The following was edited by Dylan Lowe from a presentation by the author
Current State of Shopping
Times are not great, we all know that, but let's take a look at the fact quantifiably for a minute. At the time of writing, 24% of shoppers are already affected by COVID-19 and another third will be within the next few months. For those that could make it to the store, 92% percent of them had a negative experience, with 41% unable to purchase the items they came to buy and 42% leaving the store to go elsewhere. This has resulted in 26% of shoppers using an online method resulting in massive upticks in home delivery, curbside and in-store pickup.
Those shoppers at low-income levels have been the most affected. One third of shoppers going into COVID-19 were already on financial assistance of some kind, like WIC or SNAP. These shoppers, often called "cash flow shoppers", were forced to trade down, focusing on smaller pack sizes and multipurpose items, rather than more specific goods like Windex. More than 40% of cash flow shoppers making less than $30k annually noted that they were likely to choose a different brand. Most likely, these shoppers will simply go without items they don't immediately need.
Optimism: To say consumers are "less optimistic" would be an understatement. Over 1/3 of shoppers expect the crisis to persist for longer than 8 weeks and less than half of all shoppers expect to return to the old activities we all remember, like going to the mall, seeing a movie at the movie theatre or going on vacation.
Unemployment: At the time of writing, the Bureau of Labor Statistics is reporting an unemployment rate of 15%, but Treasury Secretary Steven Mnuchin stated that number is actually around 25%, if you include the number of people that have completely dropped out of the labor force.
Stockpiling: The majority of Americans have continued to stock up on various items they deem essential. This mindset has not stopped once the individual, for instance, has purchased 3 months of toilet paper, they simply switch to a new item to stockpile.
Many thought spending patterns would crash after initial stockpiling, and while there was dip toward the end of March, spending once again picked back up by the middle of April.
Ecommerce: Online shopping is growing faster than ever and could be here to stay. In fact, 16% of those who placed an online ship-to-home order indicated it was their first time ever or first time within the last 6 months. With so many shoppers swarming to online purchasing we can expect this trend to be a sticky one and retailers will need to continue to invest in these technologies.
The growth of online purchasing has remained high even for those states that have begun to reopen their brick-and-mortar stores.
The Future of Retail
There are many unanswered questions regarding COVID-19, with the biggest being when will there be a vaccine? More importantly, will there even be an effective vaccine? What we do know is we have been riding this pandemic out for 2 months now and the news cycle is changing the narrative on an almost daily basis. Our lives and habits have all changed dramatically and we are no longer focused on looking good and buying that new Hugo Boss suit or latest style of Nikes. Rather, we are looking for ways to stay productive, comfortable and sane at home. It's not that consumers have stopped purchasing, they have simply shifted what they purchase. With research indicating it takes 3-8 weeks to form a new and permanent habit, these trends are here to stay.
Retailers and suppliers need to start thinking of this situation as an indefinite one. Even if a vaccine is successfully produced and distributed to society a year or two from now (and those are a big "ifs"), that means we will have formed new habits and will have shifted our priorities permanently. Have you noticed on your most recent video conferences that people are no longer dressing up for that virtual business meeting?
Look, but don't touch: We no longer interact with people and things as we used to with our priority being self-preservation. Even with states that have begin to open up brick-and-mortar locations, consumers are wary of picking up merchandise, trying on clothes or touching credit card machines. The biggest U.S. mall owner, Simon Property Group, is already requesting all of its retail tenants to use contactless payment methods, such as Apple Pay and Macy's has mandated all customers to use hand sanitizer before trying on jewelry or watches.
This idea includes our personal space. Our priority for self-preservation will mandate retailers rethink physical spaces to allow for social distancing even after society returns to any sense of "normalcy". Consumers will continue to avoid crowded spaces and venues, opting for safe (nearly empty) spaces instead.
Shop local: A sense of "community" has developed among consumers where many have turned to shopping local to support their neighborhood businesses to ensure their community does not collapse. Additionally, consumers are no longer venturing far from their homes to buy coffee or food. These trends will form new habits in consumers that will lead to a shift back to "Main Street" shops and eateries rather than larger malls or retailers the consumer used to venture far to get to.
It's all digital from now on: Aside from the "shop local" trend, the majority of retail is going to be digital going forward. Online shopping, with the likes of companies like Amazon, was already booming before COVID-19. Now that consumers who previously resisted this change have been forced to shop online, we can expect this will be the new normal for everyone. At the time of writing, brick-and-mortar retailers JC Penny, J. Crew and Neiman Marcus have all filed for bankruptcy and we can expect more brick-and-mortars to follow. It's no secret that traditional retail was already in a steep decline and what survived to this point will quickly collapse, as retail goes nearly completely digital.
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