1、CONSUMERS AND THE NEW NORMAL THE SHAPE OF RETAIL: 1 THE SHAPE OF RETAIL: CONSUMERS AND THE NEW NORMAL Contents Introduction2 COVID-19 timeline4 Section 1: The impact of COVID-19 on consumer behaviour6 Section 2: Future trends14 Section 3: Beyond the pandemic: the impact on retailers20 Conclusion30 A

2、ppendix: Country profiles32 How A this corresponds with a higher proportion of consumers indicating that permanent changes would occur in the way they shopped. Conversely, Swiss consumers were the least likely to suggest a permanent change in shopping habits. Switzerland also showed fewer respondent

3、s who thought the virus was of a high or very high threat. Our research also shows firm intentions for consumers to transition from store-based sales to online channels across all countries surveyed. Shoppers expect to cut back on the frequency of visits to physical stores most in Italy, Spain, Fran

4、ce and the U.K. Likewise, consumers across all countries surveyed showed further intent to increase the frequency of online shopping and the average transaction value of their purchases, particularly for online non-food products. Attitudes towards online shopping for food were more diverse, likely t

5、o reflect cultural variance, the difference in online delivery propositions and capacity constraints. Overall, the largest shifts are likely to be experienced in Italy, Spain, France and the U.K., with Italy and Spain having significantly lower online penetration rates which will likely ensure aggre

6、ssive rates of growth in the future. Note: Net balance of those that intend to either cut back or increase spending in the long-term. Net balance of those that intend to either cut back or increase spending in the long-term 18 There will be a step-change in the proportion of retailsalesconducted onl

7、ine in 2020 as lockdown measuresnecessitate the shift towards this channel. Overcoming the initial barriers to online shopping will cause a step-change across countries, resulting in an estimated 13.6 billion of additional online sales in 2020 above previous expectations for the U.K. (5.0 billion)3,

8、 France (3.0 billion), Germany (2.3 billion), Spain (1.5 billion), Italy(1.5 billion) and Switzerland (0.3 billion). The greatest gains are likely to be experienced in Italy andSpain, where the proportion of online sales are lower and consumer adoption rates have been weaker than other nations. Howe

9、ver, even in the U.K. where the proportion of online sales is already high, a likely step-change will emerge in the size of online sales as retailers boost capacity. Proportion of online retail spending (%) 2021F2020F2019 9.8% 11.7% 6.3% 5.4% 7.3% 20.4% 12.1% 13.9% 8.9% 7.3% 8.8% 25.2% 12.4% 13.7% 9

10、.5% 7.6% 9.0% 22.8% 0% 5% 10% 15% 20% 25% 30% GermanyItalySpainSwitzerlandU.K.France Source: Retail Economics Figure 9. Online penetration rates expected to see a step-change in levels of adoption. Overcoming the initial barriers to online shopping will cause a step-change across countries, resultin

11、g in an estimated 13.6 billion of additional online sales in 2020. 3 Sterling to Euro exchange rate of 1 to 1.12 as of 10 June 2020. 19 THE SHAPE OF RETAIL: CONSUMERS AND THE NEW NORMAL 20 Section 3 Beyond the pandemic: The impact on retailers 21 THE SHAPE OF RETAIL: CONSUMERS AND THE NEW NORMAL Eur

12、opean governments swiftly implemented measures to support their economies, businesses andhouseholds. While these measures helped limit the economic damage inflicted by COVID-19, inevitably the retail sector will emerge from the pandemic in a different form. A shake-out across all retail geographies

13、is on the horizon as consumers migrate towards business models that are aligned to a new set of values. Retailers who fail to pivot their business models fast enough will cease to exist, engulfed by those with nimble strategies and new entrants. It is equally as critical to strategically tackle the

14、heavy legacy fixed cost base of many retailers in order to become more agile. Retailers will need to address the burden of rent and other occupancy costs in order to support the footprint of the future. Retail industries across the world are currently transitioning through a readjustment period. Acc

15、ordingly, businesses that emerge on the other side will be stronger and more adaptable to challenges that lie ahead. If businesses hibernate for too long, the opportunity to grasp new markets, retain loyal customers and win new ones will quickly pass, as consumers seek alternatives that meet their n

