“Who are these people buying heels?!” one of my team members asked in wonder today, when discussing how spending habits have changed so dramatically in the last 12 months. She couldn’t imagine why anyone would be buying anything other than more sweatpants and slippers. I didn’t tell her about the small stash of glam footwear that I’ve been snaffling up in the sales, full of optimism for when I can strut my stuff once more!
It’s not just Zoom dressing that’s changed our fashion habits, immense socio-economic changes brought on by the Covid-19 pandemic, has had a profound impact on all areas of retail. We conducted our own research to understand the impact of Covid-19 on the retail sector and surveyed 1,000 UK consumers to uncover their altered purchasing behaviours.
One key finding was that consumers have totally re-evaluated their necessities, with sharp changes in the way people are spending. Considerably more in some areas, and considerably less in others.
An attitude of “if I can’t see new things when I travel, I want to see new things in my home” has provoked a huge rise in spend in home improvements. With so much time spent in the home, consumers have been busying themselves with making their homes-slash-offices-slash-hotels more individual to them. Gardens have been filled with fire pits and chimeneas for outdoor entertaining, garages have been transformed into offices, and the humble shed has become a new object of desire. 21% of consumers told us that they’d shopped more in the DIY and Homeware categories than in previous years.
The other categories that our research confirmed a spike in (with 30% of consumers saying they spent more) was in Food and Drink. Ready meals have been hit as consumers have been scratch-cooking more, and palettes are becoming a little more discerning. One of our clients, Laithwaites, has seen a shift in the type of consumer trying their wine case deliveries for the first time, as the consumers who’d previously have grabbed a bottle of Oxford Landing from the corner shop on the way home from the office, have upgraded their experience with home delivery of wine instead. A widely reported trend in 2020 was that rather than sticking to familiarity and brands that consumers were use to shopping from, consumers often did quite the opposite. We’re likely to see consumers exploring new tastes, and brands, as lockdown boredom creates more homespun curiosity.
The retail sub-category that our research showed the highest growth, was Supermarket Delivery, which at 37% saw the highest growth. This hasn’t just benefitted the Ocados, but also brands like Milk & More and Gousto (which achieved UK unicorn status with a $1bn valuation in November) which are benefiting from consumers finding new ways to shop.
In stark contrast, Fashion and Luxury experienced a sharp decline during the first lockdown, with 51% and 45% of consumers saying they shopped less in these spaces. Beauty and Wellbeing and Electronics were also negatively affected, with 42% and 35% of consumers respectively saying they have shopped less of these. With brands like Debenhams and TopShop toppling into oblivion, it’s the brands offering the strongest digital experiences, like ASOS, who are winning.
These findings show a major realignment of consumer priorities and a general reduction in excess spend across retail sub-categories that could be deemed “less essential.” And while these were the immediate responses to the Covid-19 pandemic, these changes, albeit with a somewhat less severe impact, are here to stay, especially now as we find ourselves in another lockdown.
Fashion is set to be the hardest hit sector long-term, with 30% of consumers saying they’ll spend less going forward, followed by Luxury at 29%, Electronics at 25% and Beauty and Wellbeing at 23%. Conversely, Food and Drink and DIY and Homeware will continue to benefit, with 18% and 15% of consumers respectively saying they will spend more on these categories going forward. Supermarket Delivery remains the top performing subsector with 27% of consumers saying they’ll shop more.
In our survey, we additionally uncovered the retailer attributes that make consumers choose one over another and what it is that can sway them.
Almost a third (30%) of consumers said they would choose the brand that makes their life easier – this is not necessarily a shock, so we broke this down further. To understand the nuances of how Covid-19 has impacted UK consumer choices, we asked respondents to tell us what matters most to them when shopping with retailers. “Convenience and clarity” ranked highest, with more than half (52%) of consumers saying that the brand needs to be “easy to understand, buy and use.” That’s why brands like ASOS are focusing efforts on helping customers navigate their way through an enormous array of options, by getting to know what customers’ preferences are through a mix of inference and asking. And at the other end of the market, RAPP client Burberry is offering customers personalised virtual or in-store appointments.
Choice and options are also incredibly important, with 29% of consumers saying they’d choose a brand that makes them feel confident with their choices and options. A quarter (26%) of consumers surveyed expect the brands they buy from to stand for something that is important to them. Frictionless customer experience is also key, with 24% of consumers identifying CX as key in winning them over.
The future of retail
In this new environment, retailers have a bigger role to play in helping consumers choose the right products, but this can only be achieved if an organisation has collected relevant data points and analysed the insights correctly to arrive at clear conclusions that are relevant to the individual. In other words, you can’t offer individualised choices and options unless you know what that person actually wants.
So, what do people want? A towering 83% of consumers in the UK want retail brands to treat them as individuals, according to our study. Shoppers have evolved, they crave individualised experiences that will make their lives easier, offer them relevant choices and options and align with their own intrinsic values about how the world should operate. Thankfully, advancements in technology now enable retailers to create value from every individual’s experience of a brand. With individualisation, retailers can directly address an individual’s wants, needs and behaviours, getting to the heart of who a person really is. Even down to their personality, as RAPP research proves that the way that introverts and extroverts shop is fundamentally different. Having the ability to identify these nuances, to create and serve relevant content that adapts to the individual, will be the difference between ASOS style acceleration, and the steep slope to Debenhams.
Once this latest lockdown has been lifted, success will be predicated on one’s ability to adapt to new consumer behaviours and demands, while re-thinking the long-term ramifications of a crisis that has fundamentally changed how we interact and operate as a society. Central to this is a brand’s ability to offer more individualised marketing communications and experiences that are tailored to a customer’s unique preferences, values and beliefs.
By Caroline Parkes, chief experience officer at RAPP and Code