During the pandemic, consumers have shopped more online and there is no going back

If one figure encapsulates how the COVID-19 pandemic changed consumer behavior, it lies half-buried in statistics tracking UK retail sales for November. According to the BRC-KPMG Retail Sales Monitor, 59.3% of UK non-food sales took place online in November 2020. A year earlier, the equivalent figure was 33.2%.[1] To put that number further in context, it was only in June 2020 that online purchases made up more than 50% of UK non-food purchases for the first time ever, at 50.7%.[2]

Even allowing for the fact that November was a month when non-essential retailers in England and Wales were forced to close because of a spike in COVID cases, and when there were Black Friday bargains to be found, one message of these figures is clear: British consumers have grown increasingly comfortable with the idea of shopping online.

This is a pattern we see repeated around the world in ways that reflect local market conditions. In Brazil, a country where there have been significant barriers to e-commerce because of factors such as underdeveloped infrastructure and a lack of access to banking services, the Brazilian Ecommerce Association anticipated four million Brazilians would shop online for the first time in 2020. Instead, according to the association’s president, Mauricio Salvador, six million Brazilians shopped online for the first time in the four months after the pandemic hit the country.[3]

Lasting change?

These are remarkable figures, so much so that it is easy to get fixated on the raw numbers. Instead, we need to ask what do these numbers mean? Do they merely represent a short-term response to an exceptional situation? Or will consumers, having changed their behavior, continue to do more of their shopping online?

These are questions that affect not just the retail sector, but brands and suppliers too. To take just one aspect of retail, if consumers are doing less of their shopping in town centers and city centers, this profoundly affects how supply chains operate.

A useful way to think about the issues here is to begin with worldwide e-commerce figures. According to Statista, in 2014, global retail e-commerce sales had a value of US $1,336 billion. In 2019, the equivalent figure was $3,535 billion. By 2023, Statista has predicted, this will rise to $6,542 billion.[4]

It follows that COVID-related spikes are taking place against a backdrop of increasing e-commerce activity. Therefore, there is every reason to suppose that even traditionally reluctant e-shoppers, such as older consumers worried about the possibility of fraud and unconfident when dealing with technology, will continue to buy online once the pandemic is over. They will have seen for themselves how this is a secure and convenient way to buy goods.

Not the same old faces

But from which companies will these consumers be shopping? This is less clear. This is because for all that online shopping has boomed, the revenue this has generated often represents a larger share of a smaller overall pot. Many retailers have not replaced the income from their stores.

This came home brutally at the turn of November and December in the UK when two major retailers failed: Philip Green’s Arcadia Group[5], famed for such brands as Topshop, Miss Selfridge and Dorothy Perkins, and the department store Debenhams[6]. While these failures were down to a number of factors, it is telling that both relied too heavily on their bricks-and-mortar presence. This left already struggling businesses exposed to the loss of footfall with the government-imposed lockdowns.

In contrast, the luxury brand Mulberry credits its digital strategy with helping to shield it from the worst of the COVID downturn. Its online sales jumped from £13.9 million in the six months to September 2019 to £23.4 million in the same period in 2020. In the first quarter of Mulberry’s financial year, e-commerce accounted for 67% of its sales. The point here is not that Mulberry maintained its overall sales – what it calls its omnichannel retail sales fell by 25% to £42.9 million and it was forced to make redundancies – but that its strategy was robust enough for it to cope with an extraordinary situation.[7]

Changing shopping patterns

These companies’ contrasting fortunes point to wider lessons. First and foremost is the idea that businesses have to adapt to consumer behavior. Traditional retail is certainly not dead, but the pandemic has made it acutely clear that many retailers have struggled to keep up with how their customers are shopping.

To correct this, retailers first need to get the functional part of retail right. During the COVID pandemic, consumers were often unable to go out to browse for items. Where lockdowns have eased, many have remained cautious. While consumers would not use this terminology, the value of logistics expertise – reliable and flexible deliveries and click-and-collect services – has become clear to them.

