2020: The Year of Home Shopping

Part three of a four-part series.

COVID-19 and the resulting lockdown is changing how we live in many ways. One of the most notable is the global growth of e-commerce sales. For weeks now millions of people around the world have been quarantined in their homes, and they are increasingly shopping online for goods, services and entertainment.

Retail has been moving increasingly online for the past 20 years but events over the past few months have significantly accelerated that shift. According to payments firm ACI, transaction volumes in most retail sectors saw a 74% rise in March compared to March 2019. Home products and furnishings were up 97%, DIY products 136%, garden essentials, 163%, electronics 27% and telcos 19%.

Most crucially, this is not a temporary spike. A CapGemini report based on early April interviews with more than 11,000 people worldwide found that only 24% expect to be out shopping in the way they were before COVID-19. While younger people were already spending more and more online, this crisis has encouraged more elderly people into online shopping. Many will now be comfortable with it and will choose to continue once the lockdown is lifted.
For many, this is the moment to abandon their current generalist positioning and find a much more profitable niche.

The days of the out of town supermarket and sprawling department store have long been numbered. Between 2008 and 2018, the number of department stores in England fell 25% to just 180, according to research from crowdfunding marketplace Lendy. In 2019 the John Lewis Partnership slashed staff bonuses to just 3% – the lowest since the mid-1950s

The rise of online shopping continues

This sudden influx of online demand has presented practical issues for the supermarkets and they have coped well, hiring more staff for warehouses and deliveries, enhancing e-commerce sites and processes, and adapting supply chains. However, longer-term the challenge for the supermarkets – indeed for all retailers – is to innovate their online offerings so that in the weeks and months ahead they are the sites people visit, buy from, return to, and then recommend.

From technology to Customers

It is an area crying out for innovation. Innovation in e-commerce has focussed too heavily on technology and not nearly enough on what customers want. So many online stores are simply virtual versions of the vast, uninspiring buildings where customers are left to wander, unthinkingly dropping the same products into their carts.

Will we soon see supermarkets offering a more tailored approach? For example, will we see sites asking visitors what they want to cook and then filling baskets with the ingredients for that meal? They could ensure it was only the right amount of ingredients, so reducing waste while providing a more tailored experience to customers.

A more personalised approach needed?

They could be developing deeper, longer relationships with customers, building profiles and suggesting products or services suitable to people with those preferences of characteristics. They could stop suggesting meat products to people they know are vegans. They could tailor suggestions based on healthy eating, or free-from lifestyle choices. The number of people aged 45 to 64 who live alone has increased by 53% in the past 20 years, and there is much that retailers could do to adapt their offerings for them.

Then there is the issue of returns. Around 25% of products bought online are returned and this costs retailers billions of pounds every year – to say nothing of the environmental impact and, currently at least, the health concerns around all those unnecessary journeys. Putting obstacles in the way of returns – like charging customers – has a detrimental impact on sales so retailers simply absorb this cost. A more personalised service would significantly reduce this.

The Moment to Innovate

There is so much that can be done, and this is a rare and fleeting opportunity for retailers to act. It’s a global phenomenon too – according to a 2019 report from Gallup, only 19% of Americans were buying groceries online. That has all changed now. Around the world, there are Americans, Europeans, Asians, all spending their dollars, euros, yuan and yen. The potential here is vast; the question is who will seize the opportunity.

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