Jürg Meisterhans explains in an interview how the retail sector will develop going forward and shares his opinion on the retail apocalypse.
KPMG conducted a representative survey among 3,152 consumers from Germany, Austria and Switzerland to ask them about their shopping behavior. How has the coronavirus pandemic changed the way they shop?
Our survey reveals that 40 percent of the Swiss population have changed the way they shop because of the coronavirus pandemic. Online grocery shopping in particular has become more acceptable. Contact restrictions and the absence of a shopping experience due to the hygiene measures in place are some of the main factors behind this rapid development. Typical Swiss citizens view online shopping as practical, convenient and simple.
How sustainable is this development?
Nearly half of consumers think that the coronavirus pandemic has brought about lasting changes to their online shopping patterns. Just how sustainable this change is, however, remains to be seen because our survey also revealed that consumers are looking forward to a return to in-person shopping experiences. People want to get back into the stores because online shopping was a measure forced on them, especially during those times when only grocery stores were open. They had no choice but to switch to the online channel for items like clothing or furniture, for example. What that channel completely lacked, however, was a social aspect – and that shouldn’t be underestimated.
The younger the shopping public, the higher the online spending compared to bricks-and-mortar retail. Will we be seeing a retail apocalypse soon?
No, definitely not – there won’t be any retail apocalypse, although shopping patterns will change over time. Today’s young consumers are already doing more of their shopping online and will continue to do so in the future. Despite the growing importance of e-commerce, bricks-and-mortar retailing – physical stores, in other words – will continue to play an important role going forward. The shopping experience, social contacts and personal, face-to-face advice cannot possibly be replaced by an online experience. That much has become evident over the past months.
What could change in the future, though, is the mix of items in shoppers’ carts: Currently, you only buy products from a single product category, like groceries, from a specific retailer. That raises the question of why we can’t buy other things like drugstore products from the same store, too. In the future, one retailer offering a blend of different product categories might become a more common sight. That’s what’s so interesting about online marketplaces like Microspot, Galaxus, Amazon, and others, that offer such an enormous range of products.
It’s mainly non-perishable goods that are being bought online at the moment, but retailers offering fresh goods, like coop.ch and migros.ch, are catching up. What do you foresee for the future?
One of the main reasons why non-perishable items are more commonly purchased online is that they’re easier to handle with respect to shelf life and transport – unlike frozen vegetables or meat, for example. But that being said, the lockdown also resulted in an increase in the amount of fresh goods purchased online. Then again, that’s also linked to the contact restrictions. What’s clear, though, is that consumers will still continue to do most of their grocery shopping in stores. The online potential for fresh products is still fairly low. People want to see, touch and pick out their own food. Nobody wants unripe bananas or a wilted head of lettuce. Being able to make your own decisions is still a priority when people shop because they want to choose the things they’re paying for themselves.
Technological advances could make it possible to see, select, compare and then purchase perishable items online, there’s definitely some potential there. That’s still a long way off, though.
Migros, Coop and Swiss Post have announced plans to share delivery trucks and couriers in the future – not only with an eye to efficiency but also for environmental reasons. Which other developments do you expect to see in the retail sector?
There are several innovative projects underway in the retail sector – we’re seeing a change of thinking here, too. One example of this is how logistics will be handled in the future. It would make sense from both a financial and an environmental perspective if various retailers were to pool deliveries, an approach that Cargo sous terrain is now working to implement. Not only would it result in lower logistics costs, but it also offers the advantages of a large network of delivery trucks as well as reductions in traffic and noise on the roads. It’s entirely possible that a distribution center might be built, which could then result in an uptick in online purchases of fresh goods.
Digitalization is also a megatrend in the retail sector. Automation can make business processes even more efficient. Not only that, but digitalization also opens up far-reaching opportunities for analyzing customers’ shopping behavior and to address, meet or actively trigger needs in a targeted way. That also includes coordinating Click & Collect orders, leveraging customer analytics and using artificial intelligence. On the other hand, digitalization poses a huge challenge for IT, as well, with one example being the topic of cyber security.
Consumers are additionally attaching more and more importance to issues like sustainability as well as organic and regional products.
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