Here is a summary of their discussion around consumer behavior and how this holiday season will look different.
Mike Webster: We are fortunate at Oracle that we work with retailers all around the world, and the survey, looks at critical markets - the United States, Mexico, Brazil, United Kingdom, Italy, Germany, France, Australia, and China. We think it's a reasonably comprehensive look at what behaviors consumers are demonstrating in this very interesting time.
Mike Webster: Well, I think this study is intended to serve two purposes. First, we want to help inform the decisions our customers take based on insights into behavioral changes. It has been consistent throughout the years of our study that what we hear in consumers demanding in terms of choice, convenience, and change is validated in the periods that follow. But the primary purpose is to help our customers look at what business processes are critical and the role that technology plays in delivering those processes seamlessly. It's about preparing our retailers to better serve customers based on changing market changes.
Mike Webster: This study helped demonstrate that shoppers have a longing to return to normalcy, whatever that is defined as, but with some apparent changes. About 20% of the respondents indicated that a physical store would be their primary destination for their purchases, while about 50% said that they would have a mix or an omnichannel experience of both physical and digital channels. We got some profound insights into how customers want to engage with retail brands. The survey introduced, for the first time, a couple of new concepts most meaningfully were:
About 16% of respondents demonstrate they want to be able to order online but retrieve at curbside, so eradicating the traditional four walls of physical retailing
The remainder is buying online, picking up in-store, which has a little twist because that location might be a contactless kiosk.
Mike Webster: I think that communication is key, but really what consumers want more than that is visible evidence that their safety concerns are being addressed. 80% indicated that their preference is to see not only staff but also other customers wearing masks. About 80% also indicated they want to see visible cleaning efforts, not just Plexiglas dividers, but the evidence that the stores are being cleaned more often and thoroughly. We also saw about two-thirds of the respondents prefer a contactless checkout. These are just some real visible signs of safety measures retailers are taking, in addition to the communication around them.
Mike Webster: What we saw is that there is a group of consumers that felt that they would be more than comfortable to return to an indoor mall setting, roughly 20% of the respondents. Others felt more comfortable in outdoor shopping venues. The survey concluded that a majority are fine with either indoor or outdoor malls, as long as they thought that those proper safety precautions were being taken care of and that they had a comfort level with the stores' occupancy level. About ¾ of our respondents indicated that retailers that are managing traffic volumes would help them feel more comfortable and safer as they return to shopping.
Mike Webster: It's a dynamic picture as we serve global brands that deal with a variety of local regulations and very specific protocols. I think all of our customers have demonstrated that protecting the safety, not only of their consumers but also their staff, are board-level mandates. We think that they are taking the steps required to accommodate safety and continue to provide a critical element in retail, which is the experience, and that's why people are longing to get back into stores. Consumers want to interact with products and staff that have the expertise to share.
Mike Webster: I think inventory availability continues to be a huge priority and a massive challenge as we've seen consumers change their behaviors and stockpile certain products. We've also had supply constraints as a variety of markets struggled to source products to meet the consumer demand.
Retailers have to consider two things:
Consumers are shifting their loyalty, so if there is an out-of-stock position, consumers are more than willing to try a private label brand or another national brand; that's one dimension that we've seen around this surge in how consumers are shopping.
Communication is critical, so that means the need for real-time updates on items throughout a delivery process. If I've placed an order with you, the demand for transparency and timely updates on where that product is in the logistics process is critical. There is a dynamic around how retailers are promoting and what we as consumers are expecting. There is no doubt that price continues to be a very high priority in the purchase process, and about half of our respondents indicated that they are expecting to see an offer or discount. But what was really important in the survey was that a lot of correspondence, immediate availability, and fast shipping were key priorities. It's not just enough to give consumers access to the digital channel; retailers must execute and fulfill quickly.
Mike Webster: Clearly, there are issues around supply chain fulfillment and logistics, and there are several issues about how you forecast the demand. There are real challenges in inventory visibility across the enterprise and ensuring that customers can either pick up from a store or a distribution location when fulfilled by a third-party. So it touches every single part of the retail value chain, and it is vital. We believe that our customers do a better job in both processes, forecasting the demand, and then executing it through their supply chain.
Mike Webster: This is interesting. Last year, nearly 80% of the respondents indicated that they would make at least one return, and we saw that number drop in more than half. This year, about 38% of consumers indicated that they expect to make a single return this holiday season. I think it speaks to a change, and again, retailers are giving them more choices. I also believe it speaks to just where we are in the recovery from the pandemic. Perhaps there will be less travel to see family and friends and a little bit more gift card purchases that maybe lighten the load on returns. It is a meaningful change year over year in our survey.
Mike Webster: We saw strength in grocery and cosmetics. Those continue to see annual increases in both same-store sales as well as online. We saw an increase in electronics, perhaps driven by distance learning and working and finding ways to entertain families at home. We saw strength in the sporting goods category as gyms are closing and forcing consumers to do home workouts. There were also improvements in the pet category, perhaps mirroring the rise of adoptions in new pets that we've seen over the past six months. We see a little bit of pressure in luxury apparel, at least short-term, as we look at what's happening in China. We see those categories recovering pretty clearly.
Mike Webster: Well, I think with many of the customers we serve, what the pandemic is validating is the role of the store is critical. It is a place for them to differentiate their products and provide experience. It is also proving that the role is changing as now we see the store being a fulfillment center or being expanded to support things like curbside pickup.
We also see many other retailers taking advantage of this period to change the way they engage, using social media. About 50% of our respondents indicated that they're finding new brands on the social media platform of their choice, whether that's Facebook, Instagram, YouTube, or TikTok. We are seeing customers looking for influencers to help them on their purchase path, and we're seeing retailers do a much better job in engaging and serving customers in that channel. That will likely continue to expand in 2021.
Mike Webster: I think we can expect to see changes in-store formats; in some cases, we'll see smaller stores emerging. I think we can see the difference in staffing levels as they reposition their support processes to meet the customer where they are, whether that's curbside or in a dedicated location for buy online pick up in-store or at the checkout. I also think we'll continue to see retailers putting great emphasis on getting to a single view of inventory, a single view of order, and a single view of the customer - so they can provide a more frictionless experience. Listen to the Retail Focus podcast.
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