With coronavirus restrictions across the world beginning to relax, we wanted to put our global expertise to practice – sitting down with our Incubeta leadership team to hear their thoughts and opinions on the state of the retail landscape in a post-Covid world.
Matilda Rose Moir
There’s no denying the colossal impact that Covid-19 has had on the retail industry as we know it. Throughout the last year a combination of travel bans, government-mandated lockdowns and physical restrictions rendered bricks-and-mortar stores close to redundant – and ecommerce swooped in to take its place.
Covid-19 completely reshaped the retail landscape; accelerating the already burgeoning growth of online shopping, and fast-tracking digitalization to the forefront of the global marketing industry. In the last year alone we’ve seen a 20.4% increase in digital ad spending, as marketers had to substantially pivot their strategy to support the $4.89 trillion ecommerce spend predicted for 2021. And it doesn’t stop there.
Despite bricks-and-mortar commerce returning to a somewhat ‘pre-Covid’ normality, the consumers’ new found love for digital will continue to prevail throughout the coming years. In short, the shift toward ecommerce is here to stay, and with online shopping set to generate over $6 trillion in global sales by 2024, here’s what brands should know, and consider when planning their approach.
1: Re-adjustment in Ecommerce Spending
The shift away from bricks-and-mortar retail was largely brought about by social distancing restrictions and lockdown regulations – with ecommerce picking up the slack when the highstreets shut. As the world slowly begins to re-open we’ll see a re-adjustment in online shopping as physical stores reopen. We’ve already begun to see a reduction in search volumes and online traffic along with an increase in retail mobility – as measured in Google’s mobility reporting.
That being said, Covid fast-tracked digital adoption, and even during this current re-adjustment period, interest in ecommerce and online retail is still well above that of pre-lockdown levels. The reduction in ecommerce is only temporary, and in most categories traffic and search interest still remains 20-30% above the pre-lockdown baseline numbers.
Analyzing partner data and consumer research we know that lockdown created a new demographic of online shoppers, a high percentage of whom are signalling intent to continue using online for research and purchasing. We’ve seen a huge difference in how consumers shop and, due to speed and ease, they’ll continue to come back online even after the high street re-opens.
Ecommerce has made a leap over the last 18 months, and its share of overall retail will continue to grow – a factor that needs to be taken into consideration when planning marketing outputs.
“We will absolutely see a re-adjustment in certain areas and a partial shift back to offline retail. But many changes in consumer behavior will stay. Online retail is, and will continue to be one of the winners”Leonardo Kopp, Incubeta CH
2: Sustainability & Ethical Marketing
After the initial impact of coronavirus, we saw an increase in customers becoming more interested in a brand’s ethos; such as how they support their staff, their contribution to the public services and their sustainability efforts. Very quickly it became a lot more about the people rather than the product.
In 2021 consumers are increasingly aware of environmental issues, ethical marketing, inclusive practices and their individual footprint. Conscious consumption is on the rise and consumers are demanding more from their brands than ever before.
6 in 10 consumers are willing to alter shopping habits to reduce their environmental impact
Businesses in the top quartile for gender, racial and ethnic diversity are 35% more likely to have financial returns compared to their respective national industry medians
62% of US Consumers will chose brands that realistically capture real-world diversity over those that don’t
Over 71% of consumers are willing to pay a premium for brands that indicate traceability
With time to reflect over the last year, consumers are re-evaluating what is necessary and important. With this comes considerations around supporting brands that advocate for the environment, support those historically underrepresented, excluded or stereotypically portrayed, and their overall social impact on the industry.
Looking forward, brands should strive to embrace real-world diversity, practice sustainability and put their people first – not just to reflect consumer demands but to play a crucial role in their overall performance. Brands that speak with authenticity, are seen to meet the needs of consumers, and tend to engender ‘positive sentiment’ with consumers which leads to a significant performance gain in comparison to brands that don’t.
“Brand ethos has really come into play over the last 18 months, with consumers choosing businesses that support their staff, contribute to the industry and are an advocate for sustainability. Now, more than ever brand ethos and performance growth go hand-in-hand.”Sally Laycock, Incubeta UK CEO
3: The Future Role of the Physical Store
Over the last year we’ve seen a huge difference in how consumers view shopping and retail experiences – particularly when bricks-and-mortar was no longer a viable option. With stores around the world opening up, we will undoubtedly see a partial shift back to offline retail – but many changes in consumer behavior will stay, and online retail will continue to prevail as a dominant channel.
