eCommerce’s moment to shine, but what about post-Covid 19?

Much has been written and discussed about the current state of retail during these unprecedented times. Like many of us, I am staying at home, venturing out only to get groceries or to the pharmacy. Other than that, when we do leave the condo it is to walk the dog or get some exercise. No more excursions to stores or the mall, no more date nights at restaurants or meeting colleagues at coffee shops or bars. Our retail muscle is atrophying before our very eyes!

Of course not all retail is suffering. Online grocery ordering has been skyrocketing in this era of social distancing. The most recent data showed a 37% increase in April online grocery sales from March.

What’s interesting is the number of customers only grew by 1% and spend per order by 3%, but clearly the order number jump by 33%. So those that are leaning on online grocery are placing more orders. Another interesting data point – 26% of homes that had not purchased online groceries in the past 30 days are highly likely to do so in the next 3 months. Interesting numbers to say the least.

Of course not all categories are enjoying such a bump. A recent New York Times piece looks at the categories that are doing well, and those that aren’t.

No surprise that travel has taken such a beating during this time…we aren’t suppose to leave our homes!! So not sure how we are suppose to get on planes and trains. But what is even more interesting is to see what categories have spiked in terms of online sales. Disposable gloves have seen a 670% increase year over year sales and bread machines 652% increase in online sales. Some of the biggest categories that have dropped? Luggage -77%, Men’s swimwear -64% and Bridal clothing at -63%…no surprise there either. Click here for a more complete list. So coming out of Covid-19, do we expect to see disposableglove.com as the new go to ecommerce site and all of grocery shopping being done on line? Of course not.

Online Retail peaking at 22%?

But what do the numbers show us? That eCommerce, in terms of “percentage of change” has slowed down before the current pandemic. In our current state the categories of eCommerce that are peaking, are not necessarily those that will be sustained post Covid19. But what should we expect?

• A bit of an acceleration of eCommerce growth continues – I realize I have stated that we cannot simply assume that eCommerce trends will continue, but I am not naive enough to believe things will go back to “normal.” I certainly expect a number of consumers who have been forced to try eCommerce will see the utility. That utility will continue post Covid19. Specifically in having grocery and other staples delivered.
• Rushing to brick and mortar. Wait…what? Yup. I expect a burst of consumers rushing out to physical retail locations. Think about it, we have been stuck in our homes for close to 6 weeks now, we are itching to get out and do something! Retail is part of that activity. There will be a resurgence of retail-therapy…in the store. Savvy retailers will look to creating in store experiences that not only excite consumers to be in the store but also provides a safe and healthy environment. Those retailers that offer such an experience might find a new loyal customer.
• Increased fulfillment experiences. Before Covid19 we had already started to see new fulfillment methods: BOPIS, pick up lockers to name a few. Of course we are now seeing BOPAC (buy on line pick up at curbside) becoming pivotal for retailers. Look for more fulfillment options from retailers to meet customer needs. Expect the consumer to start demanding these as well! For example, I wouldn’t be surprised if consumer pressures force legislation to loosen up regulations that have grounded drones for last mile distribution.

Let’s all hope we go back to a new normal soon, meaning we can slowly start to interact with one another, leave our homes, go to church, have a dinner in our favorite restaurant and yes shop in stores. Of course things will never go back to “normal,” then again I would argue what was that normal you speak of? Haven’t we seen retail undergo constant change since humans first traded from our caves?

The pandemic has made some of our retail muscles atrophy, while building up other muscles. Stay healthy everyone, stay strong. We will emerge from this and so will retail. It is much more resilient than we realize.

It’s the customer … stupid.

