Covid-19: Could the coronavirus change consumer behaviour forever?

It has been well documented that the coronavirus pandemic has already been hugely damaging to the retail sector. This applies particularly to retailers selling non-essential goods, who, in many countries, have been forced to close their physical stores. This scenario seems certain to become the norm for a number of weeks, if not months. And as we step into and become accustomed to this new reality, how may consumer and retailer behaviours will adapt beyond what we have already seen? And will the Covid-19 experience change the way people shop in the long term, especially in regard to eCommerce?

The picture so far

To date, supermarkets and other food suppliers have had a clear boost in sales, and are facing immense pressure to satisfy demand, both online and in store. “It’s like Christmas mark 2 for food retailers, but without the contingency planning,” notes Darren Williams, MD, DW Exec Consulting, who previously worked for big-name retailers including Hotel Chocolat, T2 and Paul.

In regard to non-essential retail, the picture has been markedly different, even for those with online and delivery capabilities. “People are scared to spend money that’s not essential,” adds Williams.

Yet this picture has the potential to change somewhat in the coming weeks. As people become used to the routine of staying indoors – either unable to continue working or working from home – there is likely to be a greater need for certain non-essential items. In recent days, governments in countries such as the US and UK have announced radical packages to secure at least part of people’s incomes in the event their employer is forced to temporarily close. Whilst not ideal by any means, these measures can at least help alleviate some of the financial pressures many people are feeling.

A rise in online shopping?

Guy Elliott, senior vice president, retail & consumer products EMEA & APAC at Publicis Sapient, believes there will be an increase in consumer demand in parts of the non-essential retail industry over the coming weeks. “I think online shopping for anything that is essential to being quarantined will grow – it’s a huge range from exercise and hobby equipment, to gardening and home improvement. So there’s a massive surge in demand for anything that revolves around being at home, such as working from home and keeping yourself entertained when you can’t go out,” he says.

Additionally, as history has shown, it is in times of crisis when innovation is most likely to flourish; many companies are likely to try and find novel ways of encouraging home-bound consumers to purchase their products. One example so far is restaurants that have been forced to close, now offering takeaway and delivery services – fast-food chain Leon even turned some of its stores into mini-supermarkets. As Elliott puts it: “Times of distress make people very creative.”

Shopping will undoubtedly become a heavily eCommerce activity during this period. Those retailers who do not currently trade on the internet, such as Primark, will surely be wondering if ignoring online shopping all these years was the right decision.

Andy Mulcahy, strategy and insight director, IMRG, says he expects to see very concentrated growth in eCommerce: “As the stores are shut, the demand will almost certainly have to shift online. As people get used to this new reality, you might expect their shopping habits to extend past focusing so heavily on grocery and essentials, although we have to consider the economic environment.”

So could the experience of Covid-19 change consumer shopping habits for good?

Certainly in regard to grocery shopping, current events appear likely to speed up the growth of online shopping even after the current crisis is over. “The thing about online grocery shopping is that for the most part, once people get into the habit of doing it, say after three or four purchases, it becomes a routine and you don’t go away from it easily. I believe if this continues for a while we will see a significant sustained shift to online purchasing even post-virus,” comments Elliott.

This could well apply to high-risk groups like the elderly, many of whom would never have envisioned themselves undertaking online purchasing as recently as a few weeks back. In the UK, for example, these individuals have been urged to self-isolate for 12 weeks, forcing this behavioural change at least short-term. Currently, due to the huge demand for online grocery's, retailers are finding ways to ensure elderly patients are given priority access to online delivery slots.

Whether such a lasting growth in eCommerce activity will apply to non-essential retail is harder to predict. Physical exercise is one area in which it is possible to foresee behaviours changing – many may continue buying workout equipment to use in their homes rather than attending a gym for example. Indeed, shares in Peloton – the at-home digital exercise bike company – spiked in mid-March as people began staying at home more due to fears surrounding Covid-19. Peloton also recently announced it was extending its 30-day trial period to 90 days. 

It is the strong belief of Paul Martin, UK head of retail at KPMG, that Covid-19 will precipitate a rapid increase in eCommerce activity. He discussed this during a panel discussion at this week’s Retail Transformation Live online event, saying: “Online is an increasingly important channel in the UK, and we know there is a penetration of about 20%. I would argue this pandemic will significantly increase these penetration rates: individuals who have not interacted with online on an everyday basis will now, in many cases, be forced to do that. I also think it is very likely we will see an acceleration of the demise of the physical store.”

Changing behaviour of retailers?

Additionally, it’s possible to see retailers themselves driving this change, regardless of consumer behaviour, with the precariousness of the physical store model devastatingly exposed by the Covid-19 pandemic. “If we see a bounce into online retail that is sustained we could see retailers de-risk their estates even more,” notes Williams.

A much quicker expansion into automation, ensuring retailers can sell and deliver products efficiently during a crisis such as a pandemic, could also result from the experience of Covid-19, further shifting operations away from physical stores and warehouses. This could potentially range from the use of drone delivery to automated warehouse processes. Elliott adds: “I think retailers will have a huge bit of soul searching after this is done to work out how they do not get damaged by this next time; how they can automate things.” To illustrate this point, a number of non-essential retailers have in recent days elected to close their online operations due to being unable to ensure the safety of staff working in warehouse and distribution centres.

There is no doubt the new Covid-19 virus has shaken up retail, and it is a distressing time for large parts of the sector. To suggest there is a crystal ball to look into the industry’s future beyond this unprecedented period would be foolhardy to say the least. Nevertheless, it can be argued that the increase in online shopping over the coming weeks will, at least to some extent, accelerate the growth of eCommerce activity beyond the Covid-19 pandemic. The experiences of consumers and retailers alike during this depressing period may accelerate this process that was occurring at a much more glacial pace prior to Covid-19.

What’s Hot on Essential Retail?