Retail Adaptation report

RETAIL ADAPTATION How retail adapted during the COVID pandemic

1%

ACRS conducted research to investigate how retail changed and adapted during the COVID-19 pandemic.

Throughout September 2021 we surveyed 1,609 shoppers from across Australia, the United Kingdom and the United States of America.

This report reflects on shoppers’ experiences throughout the COVID-19 pandemic and identifies key changes in consumers’ behaviour and attitudes towards retail, with a particular focus on Australian shoppers.

n=

1,002 Australian shoppers

301

306

n= United Kingdom shoppers

n= United States shoppers

17% 16%

15%

18% 6% 17% 12%

AGE 18–24 25–34 35–44

5% 15%

45–54

20%

55–64

20%

65+

46%

22%

19%

46%

54%

54%

THE RETAIL INDUSTRY FACED A NUMBER OF CHALLENGES DURING THE PANDEMIC

Short- and longterm snap lockdowns varying across states

Physical compliance for the health and safety of staff and public

Domestic and international supply chain disruption

Quality staff retention and acquisition, as well as training

WITH CONSUMERS SPENDING MORE TIME AT HOME, ECOMMERCE BOOMED DURING THE PANDEMIC Retail spend in 20201

$310.29B Up 9.7% YoY Online goods spend in 20201

$50.46B Up 57% YoY

(Up 23% YoY as at 31 August 20212)

Online share of retail spend in 20201

% 16.3

Sources: 1 Australia Post Inside Australian Online Shopping eCommerce Industry Report (2021); 2 Australia Post Inside Australian Online Shopping eCommerce update (Sept 2021)

MAJORITY OF AUSTRALIANS MADE AN ONLINE PURCHASE IN THE LAST THREE MONTHS, WITH OVER A THIRD MAKING WEEKLY PURCHASES

% 84

Online shoppers who made a purchase at least weekly

% 37

of Australians made an online purchase in the last three months

% 54

Compared to…

% 53

94%

84%

INDEED, HALF OF AUSTRALIANS SHOPPED MORE ONLINE THAN PRIOR TO THE PANDEMIC, WHILE ONLY A SMALL PROPORTION SHOPPED LESS

% 50

of Australians made more online purchases during the pandemic (i.e., since March 2020) compared to prior to the pandemic Compared to…

62%

59%

4%

Only 4% of Australian shoppers made less online purchases during the pandemic

46%

Almost half of Australians made about the same amount of online purchases during the pandemic

CLOTHING, FOOTWEAR & ACCESSORIES AND GROCERY PRODUCTS WERE THE MOST PURCHASED GOODS ONLINE Products purchased online F Clothing, footwear & accessories

56%

Grocery products

41%

F Household

46%

32%

M Consumer electronics

30%

18% 15%

Travel & tourism

12%

M Automotive

12%

8%

23%

11% 20% 25%

22% 23%

AUS Note:

F=Females purchased significantly more than males;

44% 33%

32%

42% 41%

50%

25%

M Media & entertainment

61%

57%

33%

F Personal care

M Sporting goods & equipment

64%

UK

M=Males purchased significantly more than females.

USA

PHYSICAL RETAILER WEBSITES WAS THE MOST FREQUENTLY USED ONLINE CHANNEL TO PURCHASE RETAIL GOODS FROM

% 64

of Australian shoppers purchased online goods from physical retailer websites in the past three months

Channels used for online shopping across categories 62% 48% 47%

65% 60%

50%

64%

50%

44%

33% 31% 19%

Physical retailer websites (e.g., Myer)

Online Online only retailer marketplaces (e.g., websites (e.g., THE eBay) ICONIC)

AUS

Retailer mobile/ tablet apps

21% 19% 11% Social media (e.g., Instagram)

AUSTRALIAN SHOPPERS WERE HIGHLY SATISFIED WITH ONLINE CHANNELS OVERALL AND USED THESE FOR A RANGE OF REASONS Australian shoppers’ primary reason for channel use aside from purchasing & level of satisfaction Physical retailer websites

Online marketplaces

63%

most frequently used for product information

4.2

/5

Online only retailers

42%

most frequently used for price comparisons

4.1

/5

Retailer mobile/tablet apps

40%

most frequently used for price comparisons

4.1

/5

Social media 21%

22%

most frequently used for seeking out promotions

4.2

/5

most frequently used for inspiration for future purchases

4.1

/5

STANDARD DELIVERY WAS BY FAR THE MOST FREQUENTLY USED METHOD TO DELIVER ONLINE PURCHASES Delivery option most frequently selected across categories

% 65

of Australian shoppers most frequently used standard delivery (3+ days) to deliver their online goods

