From being in the grip of the second wave in a bleak mid-Winter two months ago with so much uncertainty and anxiety there really has been a remarkable turnaround due to the determination of all to fix this situation. A majority of the population have been vaccinated and sunnier days are here literally, well almost, but also metaphorically. The Bank of England say the economy is all set to bounce back quickly, driven by a boom that will dwarf predecessors in its intensity and size, predicting that Britons will spend around 5% of the estimated £250bn of savings accumulated over the past year. Others predict nearer 20%, which would still be £50bn.
It is already time to start predicting what will be the key drivers for growth in this transitional period. The roaring twenties were brought about after hardship which triggered a rebound in consumer spending and prosperity. Even if what is to come doesn’t quite last as long, there will still be a heightened passion to enjoy a return to normality and indulgence in the things consumers have missed out on the most. Whilst the 1920’s was more than a lifetime ago, most of us remember the 90’s. The latter part became ‘cool Britannia’ creating a wave of confidence which undoubtedly became the precursor for the shared will and determination to be ourselves today and do it with swagger.
So how do brands and retailers plan for this, project their swagger and reward customers who have remained loyal? Gekko has pulled together some key insights and trends to consider with retail doors open once again.
Consumer confidence is back
Research by McKinsey & Company shows that optimism regarding the UK’s economic recovery is at the highest recorded level during the COVID-19 crisis. Despite different generations experiencing decreased household income and/or increased savings, optimism has also led to an increase in spending. Forty-seven percent of consumers showed an intent to splurge in 2021 to reward themselves for the trials and tribulations of the past year. Younger consumers, especially Gen Z, 71% are indicating a higher intent to spend or treat themselves, and are keen to get back to enjoying themselves.
The rise of localism
It is likely that a significant proportion of pent up spend may continue on local businesses which have found plenty of support during the pandemic. YouGov found out last year that 64% of people want to support local businesses and buy local products. This has been borne out by our own recent survey of predicted consumer behaviour post-lockdown. 35% of respondents said they have purchased from a local or independent store that they would not have done pre-pandemic. Meanwhile 52% of men, and 49% of women have been more loyal than not to their high street stores. While the expectation might have been the very oldest might be the most loyal to the High Street, interestingly 35-44 year olds were the most loyal, with 74% professing loyalty to their High Street. This shows the strength of multi-age support we have had for the local businesses who have so supported us during this time.
Although the trend may quieten once all stores reopen, local share of business will remain higher than it was pre-pandemic, and is an area to utilise for retailers. The personal experience and convenience of local can be tapped into. With most people still working from home, local shopping is set to continue this year and beyond to meet the needs of its immediate community.
Innovations led by physical retail are set to continue
An encouraging aspect of the past year has been the ability of smart retailers and indeed physical businesses of all description to pivot and adapt to survive. While there have been some high profile casualties, the reality remains those who have been nimble have seen the benefit. It has also shown up the myth that all innovation occurs within the digital realm. It is likely that more than a few of the innovations will last in this new retail era which continues to evolve. For example there is renewed and growing enthusiasm for click and collect, due to the convenience and hygienic aspects. It is now an embedded part of many consumer journeys, especially in grocery shopping, but also increasingly in all non-essential retail. Our own research has shown that over 35% of people want to see this trend continue even after the pandemic. Retailers need to react to those continuing to want to use this method. An obvious example being upselling products in a collection environment.
There will be a continuing overlap of online and offline in some purchasing journeys. In response, retailers should make sure they offer a slick omnichannel experience which will appeal to all generations. Click and collect will remain a great way to appeal to Generation Z. This is an audience that wants to shop online but also have a focus on sustainability with concerns about the environmental impact of the deliveries in terms of the distance travelled and packaging.
Customer experience is crucial
With online shopping now fully embedded, physical retailers need to emphasise the instore user experience to provide that differentiating factor from the online realm. A good customer experience means your customers will spend more. In fact, 86% of buyers are willing to pay more for a great customer experience. The more expensive the item, the more they are willing to pay, according to a research from PWC. CX also influences on-the-spot purchasing too, as 49% of buyers have made impulse purchases after receiving a more personalized experience. A Walker study found that at the end of 2020, customer experience had overtaken price and product as the key brand differentiator. This becomes increasingly more important amongst those generations that intend to spend more than they’ve saved.
Looking at our research, when asked what makes people want to return to the High Street, the experience was the thing that was really missed. 62% said it was the ability to see, hold and try a product. while 52% miss the ability to browse. The same number, 52% reported the sheer enjoyment of shopping as a key factor in returning.
Retailers should react by stimulating the senses and having the right experts instore. People who truly understand the product, can answer questions and can close a sale. This is something the online world can not replicate. To complement the expert, think about presenting those products in an appealing way. You will want to focus on products that that have increased in popularity during the pandemic – those supporting lives now more centred at home. Make them visually appealing with great displays and demos. Ensure you have clearly labelled product details, features and benefits and ensure any promotions are clearly highlighted, ie. what it integrates or works well with.
Prepare for the megapeak!
As we bounce back from these long months closed, retailers have the opportunity to make up for lost time with a real focus on peak trading times and trends. We may not all be going on holiday but we will be taking holiday and enjoying summer as best we can. This year peak trading times will return like no other year. In Q4 2020, we saw the advent of what could be described as a 10 week ‘mega peak’ that upended the usual promotional strategies of the season. Average spend went up to £86.06 (+£7.22 vs 2019). The goalposts were shifted once Amazon announced that Prime Day would move into October from July. Black Friday and Christmas plans that have become retail tradition saw this newcomer arriving earlier and reacted by also shifting their strategies accordingly, leading to an extended mega peak. The expectations are now set for this year, and it is unlikely that Amazon will give up its new slot without a fight. Wunderman Thompson predict it will again aim to be the one to kick off the festive promotional period.
Others will need to get their operations ready to counter, the right marketing, offers, and consumer experience will be vital. At least this time they have more notice. We may have changed in many ways but the propensity of shoppers to spend as a key way back to normal life looks certain.
Retailers need to be ready as we look forward to the boom and continuous change.
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