On January 01, 2020, as we turned our calendars to welcome the New Year and decade, little did we expect the turn of events that followed. As brands and businesses waited in anticipation and positive expectations in terms of growth, they had no clue that a virus would impact life and economy by bringing the world to an abrupt halt. Yes, almost all industry sectors were affected due to Covid-19 pandemic, which acted as a game-changer for the retail segment, presenting both opportunities and challenges.
As the pandemic prevailed all through the year of 2020, with stay-at-home orders, lockdowns and phased unlocking, it has infact reshaped the retail sector in a unique way. There has been steep fall in footfall at brick-and-mortar stores, malls and department stores besides the reduction in real estate footprint of retailers. The world has begun to respond and act differently than before and customers are no different. Shopping patterns and consumer behaviour are no longer the same in what is now called, the beginning of the ‘new normal’ era.
However, on the flip side, the same pandemic is the main driver for the retail industry to adopt technology. Digital technology has played a key role in day-to-day living during the lockdown. Most customers have opted for online shopping even for essentials to maintain social distancing and stay safe. This ‘digital first’ approach to shopping is here to stay even in the post pandemic era.
Localisation Emerge as the New Buzz Word
The local kirana shops have suddenly started to gain more recognition among customers during the lockdown period. This hyperlocal model that promotes trust and speed is very convenient and safe for consumers who are comfortable shopping at the all-in-one-grocery stop. On-demand hyperlocal delivery will become the norm for groceries, medicine, laundry services and other essentials even post pandemic.
Boost to E-commerce: A Pandemic Tailwind
With new customers opting for e-commerce during the lockdown in addition to the old who continue to shop online, it is evident that digital consumerism will become the new norm. There is a surge in the use of services, such as contactless payment and curb-side pickups with health and safety becoming the priority. Infact, according to RedSeer consulting the CY2020 has been bullish than expected on the e-commerce growth. Indian e-commerce is expected to grow 40 percent in 2020 grossing US $38 billion GMV (gross merchandise value) up from US $27 billion in 2019 as compared to US $22 billion GMV in 2018. This increase is largely attributed to new online shoppers, rise in online sales and more businesses joining the e-commerce business revolution.
Now, retailers are working to provide customers with experiences both digitally as well as in the physical store. Adoption of technology in retail has been accelerated and embraced unlike in the past, even by smaller retailers, with customers shifting to buying online. Small shops are leveraging the phygital (physical + digital) model where the comfort of knowing the customer offline is helping in profitable online engagement.
Personalised Commerce is Gaining More Traction
With customer experience becoming key to retail growth and digital shopping becoming the norm, businesses are leveraging technology to deliver personalized experience that mimics the in-store experience. Data insights from social media platforms and search engine tracking tools support in understanding customer behaviour and buying patterns, eventually leading to establish customer loyalty. Retailers are fully aware that by adopting personalized commerce solutions, better RoI is easily achievable, besides retaining the customer.
Retailtech is Leveraged Extensively to Boost Sales
Investing in technology and online options has now become an integral part of the retailer’s business strategy as omnichannel platforms are preferred by shoppers. Rules of retail are now being rewritten leading to long-lasting changes. Customer preferences are changing at a faster pace with the unprecedented pandemic leading to adoption of innovation by businesses to address them. Digital tools and AI are leveraged by brands to uncover better customer experiences. Retailers are opting for more accurate ML-based demand forecasting that are quicker to implement as compared to traditional approaches. Personalisation tools use data science and ML technologies, besides chatbots to deliver personalized experiences. RFID tags, ML, IoT devices that come with digital transformation have reduced direct interactions during lockdowns. Technology is leveraged even in last-mile delivery for health and safety reasons and is expected to remain so even post pandemic.
Year 2020 has certainly been a turning point for retail players. Retailers continue to innovate and adapt to changes as they strive to provide better value proposition for customers aiming for quicker recovery of the sector.