Tectonic Shifts in Consumer Behavior

Store closures set a new record #

Store traffic dropped precipitously with shelter-in-place orders, and retailers that were already struggling took a major hit. More than 14,000 stores closed in the first three quarters of 2020—an astonishing number, especially when you compare it to previous years.

• 9,800+ stores closed in 2019

• 5,700 stores in 2018

• 8,000 stores in 2017

In 2020, there were more than twice the amount of store closures than during the height of the Great Recession in 2008 when 6,200 stores closed.

Stores closed, but people are still shopping #

Undoubtedly, store closures and stay-at-home orders created a massive spike in eCommerce retail. In the first 10 weeks of the pandemic, eCommerce sales saw the same amount of growth than it had over the last 10 years.

Inventory availability impacted consumer behavior—panic buying led to stockouts, which led to a decline in brand loyalty. Shoppers bought the products they needed, not the brand names they typically want. It all came down to what was available. Nearly 40% of U.S. consumers tried new products or brands since the pandemic started. Price, product, and convenience are still the most important considerations for shoppers, and that impacts brand loyalty.

Shopping behaviors are different now. Consumers are either unable to go to stores or they prefer not to. In Q4 2020, $1 in every $4 was spent online. Last year, it was $1 in $5. Presently, 62% of consumers say they shop online more often now than they did before the pandemic.

Free and fast for eCommerce delivery #

Cost is (still) king. People don’t make online purchases if the numbers aren’t right. Fifty percent of consumers abandon online purchases because of hidden costs, specifically shipping, taxes, or fees. However, when free shipping is on the table, shopping cart sizes increase in value by about 21%.

Delivery times are even less accommodating. Amazon set a precedent with Two-Day Delivery, which is now evolving to One- and Same-Day Delivery. Consumers want their orders delivered sooner, not later—they demand convenience and speed.

Omnichannel retail prevails #

Omnichannel fulfillment addresses those consumer expectations for convenience and speed. Since March, there’s been a 96% increase in curbside pickup. Contactless payment, social commerce, virtual consultations, and curbside pickup give consumers convenient and safe options. And they have real sticking power.

Consumers are more likely to purchase from a retailer that has omnichannel options. Especially now. The primary reasons are:

• Feel safer and happier (54%)

• Think better of the retailer (54%)

• Return to the retailer (53%)

• Visit the retailer (50%)

• Choose that brand over the competition for future purchases (48%)

• Buy something online (47%)

• Buy something in a store (45%)

Q4 Peak Season #

Heading into the Black Friday / Cyber Monday (BFCM) peak season, analysts predicted that 60% of shoppers would choose to shop online over physical stores during the holidays and that the average spend online would be more than 2x in-store.

Here are the highlights of Q4 2020:

• Consumers shopped earlier: Thirty-eight percent of shoppers said they made their holiday purchases in the weeks leading up to Thanksgiving, with some BFCM deals starting as early as October. And in the first 10 days of November, consumers spent $21.7 billion online—a 21% year-over-year increase.

• No “door-busting”: On Black Friday, brick-and-mortar stores saw a 52% drop in store traffic compared to 2019, and a 95% drop on Thanksgiving.

• eCommerce broke records: U.S. consumers spent $34.36 billion over the “Cyber 5 weekend,” breaking last year’s record of $28.49 billion.

• Omnichannel outperformed: Retailers that offered omnichannel services increased online sales 19% more on Black Friday than the retailers that did not.

Overall, online retail grew 49% year over year in Q4 of 2020.

Logistics providers prepare #

COVID-19 will impact logistics providers well into 2021. The pandemic’s ongoing effects will demand businesses to plan for disruption and invest in labor and capacity if they are to survive the year.

Flexe recently surveyed logistics providers to see what they are doing to mitigate future disruptions.

The top 3 initiatives to mitigate disruption*:

1. 66% say they are putting a contingency plan in place to manage a second wave of COVID-19

2. 53% are investing in eCommerce fulfillment capabilities

3. 50% are investing in adding or expanding new sales channels

*Responses with “none of the above” were removed

Key takeaways #

The pandemic changed how people shop. Physical retail will bounce back, but the increase in online shopping tipped the scales and accelerated the growth of eCommerce. Retailers and brands must figure out how to give customers what they want. Expectations are high, but this is the new normal.

You may also be interested in: #

• White Paper: Hindsight is 2020, but the future is clear