How COVID-19 has changed consumer behavior?

Critically discuss its

impact on the retail sector of Pakistan.

The COVID-19 pandemic is having a significant impact on every aspect of life,

including how people shop. Retailers around the world are facing new
challenges, the sudden boom in e-commerce, especially in grocery delivery,
means they have to respond to a surge in orders to cope with the drastic
growth. Consumers have demands, with delivery windows full, they remain
more than ever driven by delivery options, visibility, communication and the
final mile retailer strategy.

 In 2020 UK e-Commerce is set to reach €222 billion (YOY growth of

10.96%)
 96% of the UK population is online, making the UK the largest B2C
e-Commerce market in Europe
 Of that 96% who are online, 87% of them have now shopped online.
 Clothing is the No.1 category purchased online in the UK (at 60%) but
it comes with a returns rate of around 30%.

With online retail sales estimated to reach an eye-watering $6.5 trillion by

2023, the e-commerce sector was already booming. But since the outbreak,
online shopping has been catapulted into complete overdrive. Even the
largest retailers on the planet are struggling to keep up with the
unprecedented consumer demand.

Since the health crisis, consumers have radically changed their purchasing
and consumption habits. What they buy, and especially when and how they
buy has changed. It’s no shock that the longer people stay at home, the more
they buy online.

E-commerce has become the new normal, and many businesses are seeing a
greater percentage of their sales online. The majority of food businesses had
to reinvent during the pandemic, with many of them starting online stores or
offering curbside pickup.
“Retail: Global retail sales are expected to dip by 5.7% this year due to the
coronavirus pandemic. Online purchases of clothing, however, are up 76.7%,
with online revenue up 22.2% – but average order value down 54.5%“

“Grocery: Online grocery has seen continued growth throughout the

pandemic, with online grocery sales for delivery and pickup increasing 9%
from May to June.“

Media-influenced buying

From the start of lockdown and restricted movements ’til now, we’ve
observed a big change in the way people eat, shop, and live. Since everyone
restricted their travel during this period, big expenses were instead made via
the internet.

While supermarkets and hypermarkets were stormed by consumers early in

the lockdown in order to source needed products, this trend quickly changed.

Consumers are supporting local

Buying local is another trend that consumers have come back to during the
coronavirus. With the pandemic forcing closures on many businesses, loyal
shoppers have shown their willingness to shop locally in order to ensure local
retailers stay in business.

This consumer behavior can be seen in both the products and how they have
been shopping – from locally-sourced products to supporting stores in the
local area.

Connecting locally will thus be key for businesses in the future. From
adapting their inventory to meet local demand to engaging in local concerns,
retailers should be looking at ways they can connect locally with their
customer base.

Virtual spaces are the new normal

More and more people are working from home or remotely and are happy to
do. According to Accenture, 46% of people who never worked from home
before now plan to do so more often in the future.

Therefore, there are a growing amount of virtual spaces developing, both in

terms of working and consumer habits. People are embracing new
technology to meet their needs more than ever before. With Zoom
connecting families together in the midst of periods of isolation, people have
shown their willingness to bring technology into their personal lives.

Retailers can capitalize on this shift in consumer behavior by showing their

willingness to offer new technological solutions to customers. If you have an
idea to use an app or digital-only service to promote a product then there’
s never been a better time.

Conclusion

COVID-19 is both a health and economic crisis that has impacted on

consumer behavior and purchasing patterns. Retailers can capitalize on this
by understanding these developing behaviors and building it into their
marketing/website strategy.

Retailers globally have all been hit severely by the control measures to curb
the spread of COVID-19. In Pakistan, retail sales have been hugely affected
when lockdowns came into effect across cities in the markets since 19 March,
2020.

Retail Sector in Pakistan

According to a retailer sentiment survey for independent stores conducted
by GfK across the six major cities of Pakistan, the one common major
challenge faced by majority (80%) of the retailers is managing operational
costs. A smaller percentage (38%) of retailers in Pakistan are facing no
support from distributors or brands to defer on payments cycle.

In effort to improve sales performance, retailers in Pakistan are finding

alternative solutions. Nearly 3 in 5 retailers (59%) have chosen to promote
their services online through social media such as Facebook, while over half
(51%) have expanded their coverage for home delivery service. A significant
43 percent of retailers are choosing to do nothing and just waiting it out—
for the government to remove the lockdown.

Meanwhile, majority of the retailers (52%) are expecting that this pandemic
will prevail till the end of 2020 and 43 percent are unsure when the
conditions would get back to normal. An optimistic 5 percent are hopeful it
will to get better after Ramadan.

GfK’s retailer sentiment study was conducted across 80 TCG retailers and
Telecom shops in 6 major cities of Pakistan i.e. Karachi, Lahore,
Islamabad/RWLP, Faisalabad, Peshawar, and Multan in the third week of May
2020, to gain a better understanding of the COVID-19's impact on retailers
and how they are coping with the situation.