That’s not to say physical shopping and the high street is a thing of the past. It all boils down to experience, and for consumers, shopping is so much more than entering card details and purchasing products – it’s a physical touchpoint that resonates with human needs. This should be considered as such when forecasting. From hereon brands should opt for a strategy that uses digital to support physical – and vice versa. The role of physical retail is still valuable to businesses, but you need to take the time to identify the real drivers of performance within that channel – how are consumers interacting, and how can digital support this interaction.
In the long-term, the lines between physical retail and ecommerce will become increasingly blurred as consumers distinguish less between where they research and how they purchase.
“With stores, and physical retail opening up, consumers will begin to migrate back to the highstreet, and with that comes the opportunity for an omnichannel approach. Brands should consider the integration of offline tracking to help ensure paid activity is credited for in-store sales and optimisation happens accordingly”Lani Cummins, Incubeta AUS
4: Product Investment
Since the easing of lockdown restrictions and store closures, we’ve already seen a substantial change in user behaviour with interest increases in specific sectors such as beauty, apparel and luxury retail.
Accompanying this we expect to see an increase in consumers thinking about investing in premium products above their usual price threshold – such as garden furniture, jewellery, gifts and travel. In the US alone, over 50% of consumers are predicted to splash out on expensive gifts, products and services in the coming months – with those from a higher-income background expected to spend the most.
This sudden spend increase is brought about by consumers ‘making up’ for the missed opportunities throughout 2020, and brands can use this to their advantage – targeting a wider demographic of consumers, who’d previously have been the wrong target audience.
Current Market Status
UK: Lockdown restrictions are easing across the UK, with certain areas lifting restrictions faster than others. People are able to meet in small groups in restaurants and pubs, hotels are open, up to 30 people can meet outside and 6 people or up to 2 households can meet indoors with overnight stays allowed. No face coverings are required in secondary schools and travel abroad to green list countries is allowed without having to quarantine on return.
The vaccination program is going very well in the UK. By the end of July the government expects all +18 year olds to be offered their first vaccination and therefore all +18 year olds will be fully vaccinated by the end of October.
USA: Across the US, more than 61 percent of adults have received at least one vaccine, which is set to increase to approximately 70% by July 4. As a result, the government is rolling out a patchwork of restrictions across the country with orders varying by state, county and even city. Mask restrictions are being lifted for those with a vaccination, bars and restaurants are beginning to re-open their inside facilities, and gyms are also beginning to open up.
Australia/New Zealand: As it stands there are currently no lockdown restrictions or regulations in place. Residents are free to travel domestically across state and a travel bubble has just been opened to New Zealand.
South Africa: South Africa currently sits within an Alert Level 1, meaning that most normal activity can resume, with precautions and health guidelines followed at all times. That being said, working from home is almost mandatory, there is a daily curfew from midnight to 4am, masks must be worn in public, no large indoor gatherings are allowed and no live spectators are permitted at sports events.
SouthEast Asia: Across all key markets – Singapore, Malaysia, Thailand and Indonesia – there are high levels of lockdown restrictions and regulations. Both Thailand and Vietnam have increased their quarantine periods, and with recent outbreaks in Thailand, Laos and India the majority of SouthEast Asia is experiencing severe lockdown restrictions and daily curfews. We don’t expect the country to return to any sense of normalcy until the end of 2021.
Spain: Restrictions across Spain vary depending on region. Certain regions, such as Madrid, have more freedom than others – with restaurants having been fully open since the start of 2021. Whereas other regions, such as Barcelona have much tighter rules and regulations. Across the country, everyone must remain at home between the hours of 23:00-6:00 – yet this is set to change throughout the course of May and June as government regulations change and restrictions will become solely regionally-specific.
Switzerland: Switzerland’s vaccination roll-out continues to accelerate, with restrictions relaxing due to stabilized rates of infection and hospitalization. As it stands, masks are still required and indoor restaurants are shut. There are also limitations on the number of clients per square meter for local stores. However, come May 26th the Swiss government is reassessing the severity of the situation and Switzerland could begin to open up again – with larger events and gatherings expected from June onwards.
All things considered, the road to recovery is steadily approaching, and as we settle comfortably into the second quarter of the year, brands should be preparing their strategy to compliment a post-Covid world.
Looking to the future, marketers should strive to complete the following.
Maintain a Strong Digital Presence & Approach
Practice Brand Authenticity
Adopt an Omni-Channel Approach
Put Consumers at the Heart of Your Strategy
The last 18 months have been tough on consumers and retailers alike, but with the end very much in sight, we’re entering a unique period of opportunity, and now is the time to breathe life back into the retail industry.