Insight: Online shopping trends during COVID-19

As most countries across the globe remain in lockdown due to COVID-19, retailers fear the impact on supply chain and ecommerce. But where some industries suffer, others succeed. It’s clear that as the pandemic continues to evolve, so do consumers’ priorities.

Leading luxury retailers have already seen an unprecedented downturn in footfall and sales. British fashion giant, Burberry, reported a decrease of between 40 and 50 per cent over the last six weeks, while Primark’s parent company, Associated British Foods, said a fifth of its selling space was already closed.

Having recently produced a report on COVID-19 just weeks ago, we found shopping centres across our portfolio in Central and Eastern Europe tumbled 76.2 per cent year-on-year. It is clear the temporary closure of many high streets, shopping centres and retail parks have heaped more pressure on retailers; however, there is hope that the existence of ecommerce may limit the harmful impact of coronavirus on the global economy.

Luxury

The hit to fashion and luxury sales is expected to be worse than initially feared after considerable growth over the past decade. According to Boston Consulting Group, revenues are expected to plunge between 25 and 35 per cent this year. Luxury shopping has always been more focused on delivering a personal experience to consumers. That said, when you combine store closures with factory stoppages and consumers pulling back on spending, fashion retailers must do everything in their power to weather the storm.

Ecommerce is a critical channel for fashion retailers, and we’re likely to see a further shift towards online channels over the coming weeks. For example, Levi’s – a luxury brand that has survived the world wars and the 1918 flu pandemic – has been investing more in its ecommerce business, adding features designed to attract young shoppers, to cope with a decline in footfall. Sales rose 5 per cent for the first quarter (ending February 23), but Levi’s has confirmed the impact of the outbreak would be “materially significant” for the second quarter. The recent increase was partly due to the company’s efforts “to find ways to connect more strongly with consumers during the period of time that they’re cooped up.”

DIY

With many homeowners temporarily out of work, self-isolating or working from home, the demand for DIY and garden equipment surged. Towards the end of March, Kingfisher, which owns B&Q and Screwfix, reported a 37.7 per cent rise in like-for-like sales, with growth of 8.6 per cent the week before. According to the IMRG Capgemini online retail index sales of electricals and DIY products soared 42% and 14% during the first week commencing 23 March (when lockdown measures began in the UK).

Grocery

In most countries, retailers that sell food, drugs and other essential items can still do so in physical stores. Some anticipated that online sales in this sector would grow considerably with people less willing to visit busy supermarkets and put themselves at risk. Still, with many online delivery slots reserved for those in the vulnerable category, many people need visit supermarkets on a weekly or daily basis to buy essentials.

In Germany, some observers believed lockdown measures would prompt a rise in ecommerce sales for retailers that sell food, however, according to the Bundesverband Ecommerce und Versandhandel (BEVH) 41 per cent of online retailers said the number of customer orders had fallen, while 58 per cent expected a further decline in the coming months. It’s also worth noting that over half of internet users in Germany aged between 18 and 69 have never shopped for groceries online, according to 2019 poll by ibi research and the Digital Commerce Research Network. The outlook in the UK is seemingly positive, with data from Contentsquare revealing transactions on supermarket increased 221% in the week ended April 3, while overall traffic improved by 36 per cent.

Beauty

With many countries in lockdown mode, Europe’s most prominent beauty markets are slowing; however, there is some positive news to report, particularly for UK beauty retailers. According to Contentsquare, UK online sales of personal care products rose by 53 per cent from April 6 to 12 2020. This is perhaps a sign that the “lipstick effect” is occurring – when consumers spend money on small indulgences during economic slumps. Many beauty brands have invested more in online operations too, with Glossier and Kiehl launching virtual consultations, to guide prospective customers on the products that are right for their needs.

Fitness

While gyms, fitness studios and fitness franchises are certainly feeling the financial blow from the coronavirus pandemic; there is some positive news in this industry, particularly for suppliers of exercise equipment. There are signs that many people have invested in exercise equipment to stay in shape while they self-isolate. For example, Peloten, a leading fitness equipment supplier, saw shares rise by 9.2% in March, while downloads of its app were reportedly up five times compared to February.

Do retailers need to innovate online to survive?

Many brands have long delayed investment in digital transformation; however, it’s clear that in many cases, retailers have seen positive signs when they have adapted their offering. Primark is one of the very few giant fashion retailers not to have an ecommerce operation, meaning it has no means to sell stock during lockdown and the resulting “new normal”. That said, logistics and supply chains are already feeling the effects of COVID-19, and for many large retailers, investing more in ecommerce may not provide the rapid solution required to improve sales. Companies must also focus on keeping staff as safe as possible as well as maintaining a positive brand reputation. For example, several non-essential online retailers have made the difficult decision to close their ecommerce stores temporarily, including Schuh, Moss Bros, Fenwic and Next.

To survive the coronavirus pandemic, there can be no one-size-fits all solution, however, the outbreak has given retailers across all sectors the opportunity to align themselves more closely with their customer’s needs. For those brands currently selling online and seeing a rise in sales, it’s critical not to be complacent. Selling products or services online may be one aspect of survival, but consumers still demand a good level of customer service. It’s important to highlight any potential delays to deliveries while ensuring customer enquiries are responded to quickly. According to Marketing Week, 78% of consumers believe brands should help them in their daily lives, with 45% of consumers wanting to see companies putting in place plans to protect the supply of services or products. From small boutiques to giant retailers, one thing is clear; remaining loyal to customers and suppliers in these challenging times may be the basis for survival.

Sources

About Reveal Systems

Reveal Systems is an expert in footfall intelligence, providing auditable data analysis and interpretation based on the movements of persons and vehicles. With over 20 years’ experience and a team of world class specialists in system design and data analysis, our solutions are powered by our exclusive RevealAsset software, ensuring businesses access and understand the data required to make informed decisions and drive results.

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