Retail in the Time of COVID-19: Business Unusual

COVID-19 has catapulted digital transformation within the SA retail landscape. But not all retailers are ready for it. Going online is no longer a nice-to-have, but an essential channel for service delivery, writes Tony Nugent, Retail Principal Practice and Solution Head from Dimension Data.

Even before the coronavirus pandemic hit, the South African retail landscape was undergoing a shift. Businesses were grappling with changing shopping behaviour, struggling to launch and maintain e-commerce platforms and ultimately, placing their efforts into what was considered low-risk retail: bricks-and-mortar.

As COVID-19 started to spread, digital revenue spiked for both B2B and B2C businesses – retail websites generated almost 22 billion visits in June, up from 16.07 billion global visits six months prior – with an online presence giving mandate to retail businesses to accelerate the pace of digital transformation. Stuck at home and only leaving the house for essential items, digital channels became the go-to destination to maintain businesses as usual.

For many, COVID-19 has been a stress test with store closures and many brick-and-mortar outlets needing to quickly overhaul their short-term strategy to suit the needs of lockdown shoppers. Drive-through deliveries made a surprising comeback and click-and-collect – the ability to buy online and pick up items (almost) immediately with little interaction – took over as a palpable solution for consumers avoiding excessive delivery fees and queues, as well as those looking for more sustainable, environmentally friendly packaging options.

The new retail reality is that online is imperative. Price-sensitive South African consumers who were previously cautious about shopping online are turning to on-demand apps, WhatsApp and even social media sites to fulfil their purchasing needs. At the same time, brick-and-mortar stores with longer online delivery periods (or simply no e-commerce option) are trying to facilitate their sales through on-demand apps, to reach the consumer quicker. This temporary e-commerce lifeboat, while useful in lockdown where essentials and larger baskets are prioritised, doesn’t necessarily provide a long-term retail solution.

It does, however, show that mobile should be an important consideration when going online as it could provide pockets of opportunity for retailers to target additional customers. (According to Salesforce’s Global Shopping Index report, mobile e-commerce traffic grew by 25% across all industries in Q1 2020.) Even pre-pandemic, mobile was on its way to becoming the go-to digital device for decision-making. Showrooming – the practice of visiting a store but checking alternative market prices on a mobile phone while browsing – remains a big driver of online sales.

A new realm of retail

A new Nielsen study shows that a growing proportion of African consumers will continue to shop online long after lockdown restrictions have eased. The ongoing impact of the coronavirus means brands need to continue to evolve digitally to survive, so building an online presence should be a priority. And going beyond supply and demand, e-commerce is about trust and loyalty. A business with a digital presence is an important part of a company’s value proposition. And if user experience (UX) meets customer experience (CX), you’ll win consumer loyalty, something more critical than ever when demand is potentially supressed.

For many enterprises, online is a silver lining in this unpredictable pandemic. For both B2C and B2B, retail’s digitalisation is soaring as those who previously avoided online become acclimated to digital shopping as their ‘new normal’. In response, businesses need to look at new approaches to marketing, logistics and merchandising as interesting online opportunities like marketplaces and e-commerce subchannels emerge. For B2B, digital interactions are more important than ever before as sales shift from field to online self-service. By simplifying processes and improving communication, B2B companies could optimise their customer’s experiences and be rewarded with new streams of data to draw insights from.

The coronavirus pandemic has truly accelerated online adoption but e-commerce, in its current form in SA, is simply not equipped to handle this “shopping 2.0” revolution. The first step is to incorporate the right back-end solutions to meet the needs of a new, dispersed workforce. Those who are quick to respond to the online opportunities COVID-19 has brought will be the most likely to thrive and survive during and after the crisis.

If anything, it’s unlikely that retail will return to how it was pre-pandemic.  The past few months have proved that businesses shouldn’t wait for a global crisis like the coronavirus pandemic to prioritise digital preparedness. No retailer can predict what the future holds which is why it’s time to emerge from crisis response mode and focus on building localised e-commerce platforms that facilitates B2B and B2C sales.

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