The recent global pandemic has affected everyone irrespective of economic background, geographical location, or social well-being. Human beings are interdependent for survival. The basic premise of this barter has led to the evolution of Retail in its current form. Retail too, like many other sectors, was immensely impacted by COVID-19 globally.
The Global Technical Consumer Good (TCG) Market, which is estimated to be $548 billion YTD September, recovered from -11 percent (Jan-Apr 2020) to -1.2 percent for (Jan-Sep 2020). This shows that TCG markets are demonstrating resilience and consumers have started spending money on TCG Goods.
The Technical Consumer Good (TCG) Market in India (Offline + Online) grew by 7.5 percent in 2019 and was on a similar growth trajectory of 6 percent in the Jan-Feb period. However, in March, industry growth came to a grinding halt when India was hit by the pandemic. The Central Government responded by imposing a nation-wide complete lockdown from last week of March till May. Thereafter it was extended partially or completely by respective State Governments.
By the time retail outlets reopened, there was a big shift in consumer behavior. As per the GfK Consumer Pulse 2020 report, 86 percent of urban Indian consumers changed their shopping behavior due to COVID-19. Consumers preferred to stay indoors which led to a big shift in their consumption and shopping patterns. Spending on clothing and fashion got postponed not only in India but across the globe.
Shifting Demand Patterns
In the times of COVID-19, consumers are constantly challenged by the evolving scenarios of how to live, work, and socialize. This has driven new needs and demand patterns in every phase of the crisis. This crisis has several stages, starting with 'Panic' moving to 'Adapt' and, then to the recovery – towards a 'new normal'.
During the 'Panic' phase, the urgency of meeting specific basic needs was extremely high. Unlike usual shopping patterns, consumers had to prioritize fast and make urgent purchases to survive in a new normal, and everything else was postponed. In the 'Adapt' phase, consumers turned their attention to enhancing the in-home experience – simply because they were bound to stay-in which led to increased consumption of media content through electronic devices, be it game consoles, gaming notebooks, or streaming sticks. In this phase, there was the reopening of the retail stores; the next milestone with the potential to change retail or market dynamics.
The TCG market in India began to recover in the month of August (at a growth rate of 7 percent) which further grew in the month of September (at a growth rate of 9 percent). These growths were majorly aided by Tier 3 & Tier 4 cities where the pace of improvement in sales was much faster and began in the months of July and June respectively.
Low Touch Retail Environment
For most countries now, retailers need to prepare a new low-touch retail environment to support a faster road to recovery. This will potentially impact every stage of the shopping journey.
As per GfK Consumer Life Study 2020, 48 percent of consumers read online reviews while buying technological products, and 54 percent used online as a channel for research before purchase reflecting that communication is important across platforms.
This clearly portrays the increasing relevance of embracing Digital. Physical Outlets to manage low touchpoints and remain relevant to consumers will have to shift focus towards Digital transformation.
PHYGITAL - New Digital Strategy
Loyalty towards well-known and trusted retailers was quite evident throughout this crisis period. During the lockdown, the online retail platform of these traditional retailers boomed. When they reopened, customers returned to the physical stores.
As per the Gfk Study, 60 percent of organized retailers were concerned about consumers' preference for online purchase channels and 79 percent of them were looking to increase investment in online retail.
This suggests that clarity and appearance of product information will overtake in-store display and staff engagement. So, whatever platform retailers use to connect with consumers, it will be important to use images and product descriptions.
Social media platforms have a wider reach and therefore, enable to nurture the relationship with existing shoppers and contact potential ones who are open to receive information.
Organic Traffic Strategy
COVID-19 has accelerated digitisation across organisations and individuals. As per the GfK FutureBuy Study, 44 percent of consumers in India used reviews from other shoppers to make purchase decisions online. 50 percent were influenced by General Shopping sites and 36 percent were influenced by brand websites.
Therefore, it is inevitable for retailers to adapt to the digital strategy to stay relevant. One way to embrace digital is to maintain a website for staying connected with your target groups that belong to the mobile-first generation.
As per the GfK Consumer Insights Engine report (Apr-Jun 2020), 50 percent of smartphone users spent 30 mins to one-hour researching products online, which reflects that the mobile-first strategy has its relevance for retail marketing.
To increase traffic retailers should also optimize their website with a search engine. Optimising content can also be achieved through answer box and feature snippets, voice search, and collaborating with industry bloggers on various digital points.
COVID-19 has provided us with an opportunity to move to a new normal. Retailers will have to re-evaluate the store environment and consider how a changed shopper will see and perceive it. They will also have to re-evaluate the digital environment they operate in and how they can engage with shoppers in the decision-making process online and influence product comparison and selection.