Will Coronavirus Drive Permanent Shifts in Shopping Behavior?

Retailers will be feeling the impact of the coronavirus crisis long after the quarantines, store closings and social distancing rules have ended.

It is likely to create permanent shifts in consumer behavior that retailers need to start preparing for, experts told CO—.

Americans will change how and where they shop, and retailers will change how they interact with customers and how they plan for future pandemics. Here’s what retailers can expect:

An accelerated shift from stores to e-commerce, particularly in grocery

E-commerce sales in general are expected to surge, as shoppers stay home during the crisis, but grocery sales are where the biggest long-term impact could occur.

Grocery delivery platforms such as Instacart, Walmart Grocery and Shipt are seeing dramatic spikes in sales, much of which likely is driven by new customers who are trying online grocery shopping for the first time, Keith Anderson, senior vice president of strategy and insights for e-commerce performance analytics company Profitero, told CO—.

“It could be a new population is being incentivized or encouraged to try shopping this way,” Anderson said.

Those first-time online grocery buyers have a high probability of converting to that way of shopping permanently.

“If you go to the trouble of loading your 20 or 30 items on any online grocery site, the likelihood that in a couple of weeks you’ll come back and order most of those things again is pretty high,” Anderson said. “So, when you look at the shift in consumption for that household, it really moves a lot of volume from brick and mortar to ordering online.”

Coronavirus is introducing a new generation of shoppers to stock-up and buy-in-bulk shopping

Before, Gen Z and millennial consumers, who came of age with online shopping, were accustomed to getting anything they needed delivered to their homes within a day or two. They never needed to stock up in advance because they could get everything they needed, on demand.

Now, even Amazon is telling them it could take two weeks or more to get a roll of toilet paper delivered, and, like their older generational cohorts who recall the brick-and-mortar-only shopping era, they are spending entire days searching sold out stores for it and other supplies.

Warehouse club Costco has already seen a coronavirus-related surge. Sales were up 13.8% year-over-year in February, the company reported in its second quarter earnings release.

Retailers also will move away from on-demand buying

A surge in consumer demand isn’t the only reason shoppers are seeing so many empty shelves in the toilet paper and disinfectant aisles. Retailers, like millennial shoppers, have also grown accustomed to getting inventory they need on demand from manufacturers.

Retailers have moved to keeping far less inventory in stock, and manufacturers, who also are afraid of ending up with too much excess inventory on hand, are producing goods on more of an as-needed schedule, Ronen Lazar, CEO and co-founder of INTURN, told CO—. INTURN is a New York-based enterprise solutions platform that lets manufacturers track and sell excess inventory.

The current crisis, Lazar said, highlights the need for retailers and manufacturers to improve their digital supply chain operations to better balance the desire for lean inventories with the need to be ready for surges in demand. “This really should be a strong signal for many to be better prepared should something similar happen [in the future],” he said.

Retailers will rethink in-store experiences

Joe Pine, author of “The Experience Economy,”told CO— he believes consumers will return to stores, malls, and social gathering places after the crisis passes. However, the crisis will make retailers look for more ways to deliver virtual experiences, and to interact with shoppers online, rather than focusing primarily on drawing crowds to their stores.

He expects stores will invest in virtual experiences like in-store demonstrations that can be viewed online, or virtual salespeople who can engage with shoppers.

“Even if it dies down more quickly than expected, they’re going to recognize we have to be ready for the next thing,” Pine said.

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