Social distancing, which will continue for some time yet, has forced years of digital commerce transformation within just a few months. Major brands have been pushed to rapidly overhaul their digital experience and it is estimated that compared to pre-COVID plans, investment in physical retail stores and face-to-face sales has been cut by 50% by brands. This unstoppable trend will filter down rapidly to smaller brands and retail chains.
Even before COVID-19, search and social media were already leading digital advertising spend as both B2C and B2B brands invested in avenues where they could reach influencers and customers more easily, whilst also hopefully selling to them via social commerce. Offline spending or physical store spending if you like, as dropped significantly and brands are investing heavily in online channels, not just through their own website and mobile apps, but also on third-part social media platforms and marketplace site like Instagram, Amazon and even Facebook.
But the most fundamental shift has been with consumers themselves. A recent Kantar study covering Europe’s 3 largest e-commerce markets (France, Germany and the UK) shows that the habits developed and expanded during the worst of the crisis will continue well beyond the era of social distancing. At the beginning it was shopping for necessities online that was the biggest driver for most consumers but as time has gone on, discretionary purchases started to feature more. Based on research in these 3 major countries around 80% of households say they will shop for non-essentials online in 2020 – the biggest categories being clothing and home electronics. And when you add to that a ‘new’ generation of shoppers who normally preferred the physical but were impelled to explore the digital in recent months then there can be no doubt that more disposable income will be spent in e-commerce than ever before.
But not all channels are equal – Instagram may be the right channel for fashion and beauty brands but Pinterest works best for home and interior decoration inspiration. Meanwhile Snapchat which first came onto our radar with its partnership with Nike in 2018 creating a unique e-commerce experience, the Snapchat foray into e-commerce continues apace. In May it rolled out its dynamic ads product where brands automatically create ads in real time based on their own product catalogues and then directs consumers to buy on advertisers’ own platforms. Growth and investment in this format will continue as leading retailers such as TopShop, Farfetch and Adidas have been trialling this with good results.
Of course there is still a place for physical or bricks & mortar but as seen in recent weeks, large retailers have been using digital commerce to retain loyalty to their stores – however the physical shopping experience is unlike anything consumers will have been used to. Be that personal shopping appointments in smaller outlets to pre-booking times to enter stores – the era of the casual, impulsive shopper is on the wan. We will have plenty of shopping experience but this will be led by digital commerce – a reversal in role if you will with the ‘real’ experience in store.
Ian McGarrigle, Chairman of the World Retail Congress, summarises the situation: “In today’s era of high velocity retail, shoppers don’t care about channels, they care about connections, choice, convenience and speed of delivery. In a world where ‘good’ is no longer enough and being ‘average’ is punished hard, retailers are recognising that change it needed. The shopping experience is a key differentiator for brands and retailers whether they have a premium or low price-based offer.”
