he Coronavirus pandemic has changed the way we shop, work and communicate with the world more than any other disruption, including the technological aspects in the recent times. As more people start to work from home, they are sticking to basics, they step outside only to buy essential commodities and are constantly worried about the risk of being infected in crowded places like supermarkets and malls.
How the Covid-19 pandemic changed the consumer behaviour
Cheaper 4G networks and increasing wealth in the hands of consumers, the Indian e-commerce market was expected to grow to $200 billion by the year 2026. This projection was based on market and customer research in a pre-Covid 19 world. But in the previous two months, both the consumer behaviour, as well as the market landscape were altered beyond recognition and there is a clear indication that the e-commerce industry will hit the $200 billion mark sooner.
Some of the consumer behaviour changes, according to a survey by the National Retail Federation
9 out of 10 consumers have changed their traditional habits of shopping.
More than 50% of the consumers have ordered their products online that they would normally purchase from a store or shop.
Nearly 6 out of 10 consumers say that they are worried while entering a store due to fear of catching the novel Coronavirus.
While some of these changes are, no doubt, temporary, whereas the others will be permanent. As the community moves beyond the survival mode, the adoption of digital shopping is more likely to carry forward and become a permanent way of living. This point of inflection would be primarily shaped by two major shifts in customer behaviour - the reluctance to be in crowded public places or walking in groups and higher propensity for the adoption of digital buying.
A recent study in China suggests, consumers are more likely to choose the option of online shopping even after this pandemic outbreak ends, especially for products related to personal care and groceries. This trend is most likely to continue long, even after the lockdown is called off as people would still fear to visit crowded areas like supermarkets or malls.
According to a survey by eMarketer revealed that nearly 60%-85% of the internet users across South East Asia and China have avoided crowded public places to avoid the risk of being infected by the virus. While this would certainly come down to in favour of offline, it is expected that things would not go back to being normal in terms of purchasing goods and services from retail outlets.
In short, the Coronavirus outbreak and 2020 will mark a tipping point for the adoption of mobile commerce and e-commerce platforms.
The emergence of a new world order in the retail business
We believe that the retail business is at a point of inflexion - and this is the start of a ‘A New World Order’ in terms of how the consumers shop and the way the retail industry works. Retailers would need to be agile in adapting to this situation.
Under the New World Order of the retail business, retailers across diverse categories cannot rely fully on their offline presence even after the lockdown is called off. They will have to inevitably adjust to the new rules of online buying. This would become even more relevant for commodities related to personal care and groceries where the propensity to buy online was low, previously.
Who would be the leaders, survivors and the laggards in this new world order?
This ‘New World Order’ as we call it, could force each and every retailer to converge the operations and workings of their online and offline stores. Not doing so, would mean suffering huge loss in the near future. So, who would be the leaders, survivors and laggards in this new world order?
The leaders would be the agile retailers, who upgraded their business to a multi-channel business model and the ones constantly develop innovative shopping experiences by analysing the new buying behaviour of the consumers. The leaders would be followed by the survivors with digital platforms, who have their own online store and are selling their products on major online marketing platforms such as Amazon and Flipkart.
The laggards in this race would be offline retailers who would still wait with the hope that the older buying habits of the consumers and the demand would be restored after the lockdown is called off.
What the Retailers would need to rethink in the new scenario
Prior to the outbreak of the infection, traditional enterprise retailers were focused on acquiring market share and driving growth with the help of their physical stores as their epicentre. Increasing the traffic towards their online store was not their major focus. Hence, in the new world order, the retailers have to rethink the way they do business. Their main focus has to turn towards driving traffic to their website in order to maximize their sales.
Online-Offline split in buying trends during the lockdown
As the behaviour of the consumer changes, retailers will witness an increase in dependency on online orders. The retailers would have two options, either they continue with their offline retail business and sit with the hope that the old buying habits would be restored soon or set up their own business website and start taking the orders of their customers online.
Would this new world order result in the end of offline retail business?
It is believed that the New World Order would be ruled by online sellers and online buying patterns, we also realize being innovative with different store formats can set your business a class apart from your competitors who are selling the similar products and services.
For example, a multi-channel retailer can differentiate itself from the online aggregators by transforming few of the stores into experience zones that offer an exceptional buying experience. We will see more of such strategies which would be deployed by businesses in the line of multi-channel furniture retailers such as Pepperfry and Urban Ladder.
In these times of crisis, retailers are increasingly using their physical stores as fulfilment centres to turn over their inventory quickly and cut down losses. The omnichannel retailers, who would innovatively utilize their physical store space would inevitably be the ultimate winners of the new world order.
How the retailers can adapt quickly:
With continued uncertainty, that businesses that are currently agile and the most receptive in adopting these new conditions of customer behaviour would prevail over the ones who sit and hope that the shopping habits would go back to being normal. The retailers have to cope with these constantly changing buying patterns of the customers and quickly cope with the new world order.
The Covid-19 crisis has favoured multi-channel retailers when it comes to minimising the negative impacts. Therefore, offline retailers must see the lockdown period as an opportunity to establish, develop and improve their online presence if they wish to survive this new world order. Retailers with their online presence must capitalize on the recovery trends by introducing new and innovative ideas of fulfilling the orders of their customers be it establishing an Online-to-Offline platform, or developing sophisticated digital logistics and payment reconciliation capabilities to be in the lead in this race for recovery.
The only way the retailers can tackle the increasing order volumes and diminishing margins from the online aggregator counterparts would be to focus on improving the visibility of their website.