Why the Coronavirus Crisis will Alter Shopping Habits for Good

As the coronavirus pandemic forces people to stay home, digital consumption will accelerate, possibly altering intrinsic customer behaviour and the face of retail as we know it.
By
Brad Wing
March 27, 2020

Popular research reveals that it takes a minimum of 21 days to form a habit. As we stay holed up in our houses to battle the COVID-19 or coronavirus crisis, it is more than likely that we’ll pick up a few new habits—some good, some bad. For instance, I have stuck to my scheduled work hours, which is good, but my screen time has increased considerably, which can’t bode well for my eyes.

“The coronavirus has already caused a big shift in terms of where people go and what people do,” said Paco Underhill, head of behavioral research consulting firm Envirosell, and as the author of Why We Buy: The Science of Shopping and other books.

The question now, Underhill said, “is what happens on the other side of it, when we’re no longer being warned every 90 seconds that our lives are in danger and that we risk infection by getting within coughing distance of a stranger or a friend."

While we are all unwilling participants in this worldwide production of “Big Brother”, our behaviour in the coming few days will set the tone for the rest of this quarantine period and possibly even beyond. 

Consumer behaviour will evolve rapidly during the coronavirus pandemic

As countries across the world go into lockdown, widespread closures are starting to affect brick-and-mortar stores and malls. Even the open (read “essential”) stores are facing a massive reduction in footfall as people become wary of crowds.

How does this bode for retail?

Early evidence reveals that self-quarantine and rising consumer worries have caused a spike in ecommerce as consumers look for digital options to circumvent the physical shopping environment. 

Big-box retailers like Amazon are hiring 100,000 more workers out of season to expand their order fulfilment capacity, while Target Corp and Walmart are increasing the entry wage of workers to compensate them for the surge in demand.

However, it would be naive to write this off as a temporary shift that will last only for the next few months. This is the beginning of a seismic shift.

Consumer behaviour is shaped by three factors—technological advancements, environmental changes, and economic and sociological factors; all three of which are evident with the current COVID-19 crisis. 

In the U.S., the sales for ecommerce businesses rise sharply over the holiday period by 2-3 percentage points as compared to non-holiday periods. The long term impact is that there is always an increase in digital sales post the holiday season. The data has spoken—consumers who shop online during the holiday season continue to indulge in this behaviour even after the holidays.

Andrew Lipsman, the principal analyst at eMarketer, states, “During the holiday, a time with more concentrated buying activity, consumers spend more online creating a step-change, meaning the consumer may not return to past behaviour.”

While the current scenario is far from a holiday, it will most likely reinvent the wheel. Consumer behaviour and the world of retail will be split into different time frames—before and after the pandemic.

Changing the pace of play: Accelerated digital transformation

A report by Digital Commerce 360 reveals that more than 10 years ago, ecommerce sales accounted for a paltry 5.1% of total retail purchases. In 2019, this share grew to a significant 16%.

Ecommerce share in total retail sales continues to increase_Heyday
Source: Digital Commerce 360, U.S. Commerce Dept.

On the other hand, Quantum Metric analyzed their data, confirming what we suspected—digital activity has accelerated during the coronavirus crisis. When the rate of conversion was compared with historical data, it was found to be 8.8% higher. 

Increase in ecommerce sales_Heyday
Source: Quantum Metric

Stuart Rose, a partner at investment bank Mirus Capital Advisers, shares,

“Ecommerce is better off because stores are closing and people are at home playing on the internet.”

As the old saying goes—necessity is a mother of invention. The COVID-19 pandemic has elevated the pace of digital transformation as more and more retailers will look to mitigate the impact of the pandemic on their business by going online. Strategies that were previously shelved or scheduled for a later date will happen NOW. 

Next
, a high street retailer has fast-tracked its long-term plans to manage the impact of store closures. Here’s what Simon Wolfson, Next’s chief executive has to say

“Our sector continues to experience profound and lasting structural changes and these changes are not on hold. Indeed, it is possible that the pandemic may accelerate the transition to online shopping. So we cannot afford to neglect our continuing efforts to transform every part of our business.

This process of learning new ways to serve our customers, collaborate with partners and create value for our shareholders is a task that involves every function in our business. Our buying, sourcing, systems, marketing, warehouse, distribution and store teams are all having to reinvent what we do to adapt to a rapidly changing world.”

The next couple of quarters will witness quite a jump in ecommerce sales, owing to this accelerated pace of play. If you’re wondering how you can keep up, check out these four ways to mitigate the impact of COVID-19 on your business

I’ll take your leave you with this question: At the end of this crisis, your customer will be a digital-first consumer; one who researches online and buys online. Will you be online?

Note: At Heyday, we value our community and have recently launched a “Retail Relief” program to help small and mid-sized local retailers stay afloat during the coronavirus crisis. If you'd like to accelerate digital transformation for your business, please fill out this form.