There is no doubt that the personalization of the shopping experience is still and will be one of the important trends determining the future of the retail industry. That means understanding changing consumer sentiment and buying behavior is crucial for retailers ready to strengthen their position in the post-COVID-19 world. Join us for a deeper dive into online shopping trends and what they mean for retailers.
Impact of COVID-19 on online shopping trends
In every country, boosting online sales in connection with the pandemic outbreak has become the dominant pattern of consumer behavior. The trend started in China, where an online retailer reported its online grocery sales jumped 215% to 15,000 tons in just a 10-day period from late January to early February. . To date, online sales continue to grow internationally in most industries and markets.
So, what does the popularity of online shopping mean for retailers? Simply put, if a shopper can buy the same product online and in a brick-and-mortar store, the first choice is now becoming preferable, obviously online shopping models. The route will remain relevant even after the pandemic is over.
Of course, changes in consumer behavior are not uniform, impacting different industries. Sales of health, pharmaceutical and grocery products have increased globally during the lockdown. In contrast, some industries such as leather and footwear or apparel faced serious declines. The point here is that demand for different types of products will stabilize after the crisis is over. But what won’t change is that online will continue to dominate as a primary sales channel.
How to take advantage of online shopping trends in the retail industry?
Rule #1: Need an online store
Recent trends show that the move to online shopping is inevitable for retailers of all sectors and industries. Of course, that doesn’t mean that the final online sales market share has to be at least 50% of all sales or more. Retailers can have 20%, 10%, or even 5% of their sales online but they have to operate there, that’s the point. The traditional independent retail model no longer seems to be relevant. At least for most industries.
The question most business people face now is not whether they should or should not go online, but the question is “How do I go online?”. Retailers must choose their online representation model. Here are the three most common approaches to pricing online:
- “All for all” model
- Positioning “Best offering”
- Exclusive retail range
The “All for all” model means offering a wide range of products online covering all different consumer groups and categories. The major markets are a prime example of this approach. Choosing this model requires the retailer to have significant revenue because in this case most products are usually sold at low-profit margins.
Positioning “Best offering” is a great way to win loyal customers who want to buy the product at the best price. This approach helps retailers build brand awareness and stay financial, however, it also requires a certain level of technical proficiency.
Ultimately, the exclusive range approach is considered by many retailers to be the most financially profitable because of the high-profit margins and reliance on the wealthiest customers. It goes without saying that this model can only be implemented by retailers with significant operational and brand maturity.
Rule 2: Choose an online positioning model
The choice of a particular online positioning model depends on many factors, including operational maturity, industry specificity, revenue, and other aspects. That’s why it’s important to analyze your business’ strengths and weaknesses before going online.
While online shopping becomes a dominant pattern of consumer behavior, retailers must consider four basic online positioning factors to choose priorities and determine focus. These four factors are price, variety, speed, and simplicity. Before choosing an online positioning model, the retailer must determine which aspects can gain an advantage. For example, if you sell a limited product line but at a better price than your competitors, maybe price and simplicity are strengths you should focus on.
Rule #3: Strengthen your position
Once a focus has been determined and a pricing model chosen based on the retailer’s strengths, the next step is to develop your core competencies. That is the meaning of the word “strengthening position”. Imagine, a retailer positioned in the market as the best price provider. Now, that doesn’t necessarily mean that every single position has to be priced better than the market average. In fact, it would be more appropriate to only offer better prices for key value items or KVI (important value items). But the point is to find out which of your products are actually KVIs searched and compared by shoppers. In this case, data-driven portfolio segmentation to identify real KVIs is necessary to strengthen your position.
Rule 4: Successfully Scaling
Every online retailer should remember that once you stop scaling, your market position is at risk. Automation is the answer to many of the challenges online retailers face at every stage of their business journey. In times of crisis, global market leaders should invest in technology. The technology’s algorithms help solve a large number of challenges, from determining the impact of every competitor on sales to segmenting products into different groups for retailers. suitable strategies can be applied to each group.
Rule 5: Channel development and customer understanding
The basic retail trend that is most likely to continue to prevail in the future is the personalization of the shopping experience. And retailers should keep this in mind when establishing or consolidating their online presence.
To provide a personalized and unique shopping experience, businesses should develop different scenarios of the customer journey. Technology-based solutions are again helpful here as they help identify specific buying patterns and reveal the expectations that certain groups of buyers may have.
Developing an online channel also means controlling and optimizing the cost of attracting consumers. Every retailer knows that acquiring customers is worth the budget spent on advertising, public relations, and other forms of media. And that’s where you should once again define and follow your positioning pattern.
Global economic uncertainty caused by COVID-19 has fueled online shopping trends in the retail industry and consumer behavior patterns. The need to redefine online market positioning is a key challenge faced by many retailers and the industry. To be successful online, it’s important to know your customers well. Understanding consumer behavior enables retailers to deliver personalized online shopping experiences.