The evidence is that customers will reward those businesses they most trust to fulfill orders. Turning to the grocery sector in the UK, online supermarket Ocado’s Christmas delivery slots were filled within five hours of being announced in October.[8] Also in October, Riverford, with a subscription-based business model built on customers receiving regular deliveries of organic fruit and vegetables, temporarily decided to stop taking orders from new customers because of a spike in demand.[9] More widely, Riverford is one of a number of regional specialist retailers that have done well over 2020 as consumers have adopted subscription-based services, in part as a way to guarantee household food supplies.

Dramatic possibilities

But retail is about more than functionality, it is also about emotion and drama. A well-run corner store projects a reassuring sense of community. A great music or clothes shop is an exciting social space where customers end up buying things they did not even know they wanted. With so much shopping moving online and likely to stay online in the wake of the COVID pandemic, traditional town and city centers will struggle unless they can create a sense of place, somewhere to visit rather than just somewhere to spend money.

This process was already reshaping shopping areas around the world and the pandemic has accelerated this process. Specialist and smaller retailers may well prosper in such locations, perhaps especially if a folk memory of these shops being there when the pandemic raged lingers. Larger retailers, some of which have already begun to push for turnover-based rents, may be less willing to commit to long leases.[10] Pop-up stores, which lend themselves to creating drama because they are ephemeral, will likely become more commonplace.

Change and change again

A retail landscape that simultaneously emphasizes both efficiency and excitement may at first glance seem contradictory. However, in its fundamentals, retail is about keeping promises to consumers. This has always meant first meeting customer expectations and then surpassing these expectations with new ideas and products.

The developments within retail that COVID has accelerated are in so many ways just a new spin on why this idea remains so central. This is not to underestimate current market volatility, or for that matter the ongoing difficulties inherent in businesses refining multichannel offerings, but retailers, brands and suppliers need to be clear about the business imperatives here.

For subtly different reasons, all these businesses need to have tight control over inventory and the data that underpins inventory. In this way, they will be able to get products efficiently moving through the supply chain and into warehouses and stores and then, in turn, out to customers across different locations and channels. It is no coincidence that businesses with strong digital strategies – not just supermarkets and luxury brands such as Mulberry, but retailers across the economy from the mid-market UK homewares store Dunelm[11] to fantasy-gaming role-playing brand Games Workshop[12] – have proved most adept at surviving or even thriving during the pandemic.

The COVID-19 pandemic did not create this business landscape, but it has brought it into the sharpest focus.


[1] https://home.kpmg/uk/en/home/media/press-releases/2020/12/brc-kpmg-retail-sales-monitor-november-2020.html

[2] https://internetretailing.net/industry/industry/half-of-junes-retail-sales-online-for-the-first-time-as-ecommerce-helps-drive-the-industrys-fastest-growth-for-two-years-brc-21700 [registration required]

[3] https://retailx.net/product/global-2020/ [behind paywall]

[4] www.statista.com/statistics/379046/worldwide-retail-e-commerce-sales/

[5] https://www.theguardian.com/business/2020/nov/30/philip-green-arcadia-group-collapses-into-administration

[6] https://www.theguardian.com/business/2020/dec/01/debenhams-close-stores-jobs-department-store-jd-sports

[7] www.mulberry.com/plugins/investor_relations/pdf/mulberry-results-sept-2020.pdf

[8] www.theguardian.com/business/2020/nov/28/christmas-slots-went-in-five-hours-how-online-supermarket-ocado-became-a-lockdown-winner

[9] https://images.riverford.co.uk/pdf/Riverford+Coronavirus+update.pdf

[10] www.standard.co.uk/business/business-focus-why-turnoverbased-rents-are-in-demand-a4521111.html

[11] https://internetretailing.net/strategy-and-innovation/strategy-and-innovation/dunelm-sees-sales-grow-as-shoppers-buy-more-homewares-online–22146 [registration required]

[12] https://investor.games-workshop.com/2020/12/07/half-year-trading-update-and-dividend/

CS Author Fiona Ashdown

Sr. Director, Global Field & Partner Marketing

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