How Covid-19 accelerated shifts in consumer behaviour that were already well underway.
The Canadian retail landscape was already in transition when Covid-19 dramatically accelerated changes in consumer behaviour, according to a new report from PricewaterhouseCoopers.
The company’s 2020 Consumer Insights Survey tracks the rising influence of Gen Z consumers and concludes that social and economic lockdowns due to an out-of-control global pandemic only served to amplify the shift toward digital shopping.
Authors of the report noted that while some consumers will return to old habits, the pace of change will only pick up, requiring retailers to transform the customer journey and re-examine the role of a brick-and-mortar presence.
Not all retail categories were affected equally, they point out.
When it comes to apparel shopping, the survey found some key distinctions. Among them, that Gen Z consumers (those born between 1996 and 2010) are less likely to shop at retailers with traditional formats. Only 20% said they primarily buy clothing from a department store, versus 33% of baby boomers (1946 to 1964).
Gen Z consumers are more likely to look for additional reasons to justify a trip to a store, such as personal shopping services. They are also more likely to want additional services, like a spa or coffee bar, and to look at a store visit as a source of fun.
Gen Z consumers (42%) are more receptive than baby boomers (27%) to automated checkout options, as well as other digital, self-guided experiences in stores.
Put those changes together and the rules of fashion retailing seem clearly in transition.
“Our survey analysis suggests the pandemic is accelerating shifts—due to factors like the rise of Generation Z and the trend towards working from home—that were already underway,” the authors conclude. “This will require retailers to take a long-term view to understand what a more digital, remote world means for all of their touchpoints with the consumer and the evolution of their brick-and-mortar presence.”
The report puts special focus on the lifestyles and shopping habits of urban consumers.
“With population growth in Canada’s largest centres outpacing the rest of the country and cities tending to have a younger and wealthier demographic, urban consumers are a good indicator of where consumer behaviours and sentiment are going,” PwC said.
The company surveyed 19,098 people in 27 countries prior to Covid-19, including over 1,000 consumers in Toronto, Montreal and Vancouver. A follow-up survey in spring 2020, after the outbreak of coronavirus, revealed the true impacts of the pandemic.
The large-scale uptick in e-commerce suggests that retailers will need to refocus their long-term strategies even when the pandemic eases.
Among the most notable shifts:
Buying behaviours of Gen Z consumers
It’s particularly important to pay attention to the buying behaviours of younger consumers, especially Gen Z, as their habits will increasingly shape consumer patterns in the coming years. Our survey found key differences between Gen Z (aged 18-22) and baby boomer (aged 55-73) respondents. Specifically, young shoppers are much more likely to go to a physical store for experiences or additional services.
Buying behaviours of work-from-home consumer
The shift to working from home was clearly accelerated by Covid-19, with immediate implications for retail strategies.
Those who work from home tend to be younger and wealthier, more comfortable with shopping online, and open to “alternative fulfillment methods” beyond home delivery.
In response, PwC suggests, retailers will need to put more effort into online product discovery as e-commerce grows, adapt their product mix (for example, more athleisure products as people need fewer clothes for the workplace) and offer expanded fulfillment options.
While some categories have thrived in the Covid-driven online-space, the situation has been difficult for other categories, including apparel.
While some categories have thrived in the Covid-driven online-space, the situation has been difficult for other categories, including apparel. Among the challenges during the pandemic is the ongoing concern about shopping in malls. With Gen Z shoppers looking for enhanced experiences and additional services to justify a trip, retailers will have to address not only health and safety concerns but also the role of the store.
Retailers will also need to adapt their product mix to better reflect key consumer trends that will shape the new environment, including the rising interest in locally made, environmentally sustainable and socially conscious products.
In this year’s survey, 49% of respondents said they expect businesses to be accountable for their environmental impact.
PwC concludes with the four-Rs of adapting to the new retail landscape:
Go above and beyond local guidelines to address health and safety concerns. There are good opportunities for retailers that are vigilant about safety measures to retain existing customers and reach new ones who are looking for brands they can trust. Besides following best practices around health and safety measures, digitally focused, contact-free experiences can help customers feel more comfortable. This may also require you to invest in improving your employees’ digital skills so they can better engage with customers through digital channels.
Build on the innovation started during the Covid-19 pandemic by re-examining the role of the store and creating seamless integration with your e-commerce operations. Rethink how consumers will discover your products, whether they’re coming into your stores to explore carefully curated assortments or they’re engaging with your online offerings. In expanding your e-commerce capabilities, focus on the fastest-growing channels—like mobile shopping—that have seen the biggest surges in activity during the pandemic. You should also explore which fulfillment options are the best fit for your customers and your operations.
As consumer behaviours and tastes evolve, retailers are likely to need fewer physical stores. Determine where and in what circumstances it makes sense to have a brick-and-mortar presence and where you need to repurpose your store format and size to respond to consumer shifts and preferences. Rebalancing is also about re-examining your costs. This can free up capital to help retailers make necessary investments, in areas like robotics, to more efficiently manage e-commerce fulfillment.
The retail experience matters. Gen Z shoppers want a reason to make the trip to a store. You can give them that reason by investing in your in-store customer experiences. We see great examples of this already: some leading retailers are creating engaging social spaces in their stores, while others, notably digitally native brands, are setting up a brick-and-mortar presence as a place to touch, try and potentially customize their products or offer additional services.
You can read and download the PwC Canadian Consumer Insights 2020 report HERE.