Pandemic appearances to the contrary, consumers don't have time to burn when it comes to shopping.
The pandemic and its resulting job losses and stay-at-home mandates may have given many people enough time to start that novel, clean that garage or binge their way through their Netflix lists. But even with all that time on their hands, consumers still want retailers to focus on convenience — and the merchants that can best fulfill that desire could come out ahead.
That’s among the findings of a new Deloitte report entitled “The Future Is Coming … But Still One Day at a Time.”
The business of retail prognostication is a lively endeavor in normal times, but the ongoing pandemic adds a bit more oomph to the craft. Merchants that cannot make the ongoing disruption work for them risk falling behind and failing.
One of the important retail “battlegrounds” going forward, as the report called it, involves convenience.
Prior to COVID-19, consumers made it clear that convenience matters and the new normal has further accelerated this trend,” Deloitte said. “More than 50% of consumers report spending more on convenience to get what they need, with ‘convenience’ increasingly being defined by contactless shopping, on-demand fulfillment and inventory availability.”
That’s not all to consider as retailers try to map out their near- and longer-term futures. Private label brands are apparently enjoying some new-found popularity in recent months.
“As of April 4, consumer spend across all retail categories has decreased by more than 40%, placing significant strain on short-term operating margins,” the report said. “This trend has increased private brand sales in recent months, with price and supply chain constraints playing a key role in this growth, as well as consumers trading brand preference for brand availability amid stockouts. It remains unclear, however, if consumers will emerge with new preferences or lower brand loyalty than observed prior to COVID-19.”
Digital commerce, of course, was on the upswing before the COVID-19 outbreak and will keep growing, at least according to pretty much every signal available. But no retailer should take that growth for granted.
“The spike in digital orders has had significant fulfillment implications for retailers, with order picking and last-mile delivery adding to the cost and complexity of the exercise,” Deloitte said. “While consumers have demonstrated a willingness to pay for on-demand fulfillment in the short term, it remains to be seen if they will continue to offset the cost of delivery in the future. Overall, while digital growth remains strong, the ability to profitably pursue that growth remains under tremendous — and growing — pressure.”
Other challenges for retailers in the coming months include figuring out how to better integrate physical stores into overall, omnichannel commerce processes, and retail consolidation.
“As the wallet of many consumers is increasingly pressured due to the COVID-19 pandemic, retail and consumer products companies should recognize they are competing for share of wallet, not share of category,” said Kasey Lobaugh, Deloitte’s chief innovation officer, retail and distribution. “As always, preparation is key. Rather than relying on prophecy-based predictions, retailers should embrace data-driven scenario planning, and remain vigilant in monitoring emerging trends.”