Retailers must adapt to the post-COVID-19 consumer
KPMG’s latest research stresses the vital need for retailers, and consumer businesses more broadly, to adapt to better serve customers post-COVID-19. The analysis reveals that consumers are feeling more financially constrained, are more digitally savvy, and place greater emphasis on their trust in brands as a result of the pandemic.
Based on the views of over 12,000 consumers globally, value for money (63%), ease of buying (42%) and trust in the brand (41%) are the principal drivers of purchasing decisions currently.
Paul Martin, UK head of retail at KPMG, said: “The early stages of the pandemic saw retailers having to react quickly to a unique set of circumstances, and although many have put their resilience plans into operation, they are now trying to adapt to the new reality that lies ahead on a more permanent basis. In many cases that will result in the need to review both business models and their ways of working going forward, factoring in the shift in consumer behaviours and expectations.
“Retailers need to carefully consider how they can benefit from the rise of alternative channels like online, and while that’s been a longstanding issue for the sector, the rate of change has accelerated considerably since COVID-19. Likewise, the added focus on value for money must mean far more than just reducing prices, it will prompt a fundamental shift in the purchasing decisions of retailers as well as a greater need for efficiency in operations. Interestingly, a fifth of consumers said they intended to source more items locally, forgoing global brands, which would mark a significant shift if it comes to fruition.
“Trust in businesses and brands will clearly be of paramount importance, and consumers have indicated that their trust will largely be shaped by a focus on safety and the customer support on offer. Saturday’s easing of restrictions in the leisure and hospitality sectors will certainly be another test of that and it’s crucial that consumer businesses get it right.”
Increased focus on value for money:
- Consumer spending looks set to be significantly impacted by the economic and psychological fallout of the pandemic
- Over 40% of respondents globally felt negatively impacted financially, with 28% financially overwhelmed and a further 15% feeling financially sensitive
- In the UK, 47% of respondents felt worse off financially since COVID-19 arose, with 81% saying they have limited their spending
Rise of the digital savvy consumer:
- With much of non-essential retail having been online-only during lockdown, there has been rapid adoption of alternative channels
- In the UK, the majority of customers have already changed the way they deal with businesses, with nearly 60% switching to websites, 41% turning to email correspondence and 25% downloading new apps
Brand purpose and trust come to the fore:
- Personal safety (56%) was the most important factor influencing trust in brands globally
- Pointing to the difficulty in forming and maintaining trust, slightly more (14%) of respondents said they trusted organisations more than they did prior to the pandemic, yet 11% said they trusted organisations less
- In the earlier stages of the pandemic, consumers were keen for businesses to focus on altruistic measures (protecting employees, supporting key workers and assisting the government and local communities in their response). More recently though, they are calling for quality customer support, options to reduce or delay spend and frequent and clear communication from organisations
Tim Knight, Customer Advisory Partner at KPMG UK, added: “A new customer is emerging in the wake of COVID-19 – one who is more financially constrained, more advanced in their use of digital, and more thoughtful in their decision making.
“The new customer wants brands to put purpose before profit, as we are arguably entering an ‘integrity economy’. They also want businesses to innovate, accelerate their move to digital and demonstrate their values. Business leaders will need to either face into this storm of change and adapt or be prepared to batten down the hatches and hope the old models return.”