16、ew expectations. 22 Industry restructuring Reaching a post-COVID-19 future for retail is an evolutionary process. This fundamental transformation will take time and international markets will have their own nuance of localised regulation, regional competition and consumer typologies influenced by di

17、vergent cultures. During this restructure, three key stages are likely to arise that are common to all markets: Stage 1 of restructure: Survival timing is everything The impact of the virus pushed many healthy retailers froma positive to negative cash flow within weeks (seeourprevious report Survivi

18、ng the Cash Crunch). As lockdown measures persisted, demands on liquidity intensified and the depletion of working capital forced many retailers into administration. To this end, many non-essential retailers remain in survivalmode, preserving capital and carefully navigating a phased approach to reo

19、pening from lockdown. Intricate scenario planning is critical during this phase, as retailers leverage data and market intelligence to model demand scenarios which drive decision making and cash flow forecasting. This strategy is appropriate while businesses look to weather the storm as effectively

20、as possible, but as the skies clear they will need to quickly evolve their proposition to meet the new demands of a post-COVID-19 shopper. If businesses hibernate for too long, the opportunity to grasp new markets, retain loyal customers and win new ones will quickly pass, as consumers seek alternat

21、ives that meet their new expectations. These actions require bold leadership. In some instances, retailers may discover their proposition has become obsolete as new consumer realities no longer align with product ranges, experiential offerings and fulfilment methods. In these instances, leadership t

22、eams will need toact decisively to redeploy capital towards more productive endeavours. Many non-essential retailers remain in survival mode. 23 THE SHAPE OF RETAIL: CONSUMERS AND THE NEW NORMAL Stage 2 of restructure: The fallout consolidation and partnerships As the survivors gain more traction, w

23、eaker retailers in the market will fail, leading to market consolidation. During this phase, acquisition opportunities will arise which could help drive value, reposition brands and build scale. The drive towards leaner, simpler and more nimble business models will also encourage more strategic part

24、nerships. Retailers partnering with companies offering computing, distribution, logistics, payroll and many other functions were able to utilise these relationships to boost capacity during periods of concentrated demand. Partnerships and collaborations are likely to assume the form of mutually bene

25、ficial retailer tie-ups. Here, complementary partnerships can offer: 1 Repositioning propositions to attract new customers (e.g. Next and Amazon) 2 Improved logistics (e.g. Clipper Logistics that can house, distribute and manage returns) 3 Efficient final mile delivery (e.g. Deliveroo, Uber) 4 Big-d

26、ata driven insights (e.g. Google Cloud computing, Amazon Web Services, Microsoft ArtificialIntelligence) 5 Intelligent use of retail space (e.g. flexible landlords facilitating innovative solutions) Many strategic alliances arising from the COVID-19 disruption will continue to exist. In fact, they a

27、re likely to strengthen during this phase (e.g. M and new customer journeys have been revealed in the search for alternative ways to acquire essential items, driven by a desire to reduce their risk of contracting the virus. Ready to embrace permanent change, consumers whoperceive the risk of the cor

28、onavirus as very high are almost four times more likely to shift their shopping habits in the long-term, compared to those who perceive the risk as very low. Building on these new experiences, previously unseen options will be considered, and new choices willbe made. Intuitively, these more vulnerab

29、le groups, and perhaps those living with vulnerable family members, have stronger motivations to change their shopping behaviours; and once they have experienced a new way of shopping, thesehabits are more likely to stick. However, this cohort of consumers may more broadly reflect those in society w

30、ho are most risk-averse. Thesecharacteristics are also likely to exist in their attitudes towards new technology, online banking and online shopping. In other words, a new cohort of slow adopters have broken through the digital barrier, and the impact could provide rich opportunities for retailers w

31、ho can offer appropriate levels of engagement and support. Proportion of respondents (%) Perception of COVID-19 risk 0% 10% Very highHighModerateLowVery low 20% 30% 40% 50% 46% 38% 25% 21% 12% Source: Retail Economics Figure 10. The proportion of consumers who indicated they will change their shoppi

32、ng habits on a permanent basis by perceived risk of COVID-19. Data science, artificial intelligence and machine learning will be at the heart of identifying new consumer cohorts and engaging with them in a sophisticated, automated and scalable way. Most retailers do not have the in-house expertise t

