One of the more obvious victims of the pandemic — particularly during lockdowns, but even after — was the retail industry. When physical shops shut, those without an online presence had to quickly pivot online to try to stay afloat.
While it’s increasingly common for retailers to offer both online and a physical presence, the snap lockdowns and their impact no doubt persuaded those who may have been on the fence of the importance of being online. In addition, customers who traditionally didn’t shop online had to make the move out of necessity and are remaining there.
The shift towards online shopping that we saw during the pandemic has no doubt slowed down somewhat over the last year as restrictions have disappeared, says Keith Watt, head of retail at KPMG. “However, the online trend remains strong with younger consumers, with them continuing to shop online disproportionately to older demographics. They are more digitally enabled than any previous generation and also likely to eschew cash and cards for new payment methods such as Revolut and Google and Apple Pay.
“For this generation of digital natives, there’s no doubt that online shopping will continue to play a major role.”
Ronan Gibney, director of retail, Three Ireland and Three UK, says that unquestionably the biggest change to retail over the past two years was the accelerated shift to digital commerce. “But the two channels, physical and digital, post-pandemic need to work harder to complement each other.
“It’s no longer about two channels working as standalones, competing for the same customer, but rather a strategy that combines the best of both with a seamless customer journey that allows the customer, depending on their needs, to move between the channels.”
The future of physical shopping
So does this shift to online shopping mean the death of physical stores? Not at all, says Mark Jordan, chief strategy officer at Skillnet Ireland. “The physical store will continue to be a necessary option in the world of retail, and whilst we have seen a large movement towards online and app-based interactions, retailers are starting to understand that both buying experiences need to be optimised separately — whilst still being connected.
“These are areas where retailers need to make shopping a seamless experience for the consumer.”
Ikea marketing manager Deborah Anderson says customers now have choice about where they shop, so the experience — whether online or in store — needs to be seamless. “Consumers are more informed than ever, and so understanding their needs and concerns is key and creating an environment that meets those needs online or in store.
Ensuring awareness of the brand and having key metrics that will build a long-term relationship between the retailer and consumer, as will the retailer understanding they cannot rely solely on in-store or online traffic only to meet their customer, she says.
Gibney says customers have changed their behaviour post-pandemic. “We have seen a real shift away from simply browsing to purpose-driven shopping. So, while there has been a decrease in the footfall levels on the high street compared to pre-pandemic levels, what we are seeing is a significant step change in the amount of purchasing visits.
“So, customers are now coming to retail with a clear purpose to transact.”
The future is fluid
Looking to the future, then, what is the best approach for retailers? Has everyone moved online since the pandemic? AIB head of retail sector Alan Makim doesn’t believe so. He says people have returned to in-store shopping in a lot of categories, with online sales declining 17 per cent in the second quarter of the year compared with the same period last year. “The pandemic created many forced changes for people. Out of necessity, people who had never used ecommerce channels before had to become online consumers. As that necessity no longer exists, many people will revert to older habits.”
Watt says most people are adopting a mix of physical and online shopping. “Fascinatingly, we know that some young customers will often physically enter a store to visually inspect a product, and then on their Luas or bus journey home they will order it online at a cheaper price from their phone.
“Attracting the next generation of shoppers, the tech natives, to physical stores will continue to be a challenge for brick-and-mortar retailers post-pandemic.”
Physical stores are going to have to adapt more than just pivoting to online, he believes. “We are already seeing instances of physical stores becoming more like showrooms than traditional shops where products are physically kept and sold,” says Watt. “Customers now, particularly younger customers, care far more about experiences than products, so offering experiential shopping is essential.
“It’s not enough any more to just sell the best products or have the best prices. Stores need to look incredible and ‘Instagram-able’ and offer an unforgettable experience.”
The future is ... omnichannel
Being online doesn’t just mean having an ecommerce-enabled website. There are multiple channels that people can shop through such as app and social media sites like Instagram. Selling across multiple channels is known as ‘omnichannel retail’.
Omnichannel retail is about enabling customers to choose their preferred channel to engage with your store, browse, seek information and complete transactions as they wish while retaining a seamless and consistent customer experience, regardless of channel, says Makim. “It requires integration of systems.
“Rather than having an ‘online store’ and a ‘physical store’, both channels are an extension of each other. Omnichannel gives consumers flexibility and information. For example, a retailer’s website can provide details about in-store stock levels for items that a consumer wants to see or try on before purchasing. It can also provide flexible options like click and collect.”
“A couple of years ago, we had estimated that omnichannel shoppers were going to be more valuable to retailers than face-to-face or single-channel shoppers,” says Jordan. “This has gone on to be proven, as omnichannel customers account for almost twice in terms of activity volume to other single-channel customers, which results in significantly higher amounts of spend.”