to their homes and many retail outlets closed, we have broken through this barrier in spectacular fashion. Australia Post’s delivery data shows that Australians have been shopping online more than ever before. eCommerce grew 39% year-on-year in March and this increased further in April.
The situation in recent months has also further separated the shopping experience from making mere purchases. For example, the rush on essential items as availability became an issue for the first time. Shoppers may move to ensure they have a secure supply in future and be more inclined to sign up for subscription services to basic goods from toilet paper to groceries. The big question now is will consumers return to their pre-pandemic behaviours or have new habits become entrenched?
Either way, there is the potential for consumers to be more demanding of their online shopping experience and retailers will need to step up. This also has wide-reaching implications for bricks and mortar retailing as behaviours change. We outline the key opportunities over coming articles, but here’s just some of the topics we will examine.
Consumer choice and the last mile: According to Australia Post, delivery is a defining part of the online shopping experience and for some customers, the perceived lack of control over delivery and, if necessary returns, has been a barrier when making the switch to online. With many people now working from home, some of these concerns may have been alleviated in the short term, but this is something retailers need to be thinking about as people slowly return to the physical workplace.
Australia Post General Manager, Parcels and Express Services, Ben Franzi said retailers need to remember that the last mile experience begins at the checkout.
“Customers want choice and control over how and when they receive their items, and so retailers need to present them with options upfront.”
“To determine these options, the big questions include; do shoppers want items the next business day or are they happy to wait? Do they want it sent to their home? Are they happy for it to be left in a safe place? Or would they prefer to have the item sent to a 24/7 Parcel locker the Post Office?”
“Retailers need to work closely with their fulfilment and logistics partners to make it as easy as possible for customers to receive their items, and return them should they need to,” Ben continued.”
Online marketplaces fill the void: As of January 2019, 97% of digital shoppers surveyed used online marketplaces but only 50% of retailers did and just 9% saw them as their greatest growth opportunity.2 Meanwhile, as retailers ran out of stock for popular items as we prepared our homes for lockdown, shoppers turned to digital channels and online marketplaces in search of coveted items. Retailers may have inadvertently introduced a competitor and stand to lose loyal customers.
Has the in-store experience changed forever? The shape and configuration of stores will continue to change as social distancing measures demand less clutter and larger spaces. Many retailers were already offering or building an in-store experience that made it worth visiting in person. Shoppers’ health and safety will now be central to the ongoing success of these efforts.
Timely practical help
These are just some of the changes we have seen accelerate due to coronavirus. Of course, we can’t ignore the post-pandemic economic realities of elevated unemployment rates and associated weak income growth. However, our research has previously found that the most successful retailers tend to focus on the factors within their control.3
And retailers have been adapting to many of the current trends for some time. That means we have the beginnings of a playbook. CommBank’s Retail Insights reports have identified the winning strategies and defining traits of the most successful retailers. Starting next week we will share these and expert advice from across the sector to help you make sense of a future that is as uncertain as it ever has been.