We are in the middle of event season, which means lots of airplanes, hotel rooms and restaurant dinners (some better than others). During the past few weeks I have flown to all the event hot spots – Las Vegas, San Francisco, Detroit, Nashville, Chicago, New York, San Jose, Miami, Washington DC to name a few. I have also attended a wide range of events, from the likes of Infosys, JDA, Plex, Demandware, SAP, Oracle, Epicor etc etc. There has been one thread that is common – the rise of the consumer. Now this is nothing new to us here at Constellation Research. We have been been touting the rise of the consumer in the commercial ecosystem (B2B and B2C) as the biggest disruptor to date. It is good to hear that the solution providers are recognizing this shift as well.

So why is the consumer gaining in strength?

They have the voice because of social. A growing number of retailers are making sure they do better social listening to gauge how their customers are viewing them. What kinds of features or services might they be interested in. Companies like Newell Rubbermaid or Best Buy, have done a lot of work to keep an ear to the social sounding boards.

Consumers have the reach via mobile. As Demandware pointed out at their show, mobile is king. True mobile meaning our phones, not our tablets, are what sit at the top of the food chain when it comes to customer interactions and touch points. We all know the statistics about how often we check our phones and the fact they are with us almost the entirety of our waking hours. Who could have imagined what Marty Cooper did in 1983 would give us such reach when it comes to the relationship consumers have with the commerce ecosystem.

The internet provides consumers with virtually unlimited choices. Before we saw the rise of the world wide web and subsequently eCommerce, our choices were often time tethered to the stores that was within a reasonable physical range or whatever inventory that could be displayed in a catalog. All this changed with the rise of the internet. Suddenly if you were a purveyor of fine wine in the Rhone valley, you could attract buyers from Hong Kong to Pittsburgh. Regardless of your size, through a few clicks of a mouse your products were accessible by anyone with a browser and a dial up modem! Consumers now had access to a treasure trove of products.

Finally the consumers’ expectations have been set by the likes of Amazon. Not only can consumers access a wide swath of products through the eCommerce giant, but they also expect perks such as free shipping, returns, access to long tail products, to name a few.

All this taken together is why consumers are becoming, if not are already, the biggest disruptors within the commerce supply chain. Based on what I am hearing this event season, the vendors and service providers are agreeing with this assertion. The challenge will be how to best offer the solutions and technologies that can allow participants in the commerce supply chain to meet their consumers’ needs. These solution providers must keep in mind their customers’ customers as they design and offer new solutions. How can they empower their customers to be able to better meet the growing expectations and needs of the end customer? No small challenge indeed. As this crazy event has demonstrated, at least most if not all the vendors are reading off the same music sheet.

 

How we buy our groceries – we have the power they have the supply chain headache!

This weekend I read an interesting piece in Boston.com – it was all about the shifting behaviors we have when it comes to buying our food. Click here for article. The basic theme of the piece was that we no longer simply go to one grocery store, but rather selectively shop at many different locations. While the days of the butcher, baker and candle stick maker have gone by the way of the dinosaur, we are becoming trained once again to seek specialization within what are suppose to be large distributors. Distributors that were suppose to be one stop shops.

As consumers this is has put the power and control back in our wallets. We can go to a Whole Food Market for some specialty meats, then hit Costco to buy our toilet paper in bulk and finish at Giant Eagle to get some staples like bread and ketchup. Could we just do this all at one store? Sure. But we like the choice. For retailers and CPG companies this has added a layer of complexity when it comes to pricing, packaging and distribution.

I can drop a bulk pallet at Costco, but need to break that bulk when I deliver to Kroger or Giant Eagle. If I run a promotion at Shaws, but my consumer gets that item at Costco will I be cannibalizing a sale? From the CPG stand point, they need to know across all these channels what is happening, what is creating lift and can they draw patterns? For the retailer, they must be aware of how their consumers are shopping at their store. Is the consumer coming on a regular basis just to get milk and bread? Or do I need a fuel perks type program to gain loyalty?

Add to this equation the massive influx of consumer and manufacturing data and you have a daunting task for both retail and CPG supply chains to manage this process. An exciting time for us as consumers, an opportunity for retail and CPG.