69% of businesses expect to end the second half of 2020 in decline, according to Global Business Compass, our survey of nearly 4,500 business leaders around the world. More than half of leaders believe their businesses will still be suffering economically a year or more after COVID-19 is ‘over’; 27% expect recovery will take at least two years.
But while coronavirus has created a massive problem for business, understanding how the pandemic has changed customer behaviour – and accelerated trends – could present opportunities for growth. Kantar has identified three imperatives for marketers to support their business’ rebound and recovery. The first imperative was embracing a purpose-led strategy; the second is around digital transformation. Why does that matter, and what does it mean?
The rise and rise of omnichannel shopping
It’s not a surprise that omnichannel and ecommerce is surging due to COVID-19. Being unable, or unwilling, to visit physical stores hasn’t stopped people from shopping.
According to Kantar’s COVID-19 Barometer, 40% of consumers say they have increased their ecommerce spend during lockdown, rising to 48% of households with children. Importantly, 45% of consumers say they will continue shopping with online stores they found during the pandemic.
Looking at FMCG specifically – a ‘winner’ during the pandemic – the ecommerce channel grew 35% by September this year (having grown 22% in 2019). A quarter of all FMCG spending in China now takes place online; in the UK, where ecommerce growth was stagnating, it has accelerated and now represents over 10% of grocery spend. We forecast that ecommerce will account for 8% of FMCG spending globally by 2021.
What’s worth noting is who these ‘new’ online shoppers are. Again looking at the FMCG category, we saw that it was older people and those in rural communities accounting for the spike – it’s not just young people you need to consider.
Are shoppers getting what they want?
This isn’t a simple story about embracing ecommerce because customers are. For a start, our CX+ study from this year revealed that only 24% of customers are impressed with their grocery retailer’s omnichannel presence. Simply offering different shopping options may not build loyalty – the experience has to be excellent.
We have also found that the same people use different ecommerce sites for different needs. Our syndicated eCommerce ON study, which covers 120,000 category e-shopping trips, shows we may visit one store for stock up on one item, another to explore new needs, and yet another for quick or in-between purchases – all within the same category.
Yes, people are shopping across more channels than ever, and ecommerce will continue to grow in importance. But more importantly: new buying patterns and behaviours are emerging that will make brands more vulnerable to competition.
Are businesses ready to change?
As a decade’s worth of incremental change takes place in a period of months, 95% of business leaders surveyed agreed that online spending will likely increase. Only 55% of companies say they have invested in their ecommerce capabilities during the pandemic.
Going deeper: 52% of those negatively impacted by the pandemic invested in (or planned to invest in) ecommerce capabilities, compared to 63% of those positively impacted.
There is clearly more work to be done to adjust to this new reality.
How should you approach digital transformation?
1. Test new models
Testing new models of growth and partnerships (such as social commerce and direct-to-consumer) should be on the agenda of every CMO.
Exploring the disruptive – and even uncomfortable – new ways of going to market is no longer optional: consider the rise of Food Tech and delivery apps, and the so-called ‘Third Shelf’. Selling on social media challenges everything we though we knew about planning, shopping missions and even brand affinities. There is no one-size-fits-all approach: each category plays out differently and requires trial and error. Of course, investigating people’s changing needs and the importance of different touchpoints in new journeys will inform those strategies.
2. Reinvent channel strategies
Marketing teams can drive success through reinventing channel strategies, shifting towards the best performing channels.
To identify how to win on different ecommerce platforms and which products and SKUs to prioritise, brands need to understand shopper priorities and the reasons for store choice at a category level. The biggest platforms don’t always offer the most growth. They can start by understanding what shoppers expect from different ecommerce retailers and which SKUs are most relevant for each.
Recommendation engines may also play a role in increasing impact and ROI, and harnessing CRM data through analytics will be key.
3. Master Online to Offline (O2O)
Make the online to offline (and vice versa!) dynamics work for you. Understanding how consumers want to use different touchpoints – before, during or after their shopping journey – helps you adapt to the accelerating digital shopper world.
Understanding the entire shopper journey – and the needs that underlie a visit – will help you make decisions about pack formats, cross-merchandising opportunities and creating effective promotions. Know how people browse and buy from your category on key partner platforms is also helpful, as priorities vary from site to site, and so does navigation.
From a brand point of view, ecommerce should be managed as an essential touchpoint, going beyond conversion to add value in brand and communication areas. Creating an enjoyable online experience and being supportive of shoppers will help in brand building as well as sales.
With digital becoming an integral part of the new normal, brands that elevate the human experience will be strongest. But remember: there is no such thing as ‘online shoppers’ or ‘offline shoppers’ – there are just people trying to fulfil a need.
Today, your customers are craving human interaction. We know that once restrictions are lifted, people are most looking forward to things that involve being closer to people; we also know that shopping in physical stores (37%) and shopping locally (69%) has been a priority for many in our COVID-19 Barometer study.
4. Get to grips with data
In today’s environment, it is a priority for organisations to make robust business decisions using all the data at their disposal. All of the above will require a purposeful data engineering strategy with tools that easily discover, integrate, enrich and harmonise data from all sources. This will help understand new buying signals and deliver the right insights to the decision makers within the marketing and media teams more quickly.
When we looked at BrandZ Growth Brands, they were more likely to say they ‘wanted better access to data’ (51% said this compared to 40% for brands overall).
Get in touch with our Kantar experts to learn more about digital transformation, and how we can help with your recovery journey.
About Global Business Compass
Kantar interviewed 4475 business leaders around the world – over 900 of them C-suite – in May and June this year. The online questionnaire covered 60+ markets and 40 global businesses. Customised reports are available for all countries and sectors.