Retailers And The Pandemic: Adapt Or Die
Consumer habits shifted dramatically as people sheltered in place. In-person shopping is picking up again, but everything's still in flux for sellers, who will have to adapt or say 'adios.'
SANTIAGO — The era of COVID-19 could also be called the sink-or-swim era, at least when it comes to retailers, both large and small. The pandemic has caused consumer habits to change quickly and in ways nobody expected. Companies, as a result, must either move quickly and adapt, or sink.
Today, the what and the how in mass-scale consumption has become an uncertain realm, especially in Latin America, which has yet to see any light at the end of the tunnel in this prolonged crisis.
In retail, the most obvious adaptation has been to transition online. The speed at which businesses have done this exceeded any prediction that might have been made, and in Chile this was because some 229,000 households suddenly began buying online. Driving the digital transition were quarantines that blocked or limited movements, including supermarket shopping, but also people just wanting to stay home because of health concerns.
Sooner or later we shall go back out and face the "new normal," which means shops will reopen and there will be a new, mass consumption scenario. How will consumers return to shops? What will they buy, how and why? These are some of the questions the industry, if it hopes to capture this new consumer, must grasp fast and answer.
The what and the how in mass-scale consumption has become an uncertain realm.
In the past six months, mass consumption has seen some more specific changes. In Chile it began in March with panic buying ahead of an imminent lockdown, with families wanting to assure supplies for some time ahead. As months passed and restrictions increased, buyers calmed down. Their purchases have now become highly rational (no more window shopping) and broadly based on replacing basic home supplies. The consumption of meat and dairy products and packaged foods has increased. Perfumes, alcohol and drinks are down, and buyers are looking for what they need, at the best price. A consumer study by the consultancy Kantar has shown that the incomes of 67% of shoppers has dropped in the pandemic.
This can be an opportunity for the big chains in the post-pandemic world. Spending on household and cleaning products will recover its ordinary levels and a new budget space will appear for other consumer goods that saw a recent fall in demand. The return to the "new normal" will feel like freedom, which will be evident in renewed visits to shops and supermarkets. This means the point of sale will once more become the frontline, and strategies on marketing and brand visibility will be crucial to cashing in on post-pandemic consumer habits.
In present conditions it is difficult to see consumption rising again in the short term, and there's little doubt that big consumer sectors will inevitably see a drop in sales. But with the right tools like Big Data and data analyses, retailers can respond fast to these big changes. With information reading systems, retail businesses can spot changing conducts, maintain their supply chains and ensure they're not left out of the market.
*Roberto Del Río is CEO of the TCG Latam management consultancy.