Editor’s note: Ruben Nazario, Vice President, Innovation Product Lead, PRS IN VIVO, Atlanta
It is still too early to predict with certainty the total impact COVID-19 will have on society and the global economy. But there is interesting data suggesting it may have a lasting change on the way we shop.
China provides the strongest evidence, as certain cities are on lockdown and people are staying home to avoid contact with others. So how do people go about their day-to-day? By being extremely active online for work and play. E-commerce is already advanced in China and everything can be ordered online and delivered to your home.
However, e-commerce alone doesn’t always provide the entertaining experiences Chinese shoppers crave. COVID-19 seems to be promoting businesses and brands to fill that gap. Jing Daily reports that some malls in China have launched virtual reality channels where consumers can shop as if they were physically inside the stores, but from the comfort of their homes. Another big change has been social commerce, specifically live broadcasts where an influencer partners with a retailer to showcase and sell items via a live feed. While not completely new, popularity has skyrocketed. The ongoing trial of new shopping channels might have long-term effects on future shopping behavior given consumers’ tendencies (especially in China) to constantly seek out novel, entertaining experiences.
Changing behaviors
So, does that mean VR and live broadcasts are coming West next? Probably not, as China has a different retail landscape. But retailers and consumers can expect to see changes!
The first obvious sign of change in behavior in the West has been panic buying. N90 masks and hand sanitizer are selling out everywhere (my colleague found a six-pack of hand sanitizer online for a whopping $60, more than double the normal price). We looked at our online search data and found that Amazon visits from searches of n90 masks and hand sanitizers increased by over 1,000%. With items in stores going out of stock, more people are shopping online. In fact, at the time of writing, a report from CNBC confirms that Amazon Prime, Walmart and Instacart orders are experiencing delays due to a surge in orders.
Even nonperishable foods are in high demand. I regularly buy a multipack of Ramen noodles on Amazon for $25. Last week, the price had gone up to $35.
But the most searched item leading to Amazon traffic wasn’t a face mask, hand sanitizer, canned food or dry items. It was a video game! Madden NFL 20 searches increased by over 3,000% in the past month! It’s not new, the game came out in August 2019, which is an indication that people are planning to spend more time at home.
Over the next few weeks, with the likely increase of COVID-19 cases globally, we can expect more people to shop online for everyday items such as groceries and food. Our online data analysis shows that usage of DoorDash, a food delivery app, has consistently risen from roughly 17,000 daily users in late January, to an average of 44,000 in late February! This will keep increasing with more people staying home and fewer people wanting to dine out. We should see a similar trend for groceries. Right now, only about 3% of grocery sales take place online, and that share was expected to grow to 20% by 2025. However, will the expected increase happen even faster due to COVID-19? If it does, then it will be interesting to see if retailers can keep up with deliveries and see how this pans out for delivery vs. pickup. Will people prefer their groceries delivered to them (and dropped off by their door) or will they feel safe picking up at the store if there is little interaction with others?
Automation
If the COVID-19 outbreak gets worse, or continues for a protracted period, then it could be a tipping point for automation, particularly unmanned deliveries. After all, if people are asked to stay in, it is logical to project there won’t be enough workers to prepare food in commissaries or deliver groceries and orders. As reported by NBC, last month federal regulators gave approval Nuro a startup company, to deploy up to 5,000 unmanned delivery vehicles. Walmart and Domino’s were already planning to pilot delivery projects with Nuro in Houston prior to the outbreak. With COVID-19, they may want to expedite the pilot and expand to more markets to meet the upcoming surge in demand.
The changing landscape
As with all things related to COVID-19, both brands and consumers desire to be safe, prepared and agile to respond to a changing landscape. It is important to rely on data and facts, not hypothetical conjecture. That is why we will continue to monitor its impact on omnichannel retail using our analytics and qualitative research tools and report the trends that we detect and validate.