Covid-19 Has Flipped the Value Proposition of Omnichannel Shopping For Constrained Consumers

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With few alternatives available during the widespread lockdowns earlier this year, e-commerce quickly became a go-to means-to-an-end for shop-needy consumers around the globe. Six months later, that early reliance on e-commerce has expanded into a fundamental dependence on still-evolving omnichannel shopping experiences. 

The premise of omnichannel shopping certainly wasn’t borne out of the COVID-19 pandemic, but the global health crisis has dramatically elevated consumers’ use of both on- and offline channels in tandem, whether for click-and-collect, contactless delivery or an array of other fulfilment options.

Covid-19 Has Flipped the Value Proposition of Omnichannel Shopping For Constrained Consumers Brandspurng1
Photo by Ross Sneddon on Unsplash

And across consumer groups, online channels have become the most critical shopping resources for constrained consumers—those whose income and spending have been significantly curtailed or constrained due to unemployment, furloughing or other COVID-19-related challenges. Today, these consumers have matured into online super users, even if they occasionally opt to buy in traditional brick-and-mortar stores.

“CONSTRAINED CONSUMERS ARE BECOMING MORE ACTIVE AND ASTUTE ONLINE USERS, TAPPING INTO THESE RESOURCES TO SOURCE PRODUCTS, PRICING AND PROMOTION TO MATCH THEIR REDUCED SPENDING ABILITY. THEY ARE SEARCHING AND SHOPPING MORE REGULARLY ONLINE TO OBTAIN THE BEST DEALS, WITHOUT HAVING TO INCUR TRAVEL COSTS.”

AILSA WINGFIELD, EXECUTIVE DIRECTOR, NIELSEN INTELLIGENCE UNIT, GLOBAL CONNECT

Following the extended stay-at-home periods, omnichannel shopping is becoming further entrenched as the future norm, with e-commerce growth eclipsing physical stores along the way. Nielsen’s Global New Shopper Normal Study found that only 9% of global consumers were regularly shopping online before the COVID-19 pandemic.

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But as restricted movement orders forced consumers indoors, online adoption skyrocketed, with 27% of global consumers starting to shop online for the first time. In May 2020, 44% of global consumers said they were shopping online each week, with 23% reporting shopping online multiple times each week.

For constrained consumers, these indicators are even more significant: 31% are new to online shopping and 30% are shopping online multiple times per week, versus only 18% of insulated consumers. Twenty per cent of constrained consumers are now regularly using online as their most frequented channel.

Covid-19 Has Flipped the Value Proposition of Omnichannel Shopping For Constrained Consumers Brandspurng
Source: Nielsen Global Shopper Normal Study, May 2020

COVID-19-driven online shopping and purchasing behaviours will become ingrained among consumers who opt to avoid regular travel (to stores), and frequent physical touchpoints. But digital channels serve as more than simple delivery mechanisms for constrained consumers, elevating their importance to them.

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For these consumers, online channels serve a broader purpose: They are an essential way to research, compare prices and hunt for the right deals before deciding whether to leave home to make the purchase at a physical store or buy it online. Globally, 72% of constrained consumers are omnichannel shoppers, 10 percentage points higher than insulated consumers, whose finances haven’t been impacted, or as impacted, as a result of the pandemic, and 6 percentage points above the global average.

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The evolution toward online reliance among constrained consumers stands at odds with the pre-COVID-19 perception that e-commerce would gain the most traction among consumers with the greater financial muscle to flex. Early hurdles to more widespread e-commerce adoption, namely delivery costs, have largely faded, with many retailers altering their online value propositions simply because it allows them to cast a much larger net.

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“With more frequent search and shopping patterns, constrained consumers may be prepared to forego expedited delivery times in exchange for free delivery,” says Wingfield. “They’re also more likely to plan their purchases to coincide with free delivery days and times. E-commerce retailers could look to lock in these consumers’ loyalty with preferential pricing and promotions on essential product ties.”

Driven by frugality, constrained consumers are now the most active omnichannel shoppers: Compared with insulated consumers, they search more online, browse more frequently, pay closer attention to pricing, and they have more time to do so. And the savvy retailers that see this activity will remove or minimize previous adoption hurdles to ensure that any and all consumers stay online and make a purchase once they find it.

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With constrained consumers viewing online channels as a key resource for managing their spending, it’s critical for brands and retailers to understand the intentions, actions and attributes that will influence shopping habits across missions, frequencies, repertoires and the search for value. Importantly, discounters have historically been a key resource for shoppers with limited funds. The discount channel, however, is among the least present online. Aldi, for example, just kicked off a click-and-collect trial in the U.K., its first foray outside of the brick-and-mortar realm. The grocery chain also recently launched a rapid delivery service.

The opportunity, however, isn’t just for discounters. Understanding how consumers use online, whether as a resource or an actual purchasing channel, is critical for all manufacturers and retailers. The arrival and duration of the pandemic have proven just how dominant omnichannel shopping has become. As of May 2020, 66% of global consumers were omnichannel shoppers, with the rates higher in Asia-Pacific (78%) and Africa-Middle East (75%). Those rates speak to the importance of seamless experiences across on- and offline environments—experiences that will either keep consumers coming back for more or headed elsewhere to find something better.

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