52%

51%

65% 18%

18%

19% 11%

22%

Same day

Express (1-2 days)

12% 8% 13%

12%

AUS

Standard (3+ days)

Click & Collect

SHIPPING RELATED PROMOTIONS WERE AMONGST THE MOST IMPORTANT PROMOTIONS WHEN DECIDING TO MAKE AN ONLINE PURCHASE Incentives/ promotions important to online purchase decision

Free shipping

81%

Price discounts

73%

Free return shipping

67%

Conditional free shipping Promotion codes

54%

Product bundles

45%

Negotiable price

45%

Competitions

30% Very important (4-5)

30% 24% 30% 32%

25% Moderately important (3)

21% 21%

57%

84%

82%

6%

73%

73%

12%

70%

72%

13%

59%

62%

23%

55%

55%

24%

50%

48%

23%

45%

45%

45%

36%

38%

15% 4%

Not at all to a little bit important (1-2)

THE PHYSICAL STORE, AND THE ABILITY TO SEE AND TRIAL PRODUCTS, WAS THE MOST INFLUENTIAL SOURCE FOR PURCHASE DECISIONS OVERALL Most influential sources on purchase decisions overall

1 2nd 3rd

st

Physical store (e.g., ability to see/ trial) 2nd

1st

Retailer websites 1st

3rd

Internet searches 3rd

4th

Promotions

4th

4th

2nd

Family, friends & colleagues

5th

5th

5th

Email marketing

6th

7th

10th

Online reviews & blogs

7th

6th

8th

Television

8th

8th

6th

Mail catalogues

9th

14th

12th

Social media

10th

9th

7th

Online advertising

11th

10th

9th

Direct mail

12th

11th

11th

Print media

13th

12th

13th

Sales person

14th

13th

14th

Cinema

15th

15th

15th

Outdoor advertising

16th

16th

16th

SEEKING SALES/ SPECIAL DEALS AND SHOPPING FOR LOCALLY PRODUCED PRODUCTS WAS IMPORTANT TO AUSTRALIAN SHOPPERS Important to shoppers following their pandemic retail experiences

68%

Seek out sales and/ or special deals 66%

65%

66%

61%

Be frugal with spending 61%

67%

Shop for products that are locally produced 58%

48%

53%

Shop for quality products (versus fast and disposable goods)

62%

65%

Shop for environmentally friendly/ sustainable products 60%

51%

62%

ONLINE BECAME THE MAIN CHANNEL FOR NON-GROCERY RETAIL GOODS DURING THE PANDEMIC AND MANY PLAN TO CONTINUE USING THIS CHANNEL Main channel – NON-GROCERY AUS Prior to COVID-19 pandemic (i.e. before March 2020)

During COVID-19 pandemic (i.e. March 2020 to present)

68%

36%

After COVID-19 pandemic (i.e. in the future when COVID-19 is no longer a health risk)

50%

Overall preferred

50%

USA

UK 27%

56%

5%

8%

38%

41%

13%

9%

Physical stores

45%

21%

46%

72%

29%

34%

Online (home delivery)

60%

59%

10%

7%

11%

7%

Online (click & collect)

58%

38%

45%

42%

33%

53%

41%

49%

9%

10%

14%

10%

PHYSICAL STORES REMAINED THE MAIN CHANNEL FOR GROCERY GOODS IN AUSTRALIA, BUT THERE HAS BEEN A SHIFT IN PREFERENCE TOWARDS ONLINE SINCE THE BEGINNING OF THE PANDEMIC Main channel – GROCERY AUS Prior to COVID-19 pandemic (i.e. before March 2020)

During COVID-19 pandemic (i.e. March 2020 to present)

80%

57%

After COVID-19 pandemic (i.e. in the future when COVID-19 is no longer a health risk)

65%

Overall preferred

66%

USA

UK 16% 5%

34%

22%

24%

9%

64%

43%

13%

51%

10%

52%

Physical stores

Online (home delivery)

33%

51%

39%

43%

3%

6%

73%

50%

19%

35%

8%

15%

10%

59%

27%

14%

5%

57%

32%

11%

Online (click & collect)

LESSONS LEARNED AND PRIORITIES FOR THE FUTURE

Add humanised touches to online channels to show customers you care

Strive for seamless omnichannel experiences to meet increasing online expectations

Invest in the digital shopfront to attract customers and compete for screen time

Reflect and review plans and processes to increase efficiencies in operations

Engage and target locally by connecting with online communities

AUSTRALIAN CONSUMER & RETAIL STUDIES Monash Business School Level 6, Building S 26 Sir John Monash Drive Caulfield East VIC 3145 T: +61 9903 2869 E: acrs@monash.edu W: monash.edu/business/acrs