Lockdown, Shake Up: The New Normal for Shopping in Europe

The COVID-19 pandemic has accelerated many of the key consumer trends that retailers need to consider as they strive to make their businesses more resilient.

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Dr. Christian Wulff

Dr. Christian Wulff
Head of Retail and Consumer at PwC Germany

The COVID-19 pandemic is the most significant challenge that consumer businesses have faced for decades. While food retailers have largely benefited from the pandemic, especially during periods of lockdown, non-food retailers are only beginning to make a slow recovery from the impact of coronavirus-related restrictions. Online retail is winning the battle to adapt, with double-digit growth rates in the second quarter of 2020.

40% of European consumers have experienced a decrease in household income because of the pandemic. As a result, 38% plan to reduce their spending over the next few months. Consumers in the countries that have been most severely affected by the pandemic are particularly determined to spend less: 56% in Spain, 43% in the UK, and 42% in Italy. This means discretionary spending will be postponed or avoided altogether, and consumers will look for cheaper offers.

COVID-19 has sped up changes in the way people live, work and shop. This creates opportunities for retailers and consumer goods companies to capitalise on accelerating consumer trends. Lessons from the 2007-08 financial crisis suggest that some of the behavioural changes we have seen during this pandemic will persist in the future.

In this article, we share our thoughts about how COVID-19 has impacted consumer trends. Our insights are based on consumer research that we conducted in seven European countries before and after the outbreak of the coronavirus.

Breakthrough for online grocery shopping

During the lockdown, online shopping for fast-moving consumer goods increased significantly, even though food retail stores and drugstores remained open. More than one quarter of European consumers who live in urban areas (28%) used online shopping as the main channel for buying groceries. This is an increase of 10% compared to before the pandemic. The majority of consumers who bought groceries online also significantly increased the size of their basket. Half of German online grocery shoppers (52%) bought more during lockdown, while 70% of French, Spanish and Italian consumers bought more. More than 80% of consumers who started buying groceries online during the pandemic are planning to continue to do so. New buyers, in particular, had positive experiences with the convenience of delivery and with the quality of fresh food. This has helped them to overcome concerns about quality that previously deterred them from buying online.

In Germany, the importance of food subscription services has also increased significantly. Before the pandemic, 28% of German consumers received meal kits from subscription services, and 85% of these subscribers spent the same amount of money or even increased their spending during the pandemic. This trend will become firmly established because many people continue to work from home, and also because fresh food is seen as a driver of health and wellbeing – which is increasingly important to consumers.

For food retailers who face the challenge of building a profitable online business, now is the time to learn from online grocery players, rethink operations and build additional analytics capabilities. Online grocery retailers rely on automated warehouses to compile orders, and also use predictive analytics to calculate demand and automatically adjust their inventory. At this point, it is important to mention that fewer than 10% of European consumers expect free delivery when buying groceries online. However, consumers are still very demanding. They are most willing to pay for grocery deliveries that arrive between one and six hours after they place their order.

Increasing importance of personal health

Personal health and wellbeing were already top-of-mind for urban consumers before the COVID-19 outbreak. Almost half of European consumers have included more plant-based foods into their diet and have reduced their intake of substances like gluten, dairy or sugar. The importance of health and diet has increased since the outbreak of the pandemic. More than 60% of European consumers are now more focused on mental health and wellbeing, as well as on physical health and fitness.

This trend provides retailers with motivation to broaden their portfolios of health and wellbeing products, to rearrange the way they position products in stores and online, and to reconfigure their pricing models. Even if a significant share of consumers plan to reduce their overall spending, the willingness to buy hygiene and health products is unchanged.

Like consumer goods manufacturers, retailers must also think about new marketing channels and formats if they want to further develop their businesses in the health and wellbeing sector. Social media channels, and especially collaboration with influencers who represent health and wellbeing topics in an authentic way, can boost awareness and sales.

Non-contact shopping

Online sales have grown significantly in the first half of 2020, especially for daily-use products like groceries, toiletries, pet supplies and pharmaceuticals. Even after the social distancing rules became less strict, online demand for fast-moving consumer goods remained significantly higher in the second quarter of 2020 than it was in the same quarter of 2019. This trend will persist. Consumers appreciate the convenience and safety of online shopping, and also work from home more often – which means they are available to receive deliveries.

