May 29, 2020
No one knows what the new normal will look like for consumers, but we’re seeing some clues. Here’s one thing we know: consumer behavior won’t look the same as it did in early 2020. Companies involved in retail, e-commerce and logistics should be on their toes for shifts in consumer behavior that will impact their business. With vaccines still in development, and herd immunity farther away, consumer behavior in e-commerce, retail, grocery shopping and restaurant dining will change as everything shakes out as the crisis eventually abates.
While sheltering in place, one big change was the increase of digital commerce for grocery shopping. The New York Times reported that online grocery sales rose about 80% the week ending April 1. Consumers were less willing to expose themselves by entering grocery stores. Sometimes the online sales involved ordering from warehouse stores or Amazon. Sometimes it meant using shopping services like Instacart, for home delivery. And sometimes consumers ordered online but used curbside pick-up. Shopping for liquor and meal kits were big winners as well.
Given that many nonessential retail stores were shuttered, it made sense for consumers to do their shopping online for nongrocery items as well. Surprisingly, online shopping decreased in March, with retail figures dropping 8.7% that month.
Trends going forward
Consumers surveyed by McKinsey said they expect their shopping routines to change after the crisis passes, as they’re hesitant to return to their old ways. In the United States, 17% of those surveyed said they would go to the mall less frequently than before. While some of that is impulse shopping, some sales will convert to e-commerce.
While staying indoors, one trend was an increasing preference for buying locally, partly as a way to support the community. That’s expected to continue. Vendors may need more storage space in the regions they serve, and e-commerce retailers may find success adding local products to their offerings. Consumers will expect local products to be delivered in a short timeframe, since they’re close by.
Pantry stocking should level off, but not all consumers will return to restaurants, especially crowded ones, the way they once did. That means more cooking at home, with higher grocery and meal kit purchases.
E-commerce increased year-over-year before the pandemic, with 2019 e-commerce sales 14.9% higher than the previous year. Many brick and mortar stores were already struggling to compete, and the pandemic gave them a kick in the pants. Large retailers like Macy’s and the Gap brands furloughed employees, Lord & Taylor announced a liquidation plan, and Nieman Marcus filed for bankruptcy. It’s expected that many other stores will follow suit.
Combine that retail difficulty with consumers lowering their discretionary spending, partly from high rates of job loss and economic uncertainty. Research shows that countries with an earlier COVID-19 peak than the U.S. had lower spending in some categories after opening back up. That includes China, where apparel shopping and department store shopping decreased from shopping levels prior to the pandemic.
The new normal
Everyone along the supply chain will need to adapt and stay nimble in order to succeed. That includes getting merchandise closer to the consumer, to shorten last mile shipping time and to meet customer demand. Those with end-to-end visibility of their supply chain have an advantage, with an understanding of where products are along their journey. This is a good time to use a scalable approach in warehousing as well, gaining the ability to respond quickly to changing circumstances. Transportation can be a sticking point, especially with a truck driver shortage. Partnering with logistics providers that can stabilize transportation is an advantage.
Stord is a forward-looking partner that helps companies prepare for the new normal. To learn more about how to prepare your supply chain for e-commerce, while making this strategy a competitive advantage, download our webinar.