Under normal circumstances the November-December months would see Christmas shoppers don their wooly hats and brave the cold in order to hit the high street in search of gifts for loved ones. But these are far from normal circumstances we find ourselves living in, and in response to the Covid-19 pandemic the nation finds itself in the midst of a second lockdown. To help stop the spread of the virus, the government has ordered that all but essential retail must close, but there are still gifts to buy and a Christmas tree to decorate so with the high street quiet for the time being, how will festive shopping behaviors change this year in response to the restrictions?
The growth of eRetail
Online retail has boomed over the last decade, with the UK now boasting the second largest eCommerce market in the world. With the wide adoption of computers, smart phones and tablets, online shopping is more accessible than ever before and online transactions have seen 134% YoY growth. Earlier this year, we saw non-essential retail close in response to the pandemic for the first time. Unable to get to stores, consumers took their spending habits online, making the move to eCommerce to get their retail fix. During the first lockdown online sales as a percentage of total retail saw a steady increase from 19.6% in February up to a peak of 33.4% in May. In store shopping was down but retailers active in the online space saw a major growth in sales, a trend likely to repeat itself during the second lockdown.
The festive period is a busy time for retailers, accounting for 25 to 30% of the high streets’ annual revenue, with lockdown restrictions in place and in-store shopper confidence low, it is highly likely that this will be a festive period of reduced footfall and increased online shopping activity. In preparation, health and beauty giant Boots have tripled their online capacity in readiness for the surge in online shoppers and Mike Hancox, CEO of delivery firm Yodel, has said the company expects it to be “the biggest online Christmas ever, by some way”.
There are a number of factors driving the growth of eCommerce, but major factors include the convenience of browsing, home delivery and integrations with social media such as Facebook and Instagram. Social media platforms allow users to go from browsing their social feed to seeing a product they like and making a purchase in just a few taps or clicks. Convenience has always been a selling point for online shopping. Covid and lockdown will drive this behavior this Christmas. If and when the shops reopen, who will want to put on their big coat and facemask and head into town when they can do all their Christmas shopping from the comfort of their home in their pyjamas and slippers?
Direct-to-consumer eCommerce was already on the rise and the impact of Coronavirus has further increased consumer appetite. Now we find ourselves in a second lockdown with Christmas fast approaching and sadly no guarantee there won’t be further lockdowns into the new year. Businesses may be resistant to take their brand online due to outdated ideas of eCommerce deployment and fearing large initial investments of time and capital. For businesses yet to take the leap into eRetail, market uncertainties caused by Covid may leave them feeling that now is not the right time to invest in an eCommerce platform. However, with uncertainty comes opportunity. Leveraging Capgemini’s expertise and utilising SAP’s new commerce platform, Upscale Commerce, businesses can launch a new direct-to-consumer eCommerce website that capitalises on recent changes to shopper behaviour such as click-and-collect and mobile shopping in weeks not months.
Developing an eCommerce presence
Often companies feel that creating an eCommerce site for their brand is an expensive and time-consuming process, requiring six to nine months to go live, but with advances in technology this is simply no longer the case. SAP recently released SAP Upscale Commerce, their new eCommerce platform that allows the development and launch of an eCommerce website AND native mobile app in weeks not months. By utilising these advancements with the support of Capgemini, businesses have the opportunity to capitalise on the epoch of Coronavirus and eCommerce and see their online sales skyrocket within the quarter.
Capgemini has built a direct-to-consumer cosmetic storefront using Upscale to demonstrate the capabilities for retailers to go to market rapidly.
A major benefit of utilising SAP Upscale Commerce is the low TCO (Total Cost of Ownership) as it is a SAAS (Software as a service) based platform with flexible deployment options. The progressive web application and in-built AI provides a rich mobile first experience. SAP Upscale Commerce includes a number of enhanced features and functionalities as standard that would enable a business to flourish online.
White Christmas, “Dark Stores”
Due to the new lockdown restrictions all but essential retail must remain closed except for pre-ordered items collected from the premises, more commonly known as click-and-collect. SAP Upscale Commerce includes a number of options for order management, including native order management in Upscale Commerce’s back-end, as well as integration with existing ERP systems.
Upscale also allows for the monitoring of stock in bricks and mortar stores, providing for the potential to turn any store into a local distribution hub. “Dark Stores” are retail outposts with a store-like layout with the sole purpose of fulfilling online orders. Using Upscale’s stock monitoring functionality, businesses can utilise their in-store stock for online orders, transforming currently defunct stores into “Dark Stores” for click-and-collect online orders.
Click-and-collect also has the added advantage of mitigating courier fees. With additional demand for couriers expected this festive period, there is concern that courier service charges will be increased to meet demand for home delivery. Click-and-collect will not be impacted by these price increases and with shoppers making numerous online orders this Christmas the potential saving will be a big appeal for customers.
Shopping behaviors were already trending towards eCommerce pre-pandemic but the impact of Coronavirus has only accelerated this direction of travel further. Christmas is fast approaching and with it one of the busiest periods of the year for retail. At the start of the year no one could have predicted a national lockdown during the build up to Christmas and so many businesses are having to rapidly adapt to the changing markets. For many businesses this has highlighted the importance of an online presence to drive sales. With uncertainty around future lockdowns going into the new year, trends we have seen over lockdown are set to persist. With the world becoming more digital each day the proportion of retail sales made online is only set to grow. Companies will need to develop their own eCommerce offerings or be left struggling for in-store sales or at the mercy of online marketplaces. Launching a new direct-to-consumer retail platform may seem like a daunting prospect for businesses, but by utilising new technologies such as SAP Upscale Commerce and leveraging the industry experience of Capgemini, retailers can launch a content rich direct to consumer ecommerce platform, for both desktop and mobile, in just a matter of weeks.
Applications Consultant, Customer Engagement Team at Capgemini
Jake is a Consultant within the Customer Engagement Team of our SAP Practice. With experience in SAP CX and Sales and Distribution, Jake is interested in how leveraging technology can enable businesses to find efficiencies, gain meaningful insights, and better serve their customers