By René Vader, Global Sector Head, Consumer & Retail, KPMG International; Wei Lin, Partner, Global Strategy Group, KPMG in China; and Paul Martin, Chair Global Retail Steering Group & Head of Retail UK, KPMG in the UK
The massive disruption wrought by COVID-19 has left an indelible mark on customers. Indeed, the customers you knew just three months ago are not the same people today. Normal preferences have shifted as customers exercise caution – about where, what and how they make their purchases. The impact on retailers and consumer goods companies will be tremendous.
Granted, we still know comparatively little about the COVID-19 virus and its long-term implications. But what’s clear is that it has already fundamentally changed the way people around the world think and act.
And China – the first country to successfully move through at least one wave of the virus – offers some very interesting insights into how customer preferences, needs and expectations might evolve in other markets in the coming months.
Very different motivations
The impact on customers was obvious from the beginning. As the virus first started to circulate, the shift in customer preferences was palpable. Almost overnight, physical stores were shunned. Customer demand shifted from discretionary items to those perceived as essentials. People started to prioritize health and supply chain safety over cost and convenience.
At the same time, China’s home-bound consumers took to the internet to talk, work and make their purchases. Online channels of certain brands – particularly those in the grocery and food industries – saw massive volume. Those companies without a customer-friendly digital presence scrambled to fill the gap. In just a matter of weeks, China’s pace of digital adoption and rate of digital literacy skyrocketed.
Keeping your customers
Looking at China’s experience over the past three months, we see several important lessons for consumer and retail companies seeking to retain customers as their markets deal with this initial wave of the pandemic.
- Think ‘safe retailing’. Forget fast retailing. Since the onset of this pandemic, customers are much more interested in safe retailing. And in times of uncertainty and crisis, people want information they can trust. Some brands, like HEMA – a chain of grocery retailers currently being developed across China by online giant Alibaba – have responded by adding new layers of information about their products and, importantly, about the individual person making the ‘last mile’ delivery.
- Get closer to customers. Building on the experience of retailers in Japan following the East Japan and Kumamoto earthquakes, Asian markets have been leveraging smaller community retail formats around residential areas as a way to provide access to day-to-day necessities for customers without forcing them to travel great distances or congregate in large groups. Stores are equipped with 48-hour emergency power supply and share disaster relief information with local government.
- Close that last mile. With demand for home delivery at record levels, some brands have been partnering with companies that can offer scaled capabilities in areas like home delivery and digital ordering. For example, large retailers like Costco (who lack delivery services in China’s cities) have been partnering with Meituan-Dianping and Ele.me – two popular food delivery companies with significant urban reach – to ensure their customers’ needs can be met. Others are looking to diversify their delivery and last mile capabilities recognizing that – in an emergency – their products may be deprioritized as major platforms put their delivery capabilities behind meeting demand for essential products.
- Improve digital channels. Last year, everyone wanted to talk about ‘phygital’ retailing. No more. Today’s physical stores either have no goods or no shoppers. Retail and consumer brands – particularly those selling discretionary goods – will need to rethink their customer experience and find ways to deliver on customer preferences and needs through digital-only channels. Retailers reliant on traditional customer footfall to deliver their experience will be challenged to compete in this new world.
- Deliver on your values. Customers are looking for brands they can trust. And they want to buy from companies that are making a positive difference in the fight against this pandemic. This is an opportunity for retailers and consumer goods companies to demonstrate they are committed to delivering on their purpose and their values either through direct actions (say, by reducing delivery fees for hospital workers) or indirect support (even emotional support when needed).
Take what you can
Clearly, every market and every population is different. China, for example, has invested heavily into its digital infrastructure over the past few years and, as a result, has largely been able to manage the increase in digital demand. Markets that have fallen behind on these types of investments may struggle to convert consumers from the physical to the digital.
However, our view indicates that China’s experience offers some rare insights into how this pandemic is changing customer preferences, needs and expectations. And in this world, retailers and consumer goods companies will want to take inspiration and ideas from wherever they come.
Stay up to date with what matters to you
Gain access to personalized content based on your interests by signing up todaySign up today