Covid19, Consumer Behaviour and Retail
The UK has been in lockdown for over 2 weeks, and although in relative terms that isn’t a long time, for those of us experiencing it – it feels like an eternity. Life has changed drastically in a mere 16 days, we have been forced to adopt new practices and new ways of living. Subsequently this has had a colossal and perhaps irreversible influence on consumer behaviour, retail and the economy – both locally, nationally and internationally.
According to a recent article by The Sunday Times, our state of lockdown will cost the economy 2.4 billion pounds a day, and with no clear date as to when the restrictions will be lifted, businesses continue to suffer and their futures’ – uncertain.
With social distancing measures in place, the large majority of shops and businesses that rely on physical customer traffic have been forced to close, and those who aren’t selling online or have an e-commerce form of life support to help them from plummeting completely, may not survive.
The high street has been dying a slow and painful death for years – even before the coronavirus crisis, as e-commerce and online retail continues to takeover, yet this lockdown could take brick and water stores out the race completely. Clothing stores are almost daily being replaced by coffee and ice cream shops as these are among the few customer experiences you can’t buy online, although you can buy coffee and ice cream online or via app! The experience you cannot, and that is what people pay for. However once lockdown is lifted there’s sure to be an increase in people visiting coffee shops/restaurants as a meeting place for those who haven’t seen their loved ones for so long; those who are able, well enough and aren’t still in isolation of course, but for how long they will remain popular/busy – who knows.
Every week it seems a new shop closes its door and like the virus itself, this economic crisis doesn’t discriminate. Aswell as independent stores/ businesses and SME’s, even some of the UK’s most prominent and biggest brands and franchises have lost the battle to maintain a physical presence long before the coronavirus crisis; yet this has contributed to their demise even more rapidly.
According to reports The Arcadia Group which is made up of retailers such as Topshop, Topman and Wallis as well as others are due to serve notice on a huge majority of their outlets this week. Another sad retail revelation is that Debenhams – also part of the Arcadia Group that was once a household name and High Street staple has gone into administration just this week. This shows that even outlets and brands with online retail platforms are suffering as a result of the coronavirus crisis, despite UK Broadband suppliers abolishing data caps and some network providers giving their customers free unlimited data as we tread unprecedented water here in lockdown.
Whilst at the beginning of the lockdown there was a reported increase in sales in home gym equipment due to the government restrictions, homeware and cooking equipment as we have been forced to live an isolated existence within our 4 walls, however now even these sectors are declining. Some brands are being very clever with their sales and marketing
strategy during this time, an example being Peloton who have increased their 30 day free trial to 90 days, as a means of trying to secure sales once this crisis has passed.
Yet as consumers we are frightened. Our personal financial futures are uncertain and therefore we are unwilling or financially unable to spend money on items that aren’t a necessity which may be a behaviour that continues long after the crisis ends.
Consumers have had to adopt new financial mindsets; becoming more ‘sensible’, selective and financially savvy in terms if what we spend our money on, and even when our financial circumstances are more stable, this is an attitude that will more than likely continue.
Having had to live without luxuries for so long, we will perhaps question what really is a necessity and what isn’t.
What is of course a necessity is food, and unsurprisingly, all supermarket outlets have reported a rapid increase in sales, yet many have struggled to meet customer demand. As a result of this coupled with social distancing restrictions, many local convenience stores that are within walking distance within communities have also reported a drastic increase in sales, many are thriving, with one citing an increase of 800%. Despite there being a significant mark up on many products, a vast majority of us are willing to overlook this in return for convenience and not having to queue.
Many independent convenience stores are now being extra smart by offering home deliveries, capitalising on peoples need and desire for convenience and limited hassle and also offering support to those in self isolation. Also local Butchers and Fishmongers are powering through, much to the delight of communities around the UK; encouraging us to use local independent businesses and fresh produce.
Could this change in behaviour become permanent?
Even though it’s something we have been forced to adopt, there could be a more permanent shift in thinking and behaviour with many people now wanting to support their local community and the smaller businesses that inhabit it rather than larger retail outlets.
Another change we might see that could potentially affect even supermarket retailers in the future is that through necessity, consumers will have become more self efficient.
With no bread or other products left on the shelves due to increasing customer demand and ‘panic buying’, many of us have been forced to improvise; dusting off bread makers and slow cookers and making our own produce and dishes right at home.
Also with more free time due to being restricted to our homes and work taking on definitions, many people are using this time to invest in their homes and gardens, planting and growing their own fresh vegetables, fruit and home baking other products.. This has perhaps ignited new or lost hobbies and passions; many families have reported baking as a new family pastime, an opportunity to not only use items that have a long shelf life that were before overlooked in our pantry but also to bond with our loved ones and do something as a family.
Once the lockdown lifts its highly likely that in some this behavioral change will continue, having unearthed not only a new/lost passions, skill sets and form of self reliance that could potentially save them money ever more and bring families together.
It’s impossible to say what will happen with our economy, right now it is a fluid concept, we couldn’t have predicted yesterday and we don’t know what tomorrow will bring. However what is a certainty is that the coronavirus crisis will impact our retail economy indefinitely, as it will consumer behaviour. This is an economic pandemic as well as one of illness, and whilst our bank balances’ health is under threat the behaviour of consumers will be that of caution, prioritising and necessity – both online and offline.
The e-commerce industry although perhaps under pressure will we feel, recover in time, albeit with different growth margins and trends, however the High Street may be one that – through the coronavirus crisis, is catalysted into irreversible submission.
Again. Only time will tell.