After nearly two years of disruption, the pandemic has changed the way we shop for ever and created the age of conscious consumerism. It has altered not only what we buy, but how we buy. Big purchases involve clicks, not shopping trips, and remote working has turned the home interiors market into the new fast fashion. It has also signalled the end of overwhelming choice for consumers as gaps on shelves and long delivery times for items such as cars and sofas become a frustrating fact of life.
Lifestyle changes due to health or environmental concerns are also helping new services get off the ground. Investors are pouring billions into rapid grocery delivery while buying second-hand clothes and furniture rental businesses are becoming mainstream.
And on high streets, lower demand is leading to cheaper rents and empty units are starting to attract independent stores. Here is a snap-shot of some of the big changes taking place.
Grocery shopping The pandemic has caused major upheaval in the UK’s £212bn grocery industry. The return of the weekly shop during the strictest periods of lockdown looked as though it had saved the big supermarkets from a midlife crisis, only for an army of rapid grocery delivery firms, such as Getir, Gorillas and Jiffy, to emerge with the promise of delivering your groceries in less than half an hour.
The IGD, the trade body for the food and consumer goods industry, says this so-called quick commerce has “exploded” on to the scene and is now a “channel in its own right”. It estimates 13% of UK shoppers now use these services, with sales hitting £1.4bn this year and on track to double within five. Research shows that the health crisis has created the kind of market conditions where people are willing to pay a delivery fee for a £20, 15-minute, delivery experience, but time will tell if these models are going to sustain.
The expanded online services offered by the big chains have also won millions of new customers during the pandemic, but with inflation running at a ten year high, the sands are shifting again, with discounters such as Aldi and Lidl the likely winners in the coming months as Britons seek out cheaper stores.
There may be more ways to shop these days, but the supply chain problems in the background have prompted the major grocery brands to take a leaf out the discounters’ book and reduce their ranges to become more efficient. The pasta category is a good indicator of this. Pre-pandemic there were 60 or so pasta variants available in the multiple retailers but this has reduced to 20. At the same time, the shelf space dedicated to vegan foods has increased significantly to meet demand. UK sales of meat-free and plant-based dairy products have roughly doubled over the past five years and are now worth close to £600m each.
Growth has been driven primarily by penetration gains. From 2016 to 2020, three million new shoppers bought into meat-free and 3.7 million shoppers came into the plant-based dairy market. More recently, the levers of growth have changed. While plant-based dairy continues to see strong penetration gains (1.5 million new shoppers entered the category in 2020), penetration growth in meat-free is plateauing. Instead, frequency is up as existing shoppers buy more frequently.
Despite these differences, both categories saw sales growth accelerate in 2020, with meat-free jumping from 17.5% growth in 2019 to 24% in 2020 and plant-based dairy moving from 13.1% to 26%. However, the effects of the Covid-19 crisis make it hard to tell whether this reflects a genuine increase in demand or simply the displacement of sales from the out-of-home market.
Working from home The shift to home working has had such a profound impact on how we live that it has become a retail super-trend in its own right. It has altered spending priorities, as money usually spent on foreign holidays or commuting is ploughed into home furnishings and revamps. Being home 24/7 has also resulted in an acceleration of the shift to online shopping. It took eight years for online sales to double their share of spending to 20%, but within just nine months of the pandemic, that figure touched 36%.
This year’s easing of restrictions saw it fall back to a still substantial 26%. It is clear that working from home has changed both the pattern of shopping and the pattern of demand. Sectors such fashion, food, beauty and homewares have changed, but the question is, have they alighted on a new, permanent position? And it seems things are still somewhat fluid as no one knows right now what proportion of people are going to continue working from home – and of course there are moves to split work between home and office and shorten the office working week. Whilst not everyone’s job is home-based of course, the way we are socialising and shopping is much more centred around the home.
We are travelling less far at the weekend for shopping trips or to eat out so we’re much more likely to be visiting local or independent stores. And in tandem with this, the profile of consumer spending has changed dramatically: for example, shoppers have spent an extra £503m in DIY stores this year, according to figures from retail data firm Kantar. Britons also took up new pastimes: 1.2 million new gardeners spent an extra £51m on plants and related paraphernalia.
Fashion Britons have swapped style for comfort during the pandemic: witness the 88% increase in loungewear sales last year. The closure of high street stores for long periods forced shoppers to buy the clothes they needed online and there may be no going back. It has been estimated that half of the £51bn spent on clothing this year will have been bought on websites. Come 2025 it thinks that figure will be two-thirds of the total. This is already the case for electricals, which has been one of the fastest markets to move online. There are other big forces at work in this market too. The fashion industry is a big polluter and under growing pressure to get itself on a more sustainable footing, so more companies are experimenting with selling second-hand clothes or even renting them out, a model that has previously focused on outfits for special occasions. The UK’s biggest clothing retailer, Marks & Spencer, is running a small trial to test demand for renting its dresses and coats – a trend that is more advanced in furniture, where the likes of John Lewis are renting out sofas, desks and dining furniture. As always, fashion-conscious teens got there first and are already spending their cash on second-hand clothes sites such as Depop and Vinted, which are reporting big sales increases.
Automotive The second-hand boom has already arrived in the car market, where soaring used car prices, up 31% since April, are pushing inflation. Usually about 2.5 million new cars a year are registered in the UK but that number sank to 1.6 million in 2020 with a similar figure expected this year as a shortage of computer chips hit production. There has been some upside to the tumult, with the most recent figures showing a doubling of electric vehicle sales. Almost 22,000 pure electric vehicles were registered in November, more than double the figure in the same month of 2020.
Stores The rapid spread of the Omicron variant has been devastating news for store-based retailers/ The stream of household names that failed pre-Covid was accelerated by the lockdowns. Recent British Retail Consortium data shows the number of empty stores sitting at a record high of 14.5%. The crisis has pulled rents down, but seriously high business rates remain a problem. There are glimmers of hope, though, with the same data pointing to a declining vacancy rate in some regions as independents move in to fill the spaces left by defunct chain stores.
But change is likely to continue with £90bn of non-food sales having moved from bricks and mortar to online over the past 20 years, a period when there has been no real reduction in available store space.
And indeed, in the first 10 months of the pandemic, the increase in online retailing took it beyond its 10 year forecast. However, if high streets become more populated by local independents supported by vibrant food and drink retailing, then it’s possible that consumers will still find shopping trips ‘and a day in town’ attractive and it may be that high streets will become more interesting and eclectic as the pandemic recedes.
What is clear is that conscious consumerism is here to stay. Our individual vulnerability has made us focus on the vulnerability of our planet with looking after the environment more important than ever.
For more information about how we help our clients launch new products take a look at Food Brand Strategist. And take a look at BoomBod as an example of our work. If you’d like to explore how we can help you with your new food product launch, ping me an email so we can schedule a call.
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