COVID-19 has given retailers the final push to make their omni-channel businesses work, to understand what their customers really want and value, and to offer an outstanding customer experience throughout the customer purchase journey. In our consulting practice, we have seen that online retailers continued to invest in optimising their organisations and systems during the pandemic. They will emerge from the crisis even stronger than before. For this reason, the push for companies to adapt will have a greater force on retailers who have traditionally operated offline businesses.

Almost half of European consumers (49%) have been shopping in stores less frequently since the outbreak of the COVID-19 pandemic. Due to high standards for hygiene and safety, many consumers still avoid going on extensive shopping trips. However, in-store technologies can help to bring consumers back into stores by creating new forms of customer experience, strengthening customer loyalty, and integrating new hygiene and safety standards.

Even before the outbreak of the pandemic, European consumers valued new technologies in stores. Automated checkouts (34%) are one of the most important features for enhancing the in-store shopping experience, followed by personalised offers sent to the customer’s smartphone when they enter the store (29%), and in-store aisle navigation (21%). In particular, young consumers and consumers who do daily “microtrips” to grocery or drug stores expect time-saving checkout solutions. Health concerns and social distancing rules have amplified the need for non-contact shopping in stores. Use of contactless payment has increased since the outbreak of the COVID-19 pandemic, even among German consumers who have adopted mobile in-store features more slowly than other European consumers. For retailers, automated checkouts and contactless payment options are no longer an additional nice-to-have customer service – they are a clear must-have.

Conscious consumption

In times of crisis, health and financial security top the list of important topics for consumers in Europe. However, we are convinced that sustainability will remain a key factor in purchasing decisions – and will become even more important. Before the pandemic, European consumers were particularly conscious about avoiding plastic and reducing packaging. The focus on the use of plastic is likely to decrease because hygiene requirements have become very important during the pandemic.

However, during lockdown, consumers have had time to reflect and have realised that they need much less and that they value different things than they did before the pandemic. Many European consumers face the need to reduce their spending due to a decrease in household income during the crisis, and they will be even more conscious of what and where they buy. Even before the outbreak, consumers had clear expectations for how retailers and consumer goods companies should operate. 43% of European consumers expect companies to be accountable for their environmental impact, and one quarter of consumers take sustainability aspects into consideration when shopping – including environmental and social responsibility, and transparency about the origins of a product. Consumer goods manufacturers and retailers need to take sustainability very seriously and actively differentiate themselves to create consumer loyalty and advocacy.

At the same time, the pandemic has stressed the importance of sustainability at the interface of health and compliance. Traceability of product origins and transparency about business practice have become key factors for sustainable and resilient supply chains. European consumers mainly hold governments responsible for encouraging sustainable behaviour. The European Union’s Green Deal initiative, as well as several local government programmes, are driving the implementation of sustainability standards throughout global supply chains and increasing the accountability of retailers and consumer goods companies.

Webcast: New consumer trends in retail

Our experts discuss the influence of COVID-19 on consumer behaviour in Europe and present in more detail the country-specific results of our Global Consumer Insights Survey 2020 (recorded on 2nd September 2020).

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For the European edition of PwC's Global Consumer Insights Survey 2020, we polled European consumers who live in cities about their purchasing behaviour in two separate studies. The first study was conducted before the outbreak of the COVID-19 pandemic and covered 6,185 consumers from 22 cities in seven European countries. The second study was conducted in April and May 2020, after the outbreak of the pandemic, and covered 3,400 consumers from seven countries (France, Germany, Italy, the Netherlands, Spain, Sweden and the United Kingdom). We chose urban consumers because millions of people live in cities, and this concentration of the population has created a new era in consumer behaviour. Cities are vibrant centres of education and innovation, and greenhouses for new ideas. We want to understand how cutting-edge consumers behave – and gain insights into the key implications for businesses.

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Dr. Christian Wulff

Dr. Christian Wulff

Consumer Markets Leader, EMEA, PwC Germany

Dr. Stephanie Rumpff

Dr. Stephanie Rumpff

Head of Business Development, PwC Germany

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