As the UK enters week six of lockdown, Germany is one of the first European countries that is slowly lifting restrictions and allowing non-essential retail businesses to open their doors to customers, albeit with strict precautionary measures in place. German shoppers must wear face masks, respect social distancing and there can only be one customer for each 10 square meters of retail space to cap footfall in-store at any one time.
But, unlike the revenge shopping we saw in China when retail opened up at the end of March, the re-opening of retail in Germany – the test case many other European countries will be watching closely – appears to be more cautious with reportedly low levels of footfall in Berlin over the weekend. Speaking to the FT, Nils Busch-Petersen, head of the Berlin-Brandenburg Trade Association, hinted at concerns of the long-term economic damage the virus had had on consumer confidence, suggesting German retailers face a ‘long, lean period’.
So, how will the coronavirus crisis impact the ways UK consumers behave post-pandemic? And what does this mean for retailers, both now and in the longer term?
We joined Retail Week’s webinar – ‘Has retail changed forever? Inside the mind of the post-coronavirus consumer’ – which explored how shopper behaviour will undergo a fundamental and long-lasting evolution, and the dramatic impact this could have on the retail industry.
Hosted by Luke Tugby, Editor at Retail Week, we heard from Carla Buzasi, MD at WGSN, Richard Pennycook chair at the BRC and Howdens Joinery, and Debbie Hewitt, non-exec chair of The White Stuff and The Restaurant Group, on how they expect post-pandemic purchasing behaviour to shift.
Coronavirus has accelerated behavioural change in consumers
The pandemic has caused an acceleration of many consumer trends – from the move to digital, to more considered consumerism, which centres on sustainable and local products, to the evolution of the experience economy as we know it. Many of the trends WGSN were forecasting to happen in 2022-2023 we are beginning to see happen right now.
“The biggest challenge for retailers and brands is can they accelerate their thinking in line with new consumer behaviours.”
A cautious consumer after coronavirus
For Debbie Hewitt, the sense of safety is the thing she feels has been changed forever in retail and consumerism. “I’ve never seen anything that is so involved in personal safety. Never have retailers had to think about how people come into the store, the distance between them, the potential that people are going to have to wear masks or the need to have screens to protect frontline staff. This is a completely different way of thinking and it will be for some measurable period of time.”
Lifting of lockdown won’t just see consumers rushing out to shops. “There will be a nervousness and people will think twice,” Debbie continued. “It is going to take a long time before consumers feel comfortable again and will be very mindful of the fact they have had to socially distance. This is something we’re going to have to consider for a fair amount of time.”
And consumer cautiousness would not just impact how consumers shop, but also what they buy, according to WGSN’s Carla: “Now a lot of this consumer behaviour has to do with people’s views about safety, their own personal wellness and therefore a change in the sorts of products they will buy and how they buy them.”
“If you zoom out and think of the economics of this, we’re going to see a period for a good long time where consumer spending is reduced dramatically.”
Economic uncertainty makes ‘every day buys’ a considered purchase
Price will play a more important role in purchasing decisions, making buying choices much more considered. “People are getting used to spending less and buying fewer products and these decisions we are having to make now are really important,” says Carla.
“There is a recession looming, and people are very nervous about their jobs. Every single buying decision will be thought through and considered in this backdrop of economic instability and global recession. And we have been trained in the last few weeks of lockdown that we can get by spending less money.”
Social distancing – an end to the experience economy?
While the need for social distancing will remain, the experience economy will need to evolve.
“We have got used to the idea of the experience economy and that people would prefer to spend their money on doing things, such as big festivals or holidays and things like that. We will reconsider that idea certainly in the short- to mid-term future,” Carla suggests.
Some experiences – such as going to festival or gig surrounded by thousands of strangers, which would have seemed normal just a few months ago, for obvious reasons may be less appealing – and spend on these type of experiences may still be negatively impacted six months down the line or longer, depending on the progress of a vaccine.
Similarly, Carla points out, even if travel restrictions are lifted, many consumers may reassess whether they feel comfortable getting on a plane, being in a confined environment with lots of other passengers for several hours. While recent research from Skyscanner of 5,000 UK consumers suggested 84% of Brits thought international travel would resume by October, it might take longer for travellers to adapt.
But experiences don’t disappear entirely.
“Experiences don’t disappear – many of us who have been in lockdown are going to want to feel something new, we are going to want to rewards ourselves at the end of this, however what we reward ourselves with will also be quite different.”
The rise of ethical consumerism
With many retailers, including Tesco, Morrisons and Co-op, launching initiatives to support their customers, colleagues and communities, Richard suggests that now, more than ever ‘doing good’ will be good for business:
“This is an opportunity for companies to lean forward and do the right thing in the national interest. In the last four weeks with bricks-and-mortar retail generally closed, it has been the food sector which has had the opportunity to step up. I chair a group of 70 companies that make up the grocery and food sector, and they are all collaborating and talking about how they can feed the nation – it’s shown business at its best and customers will remember those who behaved properly.”
“Brands will be judged on how they behaved during this time,” according to Carla. While many retailers have stepped forward to support the relief efforts – from Dyson creating 10,000 ventilators, to Barbour manufacturing PPE gowns or Brewdog switching hops for hand sanitiser production – some retailers have ‘gone dark’.
“Businesses providing a community service right now will be building their customers for years to come. This is an opportunity for brands to build genuine relationships and act with genuine purpose, rather than paying lip service to a marketing slogan.”
Changing retail operations for the post-pandemic shopper
Digitalisation will be a key factor in retail’s new normal.
Carla predicts that we won’t see footfall returning back quickly to the rates it was at before lockdown – but she says, people are still shopping online.
“The retail leaders right now need to be addressing how they can make sure they can still get products people want to them. Retailers need to embrace digitalisation to enable them to do this and should be using the time now to test and implement this so they are ready for the opportunity when retail does open up.”
The winners, according to Debbie, will be those retailers that can bring reassurance in a thoughtful, innovative and accessible way.
“You need to think an awful lot more creatively about the offer and make it where people feel comfortable so as long as you can reassure that consumer that you are treating it properly and professionally, sympathetically, and particularly authentically then I think you will be a winner in this situation.
It’s those who not only give the attention to detail, then execute it rigorously and consistently, who will be the winners.”