The ‘new normal’ predictions becoming reality in the post-lockdown world of retail

With 19^th July only days away now and with it the much-awaited lifting of government restrictions, we are all eager to return to our normal lifestyles. There was much consideration and discussion about how the habits we as consumers were exhibiting during the lockdown would translate into the ‘new normal’: are they here to stay? Will we rewind to pre-pandemic behaviours? What are the trends that businesses should bet on in order to thrive in the post-lockdown environment?

One of the prevalent changes during the last year and half was the acceleration of the switch to online channels for purchasing and engagement. This trend had been there even before the pandemic and was seen as the main future growth driver for retail, but the restrictions accelerated the online growth rates to new levels. What we are seeing now is a slowdown and even a slight reversal, especially when it comes to grocery shopping. As stated by both Ocado and Sainsbury’s (the latter of which now has 18% of its sales coming from online compared to 8% in 2019), customers have started returning to their normal habits which includes doing grocery in physical stores and eating out more. It is no surprise to see this adjustment of numbers as no one expected the exponential growth induced by the lockdown to continue forever. However, it is safe to assume that we will not return entirely to pre-pandemic levels of online shopping. Factors like convenience, availability and choice that we find online have profoundly changed consumer habits and retailers should not stop developing digital capabilities to cater to them. In other words, businesses should make it a critical objective to maintain the momentum gained during the lockdown for developing tech capability and organisational change that enable digital engagement and shopping. Why let such amazing assets and expertise wane rather than use it as a strategic capability for the business to continuously improve and innovate?

Costa Coffee looks to be right on the money in that regard – pushing to develop world-class data capability to support its customer engagement and personalisation efforts. Another factor of the lockdown period was the rapid accumulation of customer and purchase data due to the shift of sales to online. And while having lots of information about the customers and their habits, preferences and attitudes is great, data cannot be truly considered a business asset until it is turned into knowledge and insights that retailers can use to optimise and improve their products, services and operations. By betting on the development of key technical capabilities such as data science and modelling and machine learning, Costa aims to use the increase in customer data generation as a lever to continuously enhance their understanding and engagement with consumers. In this way, they will be able to remain close and personal with their customers even when things normalise and people return to spending more time in physical coffee shops. Wouldn’t it be great to receive a personalised experience based on your needs and wants not just on your phone, but at the actual physical retail location? Now that would be a supreme customer experience!

Staying on the topic of merging digital and physical to maintain advantage in the ‘new normal’, Tesco is hot on Amazon’s heels in bringing the seamless experience of online shopping to the physical retail store. After the autonomous store pilot at their head office, they look to be confident and ready to expand their AI-driven cashless store footprint into the more dynamic environment of Central London. While the Amazon Go concept was the one to pave the way for the merger of physical and digital even before the pandemic, betting on the proliferation of this store format seems to be the smart move a retailer can make if they are to keep on top of the customer need for more seamless / contactless experience even in the physical world. Whether this is due to safety and health concerns or purely due to the better experience and journey, customers are sure to be happy not having to sacrifice some of the core habits they picked up during the lockdown period once we all go back to shopping more like we used to before 2020.

The last lockdown trend to explore in terms of how it will manifest in the ‘new normal’ is the push to more sustainable and purposeful consumption. During lockdown, we all noticed more and more the footprint of our consumer habits and choices on environment and society – whether because of the increased consumption, packaging waste or the carbon footprint from the explosion of delivery services. As such customers have started demanding retailers help them minimise the impact their lifestyle and purchase choices have on the planet – they want actions rather than words. And some businesses are already taking note and realising that (hopefully) this consumer trend will be here to stay. It represents an opportunity to both make a meaningful change to the world by becoming a more responsible business, but also achieve your commercial objectives by catering to the consumer need for a more sustainable lifestyle. Take Dunelm for example, who is ditching its plastic packaging for Christmas to allow for a more guilt-free holiday season for its customers. This reinforces the notion that the days of using CSR and similar policies as a PR mechanism are long gone and if retailers don’t get serious about their sustainability pledges and claims, they would run the very real risk of alienating customers and compromising the future of their businesses.

In summary, it increasingly starting to feel that a lot of the predictions made during the pandemic are starting to become reality. Of course as always there is the unpredictability and variability of the ever-changing consumer behaviour in the era of online, social media and memes, but that’s what makes it even more exciting and important for retail businesses to maintain the momentum and impulse to improve their offers and engagement with customers in order to stay competitive and build the capacities to brave any future storms.

Stoyan Petrov