33、o leverage these new technologies and hence strategic partnerships will be critical in allowing retailers to leverage the benefits while remaining nimble. Marketing strategies will have to adapt to new customers to target them across a mix of channels that reflect their attentions. Implications for

34、retail business models 25 THE SHAPE OF RETAIL: CONSUMERS AND THE NEW NORMAL Proportion of consumers intending to do less shopping in-store (%) Question How do you think your shopping habits are likely to change in the long-term due to the impact of the coronavirus? Proportion of consumers intending

35、to do more shopping online (%) 50% 0%-60%-50%-40%-30%-20%-10% 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% Horizontal axis Frequency of shopping trips to physical destinations net negative response Vertical axis Frequency of online shopping net positive response Switzerland Proportion of online sales 7.3%

36、Germany Proportion of online sales 11.7% U.K. Proportion of online sales 20.4% Spain Proportion of online sales 5.4% Italy Proportion of online sales 6.3% France Proportion of online sales 9.8% Source: Retail Economics. Figure 11. The long-term impact will lead to fewer store visits and greater migr

37、ation towards online. Theme 2: Leveraging permanent shifts in behaviour The closure of non-essential retail across large swathes of Europe has necessitated a clear shift towards online. Asignificant proportion of European consumers (44%) are buying products online for the first time and are experien

38、cing new customer journeys. A key consideration for retailers will be trying to identify which reactionary behaviours will endure and how they will develop in the interim. These permanent behavioural shifts will not be uniformly expressed across Europe and will depend on many factors such as broadba

39、nd penetration, online retail capacity, socio-demographics and others. Even within markets, notable differences arise by age. Nevertheless, there is a clear statistical bias towards a higher frequency of online shopping at the expense of the physical channels. Italy and Spain have lower penetration

40、rates for online retailsales and so it stands to reason that they are positioned to experience the largest proportional shift towards the online channel. British consumers also indicated that they are likely to follow this trend, predicatedon high rates of consumer adoption in the U.K.,and significa

41、nt investment in capacity from retailersand logistics companies. While this presents key opportunities, it also createsmonumental challenges for retailers that have toomany stores, too much space and a poor multichannelproposition. A significant proportion of European consumers (44%)are buying produ

42、cts online for the first time andare experiencing new customer journeys. Note: smaller bubble reflects lower penetration of online sales. 26 While it is inevitable that some consumers will revert to their old ways once a semblance of normality returns, our research clearly indicates consumer accepta

43、nce of permanent change in the way they shop across all European countries surveyed. Put simply, the gradual transition towards digital channels have effectively been fast-tracked. Specific stages within the overall shift that would have taken years to complete, may now have been accomplished in a m

44、ere matter of months. The impact on business models will be vast and the implications will be far-reaching. During the consolidation phase, successful retailers will be implementing innovative ways to engage with these previously hard-to-capture online shoppers to create and capture value. These new

45、 cohorts may become more valuable targets, while they reassess what aspects of the retailer relationship are most important. It also means that the first-mover advantage has been diluted overnight in some parts of the market. The strategy of creating a vast user base that investors patiently wait to

46、 be monetised at a later date will be tested, given the overflow and changing dynamics of digital shoppers. Whats more, retailers will need to accelerate the pace of investment in their digital and omnichannel capabilities, as the impact of the pandemic has highlighted the need for flexibility acros

47、s channels. The integration of Customer Experience and Relationship Management software (CRM) has been central to ongoing digital transformation initiatives across the retail industry, and this area is likely to see sustained levels of investment. Strategies are likely to vary widely between retaile

48、rs, but during the consolidation phase there is likely to be accelerated adoption of communication platform partners which integrate, facilitate and scale communications with customers across email, text, voice, social media and video channels. New digital customers will also require different techn

49、ologies to service them effectively. For example, it may mean that offering free, but timed delivery slots (preferred by older consumers), might provide better traction than same day paid for delivery services (preferred by younger consumers) for some parts of the market. Acquisition and partnerships will becomean important strategy in the innovationstage. Some will use M 2 an accelerated shift to online spending; and 3 a readjustment of expectations. The greatest impact concerning the quickening shift to online will be felt