How has COVID-19 affected Australian consumer behaviour?

 

1 in 5 customers have used click and collect in the last month. 26% now prefer to shop online. What does this mean for the future of retail?
For the first few months of the pandemic, we saw consumers become cautious and buying behaviour reduced to the essentials (and copious amounts of toilet roll). We then saw a surge in consumer spending since July – with sectors of beauty, homewares and electronics all doing well. Consumers are noticeably more considerate in their purchases and when they go out to physical locations they often pre-research their products online, meaning whilst footfall is lower, conversion to purchase instore has increased. We now see that up to 80% of retail purchases are pre-researched in advance and our consumers are increasingly educated prior to making a purchase.

What is the role of the retailer? To educate or to inspire?
The gap between buying and shopping is increasing with the growth of convenience (click and collect, subscriptions, parcel lockers, food delivery services) and many retailers now look to offer a more experiential online interaction to keep customer loyalty and evoke an emotional connection through the digital space to differentiate themselves from transactional retail. Retailers are providing virtual consultations and personal shoppers, Augmented reality (AR) is becoming the new normal with consumers being able to try beauty and fashion products on their avatar and even visualising products in their own home, with retailers noticing an increase in website dwell time when they have utilised AR. 63% of consumers are interested in using AR in their purchase journey rising to 70% for Millennials and Gen Z (RDG/Ebeltoft Global Consumer study 2020) and the rise of 5G will give a boost to AR and expedite the tech even further.

The increased usage of subscription services, delivery services and online retail, in general, will definitely continue and become part of everyday life for certain consumer groups. Time is of utmost importance to consumers, with 67% saying they want retailers to save them time (RDG/Ebeltoft Global Consumer study 2020). Therefore, eCommerce is playing a large part in their retail behaviours and to get the products they need, where they need them, in the quickest way possible.

However, we are all social beings and our needs for social interaction will always be there so consumers will still be gravitating towards physical retail for the emotional experience and retailers that can offer an exceptional and differentiated experience will excel.

The growth of eCommerce has been considerable with now 15-20% of sales online – even higher in some categories which has meant the improvement of retailers digital systems and fulfilment methods, with many retailers now offering expedited and free shipping to draw in consumers. Due to this, consumers have now grown accustomed to the convenience of being able to purchase what they want whenever they want at the click of a button. This has been seen with the growth of click and collect – 1 in 5 consumers have utilised this in the last month (RDG Insights consumer research August 2020). This trend for click and collect – order online and get it rapidly instore – often delivered to your car, with preferential parking – we can expect to continue as customers have embraced this frictionless experience and it has become the norm.

We are also seeing the rise of “Shoptimism” where customers are treating themselves after a turbulent year, and this is done with low value, feel-good products, generally where the experience of the purchase is bringing them joy as well as the product purchased. This can be seen with the success of TK Maxx (hunting for a bargain) and Kmart (experience of finding new products instore) also seen in the success of beauty products (an at-home facial).

Whilst the younger generation have been hardest hit during the pandemic in terms of income and job security, they have also shown to be optimistic about the future with recent research showing they are the most likely to be travelling overseas when the restrictions lift. They have been at the forefront of “Shoptimism” with the lower value purchases being utilised to make them happy during this time. Gen Z has always been the most demanding in terms of experiential retail and are looking for retailers to go the extra mile and entertain them during their shopping. Pre-pandemic, this was seen with the rise in experiences in shopping malls (kit kat chocolate, gaming in retail stores, personalisation of products)

The rise in the use of post-payment platforms such as zip pay and afterpay (up to tripling in usage in some sectors) has also shown that Gen Z are still shopping however maybe being more considerate about how they will pay as they choose to spread the cost and the risk.

What consumer trends do we predict for 2021?
We will see the continued rise of click and collect – with parcel lockers meaning you can collect your shopping from any location, not just the retailer, this extreme convenience has become the norm for consumers and will become further advanced and refined e.g parcel lockers for collecting shopping at transport hubs – possibly even collecting your takeaway dinner on your way home from a locker at your local train station. Customers are now used to extreme convenience and how they can save time so they can utilise it on more valued experiences.

This extreme convenience will include further increased use of pre-research and purchase prior to in-store purchase. The increased use of AR to try products at home prior to deciding to touch and feel at the point of sale, customers will still want the physical experience as this provides “fun” and social interaction however they will be much more educated before they ever set foot outside the house.

 

How have your target consumers changed? How does this affect your 2021 retailer strategy? Our consumer insights research can help you understand your customer and their sub-conscious drivers so you can create an actionable strategic plan. Contact our Head of Insights and consumer insights expert, Anastasia Lloyd-Wallis on +61 2 9460 2882 or email anastasia@retaildoctor.com.au for further retail advice.

Have a look at previous articles written by the retail experts at Retail Doctor Group:

  1. The inertia principle or what it takes to deliver real change
  2. Seeing the game differently – The strategic Aha moment
  3. Retail Doctor Group & Mindarc’s expert guide to implementing an effective “Click and Collect” model

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