We’ve just published some new research, supported by Amazon, on shopping habits during the pandemic. It corrects some of the myths and misinformation about how retail is changing. Here are ten highlights...
First, online sales rose sharply during the pandemic. But the channel did not dominate. Most sales during the peak of lockdown were still made at those physical stores that remained open (September onward are forecasts).
Second, the penetration rate for online is coming down as consumers resume physical shopping. Sure, penetration will remain elevated compared to 2019 but the peaks seen during lockdown were exceptional, not a new normal.
Third, the highest growth rates over the past few months have come from multichannel retailers, not from pure-play online retailers. In the US, many traditional retailers have been very innovative in using their stores to offer services like curbside pickup.
Fourth, a lot of consumers really like these new services. In the US, almost 68% of consumers say they will use curbside collection more even when the pandemic has subsided. These ‘temporary’ solutions will become permanent.
Fifth, what this means is that the role of the physical store is actually being strengthened. In the US, we project that, this year, around 35.7% of non-food sales transacted online will be supported by a physical store. This is more than in 2019.
Sixth, this dynamic underlines that the idea of channels, as far as the customer is concerned, is a redundant concept. People shop seamlessly across online and physical, using both to meet their needs.
Seventh, the fact that retail is more seamless than ever presents traditional retailers with an enormous opportunity. Those that are using their physical assets to create strong multichannel offers are securing great growth.
Eighth, this should end the lie that ‘online destroyed…”. Online isn’t destroying physical retail and it never has. Most retail casualties during the pandemic (and outside of it) are because of a failure to offer consumers what they want – i.e. not getting the basics right!
Ninth, none of this means that the pandemic and online are not causing disruption. They are! And retailers need to adapt to this, including by optimizing store fleets. But narratives that this is a battle between online and stores are very wide of the mark. It's way more nuanced.
Tenth, well there isn’t really a tenth point – but you can read lots of other points and data in the full report. Download it here: bit.ly/mcretail2

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More from @NeilRetail

25 Apr
There are some very interesting (and some wacky) ideas of how retail will change after this crisis. Here’s a hint: in the long term anything that increases friction for retailers or shoppers just won’t fly.
Anything which removes comparative or competitive advantage from retailers probably won’t fly. Retailers will share certain systems and platforms but they won’t want to share all of them.
Anything that adds to cost and provides little sales benefit won’t take root. Retail will be even more frugal after this is over. Only the ideas that save money or drive sales will be prioritized.
Read 11 tweets
8 Apr
We have been actively researching what coming out of this crisis looks like for retail.

Once the lockdown is over, some Americans will go out and splurge. But most will not.

Many have lost jobs, had wages suppressed, and are worried about their finances. They will cut back.
In other questions, we have found that some Americans - mostly older - feel concerned about going out even when the lockdown is lifted. Their spending will also be suppressed post-lockdown.

For a lot of consumer groups, it will take time before spending normalizes.
In tracking these groups over time, the spending below average segment is growing; the spending above average segment is shrinking.

So the outlook is getting worse the longer this drags on, which makes sense.
Read 7 tweets
28 Feb 19
CVS still trades as Longs Drugs in Hawaii. It acquired the chain back in 2008 but rebranded all the mainland stores (primarily on the West Coast) to CVS. Hawaii stores retained the name because of the strong local affinity to the brand.
Sadly, there’s nothing special about the stores. They’re merchandised in CVS’s characteristic uninspiring style!
A random balloon fails in its attempt to add a touch of glamour!
Read 5 tweets
27 Feb 19
Stopping for a lil bit of research (and some snacks)!
Whole Foods Kailuah has been refurbished since we were last here. Amazon has done a nice job. The visual appeal is much improved - and has a nice local feel!
There’s a big emphasis on local (island) produce and brands - probably more so than in an average Whole Foods. It’s good to see, and many of the local brands are competitively priced.
Read 5 tweets
31 Dec 18
In 1985, US department stores took 14.5% of all retail spend. Last year they took 4.3%. The figure is still falling. The internet is often blamed for this. But the blunt truth is that US department stores just aren’t very good retailers. In fact, most of them are abysmal.
The majority of mainstream stores are uninspiring places. Even in good malls, they are dispiriting and dismal. Investment is severely lacking. They are devoid of inspiration. There’s no reason for people to visit.
Retail basics are lacking. There’s no care. Standards are low. Is it any wonder market share had fallen off a cliff? Why should customers spend their hard earned cash here?
Read 21 tweets

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