What's next? The post-Covid retail environment.
Retail was already heading digital, but COVID has accelerated the need for a greater investment in ecommerce. Asset Factory Co-Founders, Jo and Andy Mackie, share their thoughts on customer behavioural change, the opportunities and what this new landscape looks like.
Prior to the Covid-19 pandemic, retail was already heading digital. Traditional, bricks and mortar SME’s were adopting new digital experiences and solutions, drummed ahead by economic and technological changes. Big retailers were already getting bigger, ecommerce was up ten percent in the months before Covid-19, while local, independent shops were deploying new channels of distribution to stay afloat.
It’s no secret, however, Covid-19 has greatly accelerated this change. Research conducted by leading market research company, Datamine, suggests online spend is currently at $830M, boasting 47.4 percent growth, compared to October last year.
Ecommerce has become the engine of trade. Meanwhile, omnichannel solutions have turned from a strategy threaded by some retailers, to a firm string in the bow for all, from fashion to FMCG markets.
This continued digital growth has changed the face of the retail experience. As retailers grapple with aggressive shifts online, their customers are becoming increasingly discerning, seeking out faster, more authentic online experiences.
Perhaps, there is no better example than the explosion of BNPL (buy now pay later) deals across the world, driven by the pandemic. It’s already gained a foothold in New Zealand, with BNPL transactions predicted to outstrip credit card payments for ecommerce by 2024. Further, a report by Finder found that in 2019, BNPL transactions grew by 105 percent, and the number of customers grew by 49 percent.
Kiwis of all ages are ditching traditional credit cards in favour of BNPL, however young people – Gen Z (52 percent) and millennials (44 percent) – have been the fastest adopters of BNPL within the last three years, according to the report.
The scheme joins an army of burgeoning payment methods – including virtual shopping and digital wallets – waiting in the wings to offer customers contactless, frictionless payment methods.
Compoundedly, Covid-19 – or at least the subsequent messaging of the virus – has changed the way we shop, interact and value experiences.
There is a nuanced customer behavioural change, in part driven by fear, because of nervousness around being indoors with strangers, opening the window further for omnichannel and ‘contactless growth’.
It’s one thing to adopt these digital channels, but it’s another to make them valuable.
In the fast-moving landscape of online shopping, ensuring user friendly experiences, while carving an authentic digital brand identity is more important than ever.
For retailers grappling with fast increases in mobile spend, investing in mobile-optimised web pages, user experience design, and an easy online check-out process is essential.
These genuine omnichannel strategies, including personalised video, imagery and other digital assets, are, and will continue to be, a necessary function embedded into a retail strategy.
However, strong digital growth will not spark the death of traditional bricks and mortar retail. Instead, it will shift to become part of a wider omnichannel strategy. As New Zealanders phase out of lockdown, retailers will open the doors of their wonderful, tactile stores.
Instore sales will inevitably climb again (perhaps even to Christmas levels of demand), people will flock to bookstores, restaurants and cafes, but digital will remain.
Brands who deployed new digital channels, as a means of marketing and selling during the lockdown period, are likely to maintain them. These will not replace in-store interactions, but will complement them, to create more meaningful experiences for the customer.
A strong example has been our local brands who, previously hamstrung by the wholesale market, have managed to regain both their market and brand identity.
As lockdown halted the operations of wholesalers, many independent brands have refused to fold with them. They deployed digital solutions, took back control over their brand, built out their own online content and, in the process, rediscovered their identity.
Moving digital enabled them to maintain their local presence, while gaining exponential reach by selling online.
The retail landscape has, and continues to, change globally. As we look across the seas to Australia, as well as the U.K and the U.S – who are walking through a post lockdown landscape – we have seen a similar flow of economic activity into ecommerce.
A recent survey of independent retailers in the U.S shows 80 percent of brands who added new channels to their businesses during the pandemic benefited – and wanted to keep them.
For all the difficult closures of independent retailers, many opportunities have risen from the pandemic, redefining how we shop and sell.
As The Atlantic aptly puts it: customer engagements have decentralised from brick-and-mortar storefronts to a constellation of in-person and online touchpoints.
How we manage these new channels, however, remains the next big question.