The decline in COVID-19 cases and continued vaccine rollout is already having positive effects: consumer anxiety levels have dropped 10% and worldwide anxiety is at its lowest level since April 2020, according to data from the Deloitte State of the Consumer Tracker. Shoppers can see the light at the end of the tunnel, and they’re adjusting their spending habits accordingly.
“We expect there to be a shift to more discretionary spending, and retail will be a benefactor of that,” said Steve Rogers, Managing Director of Deloitte’s Consumer Industry Center in an interview with Retail TouchPoints. “When you think of what people were spending money on during pandemic, it was groceries, health and other needs that needed taking care of. Now we’ve seen anxiety levels shift, and there has been a corresponding uptick in intention to spend on apparel, restaurants, travel — leisure-type activities, as you might expect.”
However, retailers still have plenty to do if they want to ride the coming upswing to its fullest potential. Lingering consumer habits will require them to rethink the in-store experience, and even some pre-pandemic demands are returning with renewed force. Key “to-do’s” that should be top of mind as consumers return to stores include:
- Offering the right in-store experience: COVID may be declining as a concern, but even before the demands of social distancing, shoppers didn’t like being stuffed into tight spaces. Some retailers will continue to emphasize buy online, pick up in-store (BOPIS) even as others benefit from longer dwell times;
- Building corporate responsibility: Shoppers’ interest in ethical retailers never really went away, and as health and safety concerns level out, making strides toward diversity, fairness and sustainability will return to the forefront as important differentiators; and
- Keeping an eye on financial stress: Pandemic anxiety is giving way to financial anxiety, and retailers need to keep their fingers on the pulse of shoppers’ concerns to prepare themselves for potential future disruptions.
Shoppers Feel Safe, but That Doesn’t Mean They’ll Put up With Friction
The number of shoppers who feel comfortable visiting stores rose from 51% in late December 2020 to 64% in March 2021. However, that still leaves a significant portion of customers unwilling to dwell in a physical location, so retailers need to determine the right balance between online and in-store services as they plan their future strategies.
Rogers suggested that retailers think about what shoppers liked about their stores, and the experience provided within, prior to the pandemic. Whether it was a pleasant layout, knowledgeable associates or the ability to touch products before buying, that isn’t likely to change post-pandemic. What will be different? Shoppers’ willingness to put up with crowds and deal with friction.
The true dividing line between an online and BOPIS-centered future versus a return to traditional store-based retailing will be defined by each retailer’s customer base and product portfolio. Goods that benefit from a hands-on customer journey will continue to draw shoppers to the store, while less expensive or personal items will continue to see the biggest surge in online shopping — and the one that is least likely to go away.
“With fine apparel, jewelry and the luxury side of the house you’ll likely continue to see people want to see, touch, feel and be able to try on,” said Rogers. “The opposite is true about more commodity-type goods. Think about cereals and certain grocery items. I think people will be fine having someone else fulfill the order and picking it up outside.”
Corporate Responsibility Will Grow in Importance
Social consciousness and responsibility among brands made regular headlines prior to COVID-19. While such concerns were less newsworthy compared to a global pandemic, they never went away. In fact, the global wave of Black Lives Matter protests in 2020 showed that some social concerns actually grew stronger during the pandemic. Today, shoppers are more socially conscious than ever, and retailers need to make sure they are taking these concerns seriously on every level, from the supply chain all the way to individual associates.
“Are you sustainable?” said Anthony Waelter, Vice Chairman, Deloitte LLP and U.S. Consumer Industry Leader in an interview with Retail TouchPoints. “Are you fair to your employees? Are you a place where diversity, equality and inclusion are values? Can I be associated with your brand because of that? I think those social factors have become much more impactful in the overall perception of the brand, and it’s drawing more consumers to those brands. Actions speak louder than words, and they demonstrate that they are in fact socially conscious across the broad range of social issues. They will, over the long run, be successful in capturing that customers who are socially conscious.”
Financial Concerns are Rising, Though Their Impact is Yet to be Understood
Health and safety concerns are on the decline, but financial stress and employment are the second and third leading anxiety drivers for most countries, according to Deloitte. As of March 31, 28% of consumers were worried about upcoming payments and 37% were putting off large purchases. While this may create interest in private label brands, an opportunity several retailers already are embracing, name brands are still more popular in multiple categories:
- Beverages: 60% of shoppers prefer name brands, compared to 16% private label;
- Personal care: 56% prefer name brands, compared to 16% private label;
- Food: 47% prefer name brands, compared to 22% private label; and
- Household goods: 45% prefer name brands, compared to 22% private label.
For the time being, health concerns still outweigh financial issues: 50% of Americans are concerned about their own well-being and 54% about the well-being of their families. Even though these pandemic-driven anxieties are likely to linger for many people even after the country achieves herd immunity, retailers trying to stay ahead of the curve should plan with price in mind.
“What we’re seeing for the first time is the shift from health and safety being the top cause of anxiety to financial stress,” said Waelter. “We’re measuring very closely. Obviously, it has an impact on retail in particular.”