79% of Millennials and Gen Xers will Continue to Buy Essentials Online

In Q1 of 2020, digital commerce revenue across the globe rose by 20 percent. In Australia and New Zealand, it leapt 68 percent. Digital traffic overall increased by 16 percent and average customer spend jumped by four percent. As a result of lockdowns and physical store closures around the world, the trend was even more pronounced in April – with 90 percent global digital commerce revenue growth and an astounding 262 percent digital commerce revenue growth in Australia and New Zealand.

The pace of this growth, though unexpected six months ago, will come as no surprise. Those retailers that have long pondered over moving into a digital marketplace have been left with little alternative; likewise, consumers who’ve resisted the temptation to shop online. The vast majority of changes we’ve seen to our retail landscape over recent months were, however, always on the horizon. COVID-19 has simply accelerated the rate of change. What may have taken five or 10 years for businesses to achieve and consumer behaviour to move to is here now. 

Digital retail: A permanent shift?

What our post-COVID world will look like no-one truly knows, however, it’s certain that some things will change – particularly things that, over time, would likely have changed anyway. 

We’ve seen many retailers doing innovative and exciting things online, and no doubt some of those will remain, evolve and form part of their overall strategy moving forward.

Consumer behaviour will also be affected long-term. Across the globe, significant numbers of shoppers have been forced online to purchase items they’d usually pick up in person. Salesforce Research is currently surveying the general population each fortnight, and the latest data shows that Australians are avidly adopting new means of shopping, with 39 percent more interested in shopping online compared to a year ago. Additionally, there is a stronger interest in using click and collect (31 percent), shopping in-app (30 percent) and shopping via social media (19 percent). 

As consumers become more and more accustomed to purchasing online – or using online services such as buy online, pick up instore (BOPIS) / click-and-collect – digital commerce will become an increasingly important part of the retail revenue mix. Habits will be formed, businesses evolved and our retail landscape forever changed. 

 Navigating the digital retail change 

Businesses are navigating through three stages of uncertainty: stabilise, normalise and accelerate – and the digital maturity of individual businesses at the time COVID hit will have affected how quickly they move through each. 

Retailers that hadn’t evolved their online presence have struggled to be agile enough to adapt and face an urgent situation in which they need to build their online presence now, or risk being left behind by both the market and the expectation of their customers. 

Many with well-established digital arms were quickly able to normalise operations and are now in the accelerate phase, during which they’re learning and evolving processes, implementing permanent changes and making use of a virtual workforce. 

This doesn’t mean that bricks and mortar stores will all remain permanently closed, of course. But these retailers have diversified income streams, fast-tracked many digital operations, and learned and evolved their offerings. 

For those businesses who’ve not had an online e-commerce business before, and are still in the stabilise or normalise phase, however, the good news is there’s still time to adapt and set their business on a path to future success – if they act quickly. Of course, launching a whole new e-commerce business can be a daunting task, especially for the digitally inexperienced – it’s smart to take a pragmatic approach, be clear about where responsibility lies, and have a mindset of learning and adapting. 

The future of retail 

For many retailers, there’s been a huge reliance on physical interactions. 

Sometimes this is understandable. Some legacy businesses have been in operation since pre-internet days. Some differentiate based on the personalised customer service they can deliver in-person. 

And yes, there is an undoubted pleasure in physical retail that cannot be replicated online. However, that cannot be relied upon as a differentiator. 

The reality is that digital commerce opens the doors to an exponentially increased number of prospective customers, and keeps a physical store open 24/7.  

Critically, however, e-commerce is a growing part of the retail mix, and the focus is shifting thanks to the online experiences retailers have been delivering to customers, and the efficiencies those businesses have been able to establish. 

There’s evidence to believe that the shift to online shopping will outlast the pandemic, and that it will encapsulate purchases long associated with a quick trip to the grocery store or big-box outlet. 

Almost two-thirds (60 percent) of Australian shoppers expect to buy essential goods online after the health threats of COVID-19 have subsided. Millennials and Gen Z consumers are most likely to drive this lasting trend, with 79 percent in Australia saying they are likely to continue shopping for essentials online after the threat passes. However, 26 percent of Aussie baby boomers also foresee purchasing staples from a desk, dining room table or couch.

The proportions of physical retail, digital commerce and other channels, of course, will differ for each business, but ultimately succeeding in retail when consumers are looking to spend in digital channels is about providing them as many options as possible to engage and shop on their terms. 

Salesforce Live for Retail & Consumer Goods on 15 July will inspire your team while providing the latest insights from leading Australian and New Zealand industry leaders. Find out more and register.

James Johnson is Director Industry Strategy for Retail at Salesforce. With almost 20 years’ global retail experience as a practitioner (Michael Hill, Colorado Group and Virgin), a consultant (EY) and technologist (Demandware and Salesforce), he understands the challenges that retailers face and helps retailers meet their customers’ needs by sharing insights, experiences, best practices and stories.

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