My local butcher, Barry, reckons trade has never been so good. Never shy of an opinion, he puts it down to COVID-19, with people forced to shop local as their worlds have shrunk. Sticking his neck out, he thinks it’ll continue that way. So, Barry is pretty happy.
By Havas Commerce Managing Director Simon Porter.
And he’s got a point. COVID-19, like all major crises, has forced a significant shift in human behaviour. But, in this case, I’d argue COVID-19 has accelerated change that was already in motion. Our latest Prosumer Report*, conducted before COVID-19 took hold around the world, clearly highlights a trend toward preferring local over global. A trend that our recent, Meaningful Brands COVID-19 study, shows, has accelerated and might be here to stay.
Other highlights from the Prosumer Report show increasing shopper tension between value and values; more appetite for experiences over transactions in-store and a fast-forward of ambient shopping in Australia.
The study highlights a number of considerations and implications for Australian retailers and shoppers.
Consumers are conflicted
Shopping is a lot more complicated—and fraught—than it used to be. People are torn between values and value. While more than half of prosumers** say that in the future they’ll refuse to buy products from retailers that don’t share their values, nearly as many admit that, when it comes to shopping, price will always be more important than their personal convictions. And while we know from our 2017 study that 71 per cent of prosumers believe the best way to save the planet is to consume less, 66 per cent say that buying new things makes them happy. In Australia, there is an even stronger affiliation to local and prosumers are 50 per cent more likely to refuse to pay less if it harms the local community.
Looking forward, I believe this will have a profound impact on Australian retail. Shoppers will prioritise local produce, goods and services. Global players will have to differentiate their offerings or give extreme price discounts. Polarising the retail landscape more than ever before.
Retailers must infuse values all along the product line
Prosumers want to consume better and more mindfully and they expect their retail partners to make that easier for them by selling products that are good for the planet (94 per cent), banning items that are bad for one’s health (88 per cent), and guaranteeing fair prices for suppliers and producers (71 per cent globally vs 76 per cent locally). As debate intensifies around our primary industries, retailers need to prioritise positive action for sectors such as dairy farming, where they have come in for steep criticism in the past.
This is a potential trap for our local retailers who lag behind their counterparts (particularly in Europe) for sustainability. I predict we’re about to see a tipping point for the likes of Coles and Woolworths in sustainable credentials.
The retail fundamentals are getting an upgrade
The imperatives of product, place, promotion and price (4Ps) are as strong as ever, but now they’ve been joined by four additional essentials: culture, community, connoisseurship, and convergence (4Cs). Rather than being just purveyors of goods, stores need to be places where people can gather for meaningful experiences and interactions. This is particularly true in Australia, where prosumers are 25 per cent more likely than their global counterparts to want trial, experience and social interaction from their in-store experience.
The Australian retail landscape is set to be transformed. There will obviously be more online shopping. Whilst physical retail will be divided into value retailers and experience retailers – with a significant reduction in footprint for the experience retailers. Which in turn has a huge knock on effect for the make-up of our shopping centres and major shopping destinations.
Even global retailers must be locally grounded
As retailers grow, few manage to maintain deep local connections. The new consumers are demanding change; they’re looking for retailers to play a more significant role in their communities. And more than half of prosumers say one of the things they expect most from retailers is to highlight local products. Australian prosumers are twice as likely to shop for local than global and are over 25 per cent more likely to trust retailers that produce products locally than just sell other suppliers’ products.
Covid-19 has already highlighted the danger of relying on global supply chains. This trend will surely see a greater reliance on local supply chain and could well see the retreat of global retailers who no longer see the value in a market the size of Australia.
Ambient shopping is just around the corner
People increasingly expect the convenience of online shopping to be available offline, as well. We found that 75 per cent of prosumers would like to be able to immediately purchase anything they see nearby with their smartphones. This will only have increased as social distancing and new shopping behaviours emerge from the COVID-19 crisis.
This will be perhaps the biggest change to our shopping behaviours in decades. In a cashless society where ‘tap and go’ is the new normal, shoppers will drive the demand of retailers and brands to shop anywhere at anytime. The implication here for Australian retailers is that brands will have more opportunity than ever before to sell direct to consumers and that has major implications for the traditional retailer vs supplier model.
This study, though conducted before COVID-19, demonstrates the more decisive role retailers can play in building the world where “nothing will ever be the same”. Australian retailers that take heed of the trends indicated here (along with our friend, Barry), accelerated by COVID-19, will be better placed to come through the crisis stronger; which means prioritising local, values and meaningfulness for a brighter future.
A future where the impact of COVID-19 will reshape attitudes toward our fundamental needs, ranging from basic food and sustenance to health and hygiene. A future where retailers emerge from the front lines of the crisis and reinforce the importance of their presence and their commitments to local communities.
*Prosumer Reports are a series of thought leadership publications by Havas—part of a global initiative to share information and insights, including our own proprietary research, across the Havas network of agencies and client companies. Havas Group is one of the world’s largest global communications groups, bringing together 20,000 people in more than 100 countries.
**Who are Prosumers: Prosumers are today’s leading influencers and market drivers. They have been a focus of Havas studies for more than a decade. Beyond their own economic impact, prosumers are important because they influence the brand choices and consumption behaviors of others. What prosumers are doing today, mainstream consumers will likely be doing six to 18 months from now. For this study we interviewed over 15,000 people in 37 countries including Australia.