Last Updated on Wednesday, 25 November, 2020 at 3:17 pm by Andre Camilleri
There has been an increased level of consumer anxiety in the past month when compared to last August, possibly down to fears prompted by a second wave of Covid-19 cases in the country, the results of the latest EY Future Consumer survey show.
However, the same survey shows that there has been a very strong up-tick in how many people are comfortable in sending their children to school – from 31% in August, to 67% in November.
EY also said that retailers must reinvent themselves to maximise their chances of thriving into Black Friday and Christmas and taking advantage of future growth opportunities as we head into 2021
By tracking consumer sentiment since August, the survey, which was held by random sampling during November, found that consumer behaviour evolved from anxious to adaptation. It is positive to note that respondents have a relatively better financial outlook today compared to our initial survey back in August 2020, where 12% of respondents had a negative perception now, compared to 19% previously.
Consumers are still proceeding with caution, as 57% are concerned about their spending compared to 67% in August. 20% plan to postpone major purchases compared to 45% in August.
Retailers must note that, while there is a reluctance to spend, there is still demand. EY’s survey indicates that 37% of respondents do not plan to participate in shopping events such as Black Friday and during the festive season. The majority of those that will participate, at 35%, plan to do their shopping online rather than in-store. 31% plan to spend less than in previous years during these events, while 10% will spend more.
Retailers can still engage their customers, EY said, but how they perform in the coming weeks will be more important than ever. Primarily, retailers will need to fully understand consumer sentiment and propensity to spend; improve the online experience even further, addressing gaps or weaknesses; and ensure agility to enable fast responses to short, medium- and long-term behaviour changes.
A considered Christmas looms ahead
Retailers are going to have to work harder than ever to capture a reluctant consumer spend over December. Second wave fears and the imposition of restrictions mean the excitement of the instore Black Friday and Christmas experience will be partly lost this year. Getting online right will be critical for retailers.
But this means very different things for different consumer segments, and across different product categories. For example, there is a significantly higher propensity towards online shopping among respondents with the highest level of disposable income (73%) and millennials (64%) compared to 51% across the sample.
Gilbert Guillaumier, Associate Partner at EY Malta, said: “There is a need to pivot our business to match shifts in customer demand and pricing sensitivities – both from a product assortment and experiences perspective. The significant shift towards online shopping and technology enabled interactions with customers requires us to create immersive online experiences. It is not just about recreating your physical store online – we need to identify new parameters to strengthen the brand, and which can be evidenced online.”
Consumer anxiety has increased for some activities since August 2020
There is an increased level of consumer anxiety since the previous survey dated August 2020, which seems to be impacted by second wave fears.
While respondents are generally comfortable to carry out various activities such as shopping for essential items, personal care and for medical purposes, there has been a deterioration in the number of people exhibiting this behaviour. 65% of respondents were comfortable going to a restaurant in August – this number decreased to 54% in November. Similarly, 47% of respondents are comfortable to go to a shopping mall, compared to 56% in August.
Anxiety around school attendance seems to have improved – where 67% are comfortable attending or allowing their children to school today, compared to 31% in August.
Building customer loyalty may play an important role in the future
While 47% of respondents do not attach importance to reward schemes or loyalty programmes in their shopping decisions, the survey notes that 22% said they would mainly buy goods or services from retailers that offer such incentives, while 31% will consider these in their buying behaviour. Coupled with considerations around perceived value-for-money and brand awareness, this may present an important opportunity for retailers to develop lasting relationships with clients based on effective client engagement strategies.
Now is the time to reinvent retail
As we enter the holiday period, the mood of consumers is subdued. What does this mean for retailers?
In the short-term, retailers need to review their marketing strategies to ensure they can maximise the opportunities of what could be a dramatic reduction in spending. Online campaigns and capacity need to be maximised; and the technological and fulfilment infrastructure needs to adequately support online demand, EY said.
In the longer term, the online experience needs to be enriched with easy access to expert advice so that retailers can replicate the in-store benefits of physical engagement with both products and staff. Fashion retailers, for example, have started to respond to this trend with online stylist advice, they added. Categories such as technology have an even greater opportunity to engage their customers through tactics such as video calls with consumers to help them choose the right product.
“To ensure the customer is not lost to a slicker experience elsewhere, physical retailers need to ensure they have: a well-thought-out product range; the option of expert, instore advice (perhaps with appointment bookings); and the ability to convert and seamlessly fulfil demand that best suits the customer – either through immediate pick up in store, same day collection, or delivery to home.”
Retailers must also focus on building the organisational agility to pivot their offer and channel mix to the changing consumer. Are they reacting to customer needs? Have they taken cost and complexity from stores and truly simplified to focus on what the customer wants? Have they maximised their capabilities online?
Retailers cannot afford to stay still in this constantly changing consumer market. What would have been a 10-year transition has happened in less than a year, and retailers need to act now with agility and focus. Doing so now will maximise their chances of thriving into Black Friday and Christmas and taking advantage of future growth opportunities as we head into 2021, EY said.