Nothing could have prepared retailers for Covid. Since the pandemic forced the first widespread lockdowns in living memory, some have collapsed, the pandemic hastening their demise after a lackluster few years. Others survived but are changing their business models and spaces, looking for new ways to maintain sales and profits. A third set are buoyant, having seen online sales rocket. All have been deeply affected by the events of the last couple of years and are no doubt wondering what the future will bring. 

Whether 2022 sees the last of the lockdowns or not, Covid has changed the way we live and shop for good. The pandemic has not only accelerated digital transformation, it has also necessitated a total rethink of the future of retail in all its aspects: online and in-store, local, downtown or mall, delivered to your door or click-and-collect. Retailers now need to carve out a successful future in this new normal, with agility baked into their operations so they are well placed to respond to changing situations. But what will the new retail landscape look like? Now that the widescale lockdowns are over, what new consumer behaviors are here to stay?

Competition Heats Up Among The Giants: Amazon And Walmart 

Apple, Facebook, (Google) Alphabet, Microsoft Amazon and Walmart all saw huge increases in sales and profits since the start of the pandemic. Amazon saw almost every aspect of their business rise, from web services to streaming to home delivery, accounting for 41% of all US online retail sales in 2021.¹ The company has opened Amazon Fresh grocery and convenience stores and is now moving into its own branded FMCG products with Aplenty. Expansion is inevitable, but the brand is keeping quiet about its plans. 

Meanwhile Walmart’s ecommerce sales grew 74%, leading them to hire more than 235,000 store associates². Having largely left the Marketplace part of the business dormant for some years, it spruced up its offering, undercut Amazon for commission on some items and reached 70,000 sellers, projected to increase 146% by the end of 2022.³ Amazon’s marketplace is still far bigger, expected to have more than 3 million sellers in the US by the end of 2022 and 7.5 million globally according to Marketplace Pulse. But Walmart has physical stores, which means successful online vendors could find opportunities to sell offline too. The company also apparently has plans beyond retail and is aiming to develop its services in advertising sales and healthcare, where it will be jostling for position once more with main rival Amazon. 

A Permanent Shift Towards Online Shopping 

Consumers have grown to rely on online shopping, not only for essentials like groceries and toiletries, but also for goods and services to keep them entertained at home. During lockdown the winners were those businesses who, like Amazon and Walmart, were able to meet the surge in demand while maintaining a high level of customer service, as well as those who could quickly pivot their offering in response to changing customer needs. 

All the surveys and statistics agree that the shift towards online shopping is likely to be permanent. According to IBM’s U.S. Retail Index, the pandemic has accelerated the shift away from physical stores to digital shopping by roughly five years.⁴ A Qubit survey polling 1,500 US and UK customers in July 2021 found that nearly 86% planned to continue shopping as they had over the last 12 months⁵, despite physical retailers re-opening, and the intent was clear in all age groups. McKinsey reports that ecommerce remains at around 35% above pre-Covid levels.⁶ But online shopping brings slimmer margins and moving forward retailers will need to find ways of increasing basket spend and keeping warehousing and delivery costs down, as well as creating experiences that keep customers coming back for more.

Creating experiences fit for the future

BORN has worked with several leading retailers to ensure their online customer experiences are optimized for this new environment. Brooks Brothers, America’s oldest retailer needed to become ‘far more than a store’. Now they have reimagined the online experience, removing friction and telling the brand story more effectively. It’s easier for users to discover new products, educate themselves on the options available and become part of the loyalty scheme to reap future benefits. 

Meanwhile, world-leading luxury watch brand Rado needed to create a better experience for mobile. The BORN team redesigned the mobile interface, enhancing the content and navigation to provide a better showcase for products and tackling content management and eCommerce functionality. These retailers are future proofing their online experiences, ensuring that they measure up to customers’ ever-growing expectations. 

Delivering For Customers, And The Environment

Efficient delivery comes at a cost, to customers, the retailer and to the environment. But it’s also key to the convenience of online shopping. What could it look like in the future?

Click-and-collect has solid advantages for retailers, driving footfall to physical stores where customers may make additional purchases as well as being a low-carbon option. Businesses finding themselves with an abundance of space are dedicating an increasing proportion to fulfilling click-and-collect orders. 

Speedy home deliveries are more of an issue. The problem with next-day deliveries is that it means half-empty vans are doing the same trips, sometimes multiple times a day. That ‘last mile’ comes at a high carbon cost. There’s a commonly held view that people will insist on speed, but a study for a major retailer in Mexico found that slower shipping was acceptable to 71% of customers if they were told it meant saving a certain number of trees, calculated to be equivalent to carbon emissions caused by faster shipping.⁷ The author of the study is hoping that giants like Amazon or Walmart might take note for the future; in the UK ASOS are already offering reduced shipping rates and a discount code for ‘no hurry’ delivery.⁸  Perhaps consumers who expect super-fast delivery, can be weaned off it in the interests of the environment, at least for the most part. 

Amazon are beginning to invest in electric vehicles for the ‘last mile’, with their robot delivery system Amazon Scout operating in four US states and the business further developing the technology in the UK.⁹ For an even more futuristic, if rather terrifying option, ANYbotics and Continental’s concept combining driverless shuttle vehicles with robot delivery dogs looks uncomfortably like something from dystopian TV series Black Mirror.¹⁰

Footnotes

1. Amazon Clobbers Competition, Accounting for Over 40% of US Retail Eccomerce Sales In 2021, eMarketer, https://www.emarketer.com/content/amazon-clobbers-competition-us-retail-ecommerce-sales-2021

2. How Walmart is Responding to Covid-Related Challenges, Forbes, https://www.forbes.com/sites/edwardsegal/2021/09/01/how-covid-repeatedly-put-walmart-to-the-test/?sh=4b190a6617bd

3. How The Pandemic Helped Walmart Battle Amazon Marketplace For Sellers, Reuters, https://www.reuters.com/business/retail-consumer/how-pandemic-helped-walmart-battle-amazon-marketplace-sellers-2021-04-14/

4. COVID-19 Pandemic Accelerated Shift To E-commerce By 5 Years, New Report Says, TechCrunch, https://techcrunch.com/2020/08/24/covid-19-pandemic-accelerated-shift-to-e-commerce-by-5-years-new-report-says/

5. Consumers Plan To Keep Shopping Online, Despite Stores Reopening, Fashionunited, https://fashionunited.uk/news/retail/consumers-plan-to-keep-shopping-online-despite-stores-reopening/2021081257089

6. US Consumer Sentiment and Behaviors During The Coronavirus Crisis, McKinsey & Company, https://www.mckinsey.com/business-functions/marketing-and-sales/our-insights/survey-us-consumer-sentiment-during-the-coronavirus-crisis

7. How To Shop Online More Sustainably, NY Times Wirecutter, https://www.nytimes.com/wirecutter/blog/shop-online-sustainably/

8. How Does Your ASOS No Hurry Delivery Service Work?, ASOS, https://www.asos.com/customer-care/delivery/how-does-your-asos-no-hurry-delivery-service-work/

9. Is Amazon’s Scout Delivery Robot Coming to the UK and Europe Soon?, Pocket-lint, https://www.pocket-lint.com/gadgets/news/amazon/153671-is-amazon-s-scout-delivery-robot-coming-to-the-uk-and-europe-soon

10. This Robot Delivery Dog Can Bring Your Parcel Right To Your Doorstep, Mashable, https://mashable.com/video/driverless-vehicle-deploys-robot-delivery-dogs