Brightpearl has published a new report which reveals significant changes to shoppers’ spending habits since the Coronavirus pandemic. The report explores how COVID-19 will impact shopping behaviours and priorities over the next 12 months. Parallel studies were undertaken in the US and the UK.
The survey points to a slump in the luxury sector with a major switch away from ‘frivolous’ spending. The company’s chief executive Derek O’Carroll said, “The luxury sector will be impacted hugely – who wears a suit to a meeting on Zoom?”
Just 8% of shoppers made a ‘big ticket’ purchase such as a car since the lockdown in March last year. One in 20 consumers (5%) are looking to buy luxury apparel such as designer handbags over the next 12 months. Just 6% are looking to spend on luxury watches, jewellery and fine art in the same timeframe. Overall, luxury spending is likely to be down by 24% in 2021.
O’Carroll added, “Shifts in spending habits apparent at the start of the pandemic are likely to accelerate this year. Particularly, as we grapple with fresh restrictions on movement likely to last well into the spring. The harsh reality, though, is there will be winners and losers across all categories. What firms do next counts.”
Key Takeaways from Report
- Much more online shopping is expected in in 2021. Shoppers will be making much less trips to the High Street. In the UK, 67% of shoppers plan to make less trips in 2021
- Shoppers are now buying items online that they previously only ever bought in store. Within five years one in five UK shoppers will be buying online only
- Spending priorities will change in 2021. Big ticket items, luxury purchases and entertainment like festivals, sporting events and concerts are all set to suffer. The global economy is expected to worsen. Consumers are expected to tighten their belts and continue working and continue their staying at home habits. Winning retailers next year will include DIY products, home furnishings, toys and electronics. All items designed for, or can be used in home
- Shoppers are more adventurous – 45% say since the virus they are more open to using or trying new brands. This means the opportunity to attract and retain a growing market of new customers is greater than ever before
- Online service has been poor since COVID. Almost 40% of consumers say deliveries are taking longer. A quarter have been let down by late delivery, a mis-pick, an out of stock or items not arriving at all. A third of shoppers say these problems damage the trust they have in online shopping. The takeaway here is that there’s plenty of opportunity for merchants as the market grows. However, this is a growing opportunity to mess it all up.
- Local shopping & click and collect were the big winners in 2020. Consumers indicated a preference to shop locally, and increase use click and collect. As a result, retailers should consider adding local click & collect points to their delivery offering to exploit these trends
Half of retailers have made no changes to their business models as a result of COVID – despite almost half of firms saying that they couldn’t survive additional spikes. COVID is creating opportunity, but it shouldn’t be at the expense of a brand’s retail operations, much more digital ambition is needed to increase retail resilience, with agile digital infrastructures that are able to support speed and convenience, handle bursts of growth and the diverse needs of cross channel experiences
According to Mark Hook, Brightpearl’s Global PR Director, “COVID has brought huge changes in the way we live, communicate, work, shop and spend. These impacts are broadly similar across the UK and US. Some of the consumer trends we are seeing in the UK, such as the switch to online only shopping, will be accelerated in the States.”
Main differences between UK/US reports
US shoppers even more likely to shop online next year.
- US shoppers are more open to buying new products online that they previously only bought in store
- The main difference between countries is that 1 in 5 UK consumers thought they will shop online in five years. That’s almost doubled in the US, where 39% of shoppers indicate they’ll be online only in the same time period.
“Retailers should be aware that the new behaviours and habits that have formed since the onset of COVID,” says Hook. “These are likely to become more entrenched over the next 12 months, as economic and social crisis peaks in 2021. Consumers will have little patience or acceptance for companies who fail to deliver on new expectations. Unfortunately, very few retailers are seeking to address the operational complexities to help deal with heightened demand. Retailers need to provide flexible fulfilment obligations and especially on the delivery side of things. They need to be wary of prioritising growth at all costs without ensuring they have the right infrastructure in place to deliver optimal buying experiences.”
“It’s important retail brands on both sides of the pond are aware of consumer changes and the challenges they bring. Furthermore, they are able to respond with innovation and end-to-end digital transformation,” Hook added.
Enterprise Times: What this means for business?
This report just confirms what many businesses, analysts and consumers already know. Brightpearl’s report shows that the pandemic is likely to impose permanent lasting change on retailers. Consumer shopping behaviours and priorities continue to change dramatically. Some retailers are responding well to this change. The crisis has seen smaller players ramping up radical innovation and end-to-end digital transformation by recruiting new technology partners. Partnering with the likes of Shopify Plus and Brightpearl. Migrating online to manage heightened demand alongside the operational complexities of selling directly to consumers. At the same time maintaining a high level of service.
Unfortunately, many other retailers lack the agile digital retail infrastructure to pivot online smoothly. They find it challenging to manage the end-to-end complexities of high intensity retail operations. This includes inventory, same-next day delivery, shipping and returns. These businesses are struggling to respond to a once-in-a-generation test of business continuity planning and supply chain flexibility. For businesses, having an online store has gone from being a ‘nice-to-have’ to a ‘must-have’. Digitising back office operations is a critical step towards transitioning to online commerce. This will only continue to intensify as more consumers move online over the next year, and the years thereafter.