COVID has driven tectonic shifts in customer behavior, and the time for businesses to act is now.
Since COVID-19 began to impact the west in late-February and early-March, we’ve been living through an accelerated pivot in how our lives are lived and business is done. Everything has changed – from our daily routines to education, our entertainment to how we work, our shopping habits to our spending patterns.
We don’t yet know the implications of the protests and demonstrations on virus transmission or the possibilities of a second wave of COVID-19, but we already see that transmission rates are rising, with the U.S. daily rates climbing again, adding more than 20,000 new cases a day – as the continued improvement in a number of regions is offset by new outbreaks in the South and parts of the West.
It seems we’re still far away from a ‘new normal’, and the upcoming 2020 presidential election – as well as state and local elections – in the United States will aggravate a sense of unease, increase the likelihood of more collective action and rallies across the political spectrum, and may prolong the a return to to pre-COVID life.
Habits formed now will remain as the foundation of the economy changes profoundly
For businesses this all has deep implications on strategy, with a combination of key factors impacting the mid to longer-term. Of course in the near-term the virus is the big variable, and we still have no idea how this plays out.
While we tiptoe out our doors as governments ease restrictions in phases, the truth is that the kinds of interactions and environments we were accustomed to are simply not going to be the same. Masks, social distancing, and constant disinfection are going to make venturing out very unappealing until a vaccine is available or herd-immunity is attained.
A vaccine is likely not available in large quantities until Q1 2021 at the earliest, and even then availability across the population is not a certainty even then. This means social distancing will remain a thing with large segments of the population wary about a return to pre-COVID behaviors, even if local governments feel pressure to open up.
This of course has significant implications for businesses that rely on large and intimate gatherings alike – from retail, to travel, to entertainment, to dining and food service, to manufacturing. The very patterns of our lives are changing – likely for a long time. Many of the habits we’re forming now will persist indefinitely.
This will be exacerbated as the foundation of the economy changes profoundly. City centers, suburban office parks, and malls will empty out, or at the very least feel very different.
Remote work and social distancing are going to lead to some very real changes in our cities and routines that drove major parts of the economy. Commutes will decrease, and running by the store at lunch or on the way home will be a thing of the past for many.
In fact, many may opt for a less dense rural or ex-urb lifestyle where they have more room – and they now rarely need to venture into the city or get to the airport. Meetings, education, and business can now be online – the ‘zoomification’ of our lives – even if it has mixed results and does not work for everyone.
If only 20% of pre-COVID work moves to remote and virtual this will have profound impacts, and I suspect it will be greater than that.
As a result, our dense urban, exciting areas that attracted office workers and loft-livers who ate out 75% of the time as they navigated the latest hot spots for fusion burritos, gelato, and hot-yoga studios as they biked, walked, or took mass-transit – ya, not so much.
The retailers and businesses that served them are already pivoting to digital with a mix of omnichannel. Larger merchants will have the advantage, but there is opportunity for many to participate. Much of this is also true for suburban malls, though we will see ongoing development of curbside pick-up and buy-online-pick-up-in-store (BOPIS) as a common, welcome customer experience.
And of course, business and leisure travel will be significantly cut, with destination shopping and entertainment locations suffering significant reductions in foot-fall – such as Manhattan, London, Paris, Milan, Chicago, Las Vegas, and city centers everywhere. The experience economy will be hit significantly, though that spending may shift to other areas such as the home and kitchen, the garden, pets, online entertainment including gaming, and outdoor recreation.
Businesses and digital commerce: Research underscores need for e-commerce to provide a great CX
The implications on businesses of all kinds is profound, but we must face the reality across business segments. In time we may see a return to pre-COVID ways of life.
A comprehensive study called “The State of Commerce Experience” conducted by Forrester looked into the current state of digital and e-commerce. This research allowed us to look at pre-COVID behaviors and sentiments, as well as how those were changing as COVID led to ‘stay-at-home’ quarantines. We looked at both retail and B2C, but also B2B – across the U.S., U.K., and DACH region.
There’s a lot to learn from this research, but some key findings around businesses and digital commerce include:
- Digital commerce is front and center for both consumers and B2B buyers. The coronavirus pandemic has driven half of shoppers to buy products they’ve never bought online before – which is astounding for a mature channel – and 70% of them are buying more than usual online. In fact, almost half of businesses report digital commerce driving growth during the pandemic as they see an uptick in online search, traffic, and orders. And while essential products dominated early in the ‘stay-at-home’ period, that is no longer the case – consumers and B2B buyers are spending online across many categories. Companies can no longer downplay the critical importance of digital commerce and investment now will set companies up to survive and thrive in the near and longer-term.
- Customers will pay for a better commerce experience, but businesses struggle to provide essential must-haves. Customers say they prefer online channels for researching, buying, and finding inspiration, and nearly 40% of consumers and a surprising 56% of B2B customers say they would pay more for a better experience. And, adding to the high-stakes, they will not buy from the same business again if they have a bad experience. The research also found that too many businesses today don’t provide the basic table-stakes of effective digital commerce like easy website navigation, relevant search results, and clear, rich product information – let alone excel in delivering inspiring experiences that connect with and inspire their customers. e-commerce is no longer simply a transactional channel, it’s an emotional one.
- The good news is that in response, businesses are looking to increase investments in core digital commerce technologies that enable great experiences. Businesses are shifting spend from offline to online, with half of businesses cutting investment in their physical stores (and in B2B, traditional sales channels) and increasing it in online channels like web, apps, social, and third-party marketplaces. Most business leaders we surveyed also plan to increase investment in e-commerce customer experience (CX) technology such as personalization, search, and content management, as well as modernizing their e-commerce platforms. This is a good sign, but it’s imperative that senior leadership and boards at these companies get behind this now.
The time for businesses to lean in and understand the implications of this tectonic shift in customer behavior and the economy is now.
To not do so is going to destroy value and put business at risk in the short-term, and have profound longer-term implications as well. Trying to win the race from a lap down is not an effective strategy.
Thank you. Be well, be safe, and here’s to good business.