How COVID-19 is Affecting Retail and eCommerce in Australia

  • Home / Ecommerce Marketing / How COVID-19 is…

How COVID-19 is Affecting Retail and eCommerce in Australia

As a Stage 3 lock-down looms over Australia, with non-essential shops likely to be shut down for the foreseeable future, small and large businesses are feeling the impact of COVID-19.
Here’s how the pandemic turned retail and e-commerce upside down in a course of a few months and how your business can pivot over the next few months with digital marketing.

The impact of the pandemic on Australia’s retail and e-commerce industries

The Power Retail Advisory Board conducted a survey among 70 Australian online retailers to measure the effects of COVID-19 on the industry. While most retailers have seen significant reductions in foot traffic and revenue, about 20% are actually seeing an increase in sales:

  • 68% have seen a decrease in revenue
  • 34% have seen a >20% decrease in sales
  • 12% have seen a 10%-19% decrease in sales
  • 20% have seen sales increase >20%
  • 16% observed no changes in sales
  • 54% are experiencing issues with their supply chain
  • 46% have reported a drop in site traffic
  • 46% have reported a drop in foot traffic
  • 8% are having issues with last-mile delivery
What are the winning 20% doing right?

One possible answer is that they’re willing to take any opportunity, even one that has been presented by a crisis, and use creative problem-solving to identify radical new ways of using technology in response to the situation.
Social distancing and the need to self-quarantine have made consumers more dependent on technology for basic tasks like shopping, price comparisons, and staying in touch with friends and family – retailers who can utilise e-commerce and digital advertising are in the position to survive, if not thrive, during the pandemic.
If you intend to advertise your way through the pandemic, however, you must understand what your consumers want and how to best approach them during this challenging time.

Seclusion shopping: Changes in consumers’ spending patterns in response to COVID-19

When the World Health Organisation (WHO) declared COVID-19 a pandemic, consumers responded by stockpiling medical supplies like face masks, hand sanitiser, toilet rolls and cleaning supplies along with household essentials and long-life goods.

UBS AG Broker Ben Gilbert estimates that grocery sales have increased 25% year-on-year in the wake of the pandemic.

Before the surge in demand, grocery online orders only made up roughly 4%-5% of sales value. But Woolsworth and Coles have reported reaching full capacity in March, with the latter’s delivery window for Sydney and Melbourne closed for an entire week. The supermarket has offered a click-and-collect option as an alternative.
Both chains are now ramping up online sales and rebuilding delivery services to make sure isolated and vulnerable Australians continue to receive essential supplies as more businesses are shuttered and people are being made to stay home to curb the spread of the virus.

A global survey by Nielsen also found spending patterns tied to COVID-19 mirrored across different markets. These six thresholds signal early signs of consumer habits based on COVID-19 event markers:

As consumers move through these stages based on health-related developments in their locales, the items they choose to buy will change, ultimately affecting which product categories are likely to thrive or languish.

The most well-positioned product categories include:

  • Health and safety products – Nielsen estimates that sales of face masks and hand sanitiser have increased by more than 300%.
  • Shelf-stable goods – Dollar growth for items like shelf-stable milk and milk substitutes has gone up by more than 300%. The same goes for long-life goods like dried beans and fruit snacks.
  • Digital streaming – As more people stay at home, streaming services like Hulu, Netflix, Amazon, and Disney+ are getting more subscribers. Likewise, film studios have made media streaming available.

But even retailers that don’t exclusively sell health-related goods and household essentials still stand to benefit from a robust e-commerce strategy during the pandemic.

Market intelligence agency Mintel found that three-quarters of consumers in Asia-Pacific are now more interested in learning about brands, topics, and social matters than they used to, indicating consumers’ need for credible sources of information in the midst of fake news and conspiracy theories regarding the virus.

This gives brands the opportunity to demonstrate their expertise, build credibility, and offer meaningful human interaction in a time of forced isolation.

BigCommerce has also observed generational and gender-based differences in spending in response to COVID-19, highlighting the need to target ads and messages based on demographics:

  • A survey of UK and US-based consumers found that 96% of Millenials and Gen Z have cut back on spending, stockpiled essentials, and are spending less on experiences
  • Only 24% of Baby Boomers and 34% of Gen X said that they let current events affect which items they purchased as opposed to nearly half of Millennial respondents
  • 25% of women and one-third of men said that the pandemic has an impact on how much they spend on products
  • 36% of men and 28% of women said that the pandemic affects the amount they spend on experiences (i.e. travel, dining, entertainment, etc.)
  • Men are shopping online and avoiding in-store experiences more than women, preferring options that limit in-store interactions (i.e. curbside pickup, subscription services)

COVID-19 as a catalyst for tech adoption in retail and e-commerce

As more cities around the world are placed under lockdown and millions are forced to stay home, Nielsen believes that consumers will seek out new and existing tech-enabled solutions for day-to-day tasks like shopping. The pandemic could also result in longer-term adoption of certain tech-enabled solutions and platforms.

Nielsen has also identified three catalyst moments that have the potential to drive changes in consumers’ shopping habits and technology adoption based on data collected from consumers around the world:

  • Fewer/shorter shop visits drive online shopping

    Nielsen Retailer Director Romolo de Camillis observed accelerated growth in online retail sales in Italy when several areas were first placed on lockdown in late February.

    The same has been observed in Australia, Spain, and France, where the penetration of online shopping for groceries was previously lower.

    However, de Camilis also stated that additional growth can only be possible if online retailers can meet the exponential growth in demand.

    In major e-commerce markets like China and South Korea, where online shopping was already part of most consumers’ daily routines before the pandemic, restrictions and increased cautiousness have encouraged older and less adventurous consumers to start buying online. Miss Fresh, a China-based online retailer, has seen a 237% increase in users 40 years and older during the outbreak.

  • Consumers turn to manufacturers/direct-to-consumer (DTC) businesses because of interrupted supply 

Heightened precaution and exponential demand have strained retail supply chains, with consumers facing empty shelves and price hikes. In response, more consumers will turn to alternative online sources and DTC businesses that consist mainly of small, local players with guaranteed supply, and which cater to niche consumer needs.

These businesses stand to benefit from direct consumer reach made possible through technology. The DTC model also makes good use of automated online shopping subscriptions that provide ease, offer preferential pricing, and inspire brand loyalty.

Experts believe that as consumers’ shopping behaviours stabilise in a post-pandemic economy, many will continue to use manufacturer-direct technology solutions, giving manufacturers the opportunity to build their sales channels and engagement platforms.

  • Because of the absence of physical touch points, consumers will want to replicate reality

With quarantines and lockdowns preventing people from visiting physical stores, consumers will look for new and alternative shopping experiences. 51% of consumers have said that they are open to using artificial and virtual reality (A/VR) to evaluate goods and services. Retailers that use A/VR to create augmented reality and immersive experiences can potentially transform online shopping.

How can we help?

Businesses with a proactive e-commerce strategy have the potential to weather the pandemic. Even in e-commerce markets that are not as advanced as China or SK, what may have been perceived as barriers to adoption may no longer be as insurmountable, as technology enabled solutions become one of the few viable and accessible shopping options.

Contevo stands for Continuous Evolution – we’re dedicated to helping Australian businesses adapt to unique and unprecedented challenges. Get in touch with us today to discuss your e-commerce strategy.

Write a Comment

Your email address will not be published. Required fields are marked *

Some of our recent results.

Get your Free Digital Marketing Audit
Valued at $2497