There’s no question that retail operations and consumer purchasing habits are experiencing a major shift, as the pandemic causes shutdowns and stay-at-home orders. Retailers and customers are navigating unprecedented times. Online shopping, once a perk, has become a necessity. Add to that the work-from-home mandates, and you have CE sales that were previously unpredicted.
The question lies in whether the necessity for online shopping will shift consumers’ preference from brick-and-mortar locations permanently, or if the two modalities can continue to work cohesively in this changing landscape of consumer tech merchandising.
A May 2020 Forbes piece suggests: “The pandemic is likely to produce two distinctive behavioral archetypes: people who have embraced a new lifestyle and those who have largely remained unchanged. The emergence of the new behavioral group is going to have a transformative impact on the future of brands. Inevitably, there will be winners and losers. Some brands will need to figure out how to win back old customers with new mindsets, whereas other brands will use the opportunity to steal market share by appealing to consumers’ newly formed lifestyles. Regardless, marketers should have these two distinct archetypes in mind when updating their customer segments.”
Steve Koenig, vice president of Research at CTA, points out, “The health crisis has accelerated digital transformation strategies across several economic sectors, including retail. Retailers who already had omnichannel (store, online, mobile) operations in place have tended to do well. Several retailers pivoted quickly to offer new services, such as video-call sales consultations, curbside pickup and contactless delivery, while physical stores were shuttered. Now that stores are reopening (to some extent), many of these adaptive measures have remained in place.”
Online Shopping Accelerates
While consumers have been increasingly gravitating toward online shopping, the pandemic has only added fuel to this fire.
“Technology shoppers have been shifting more of their spending online for a while now, but the pandemic has accelerated that behavior. I also believe brands are more important today as consumers scrutinize their household spending more closely,” says NPD Group’s Ben Arnold, industry analyst, Consumer Technology. “Consumers, overall, will become more digitally native as a result of this experience. I would also say that consumers will come to rely on brands more heavily as a way to ensure their investment will be worth the money.”
CTA’s Koenig echoes this sentiment: “The health crisis has turbocharged the pre-existing tailwinds driving online sales momentum, while it has stiffened headwinds for physical stores—either from store closures or limits on store traffic.
“Physical stores are presently in a kind of purgatory; partially open, facing an uncertain future. We expect operations and customer traffic at physical stores to remain fragmented based on coronavirus conditions and local policies. Meanwhile, storefronts are acting as distribution centers to facilitate same-day deliveries and curbside pickup of online orders. This is the new normal for retail.”
Koenig added, “We also expect more in-store automation—including sanitization but also self checkout. Fully automated, contactless stores may emerge in denser urban areas.”
Product Category Trends
While mobile products and accessories have performed poorly, TV and PC sales have shown significant growth.
“TVs have been one of the best growth categories over the last quarter. Unit volumes are up 38 percent and revenue is up 32 percent over that time,” reports Stephen Baker, vice president and industry advisor, Technology & Mobile, NPD Group. “Large screens (55 inches and above) continue to outperform smaller screens; however, we have been shocked at the strength we have seen in 32 inches, for example, given the longer-term prognosis for that segment to decline; 32-inch screens have seen 50 percent growth in Q2, one of the stronger segment performances.
“Larger screens, above 55 inches, have been up over 60 percent in units during Q2. TV sales have been driven by entertainment needs (we have seen strong growth in soundbars, mounts, and other home theater products as well), but also by the growth in new TV placements.
“NPD’s Future of Tech survey work has shown that about 40 percent of TVs being purchased are for new TV placements in the home, leading to an expected increase in the installed base of TVs going forward.”
While the trends suggest the online shopping surge is expected to continue, the complete disappearance of physical stores is unlikely.
“The new normal for retail will persist, while coronavirus remains a threat. Online sales ‘clicks’ will largely replace the ‘ring’ at the register, as store traffic remains intentionally constrained to protect customers and employees. Home installation services should recover somewhat simply because consumers will want to move forward eventually with home technology upgrades,” says Koenig.
“We think many consumers will stick with behaviors forged in the test of the health crisis for the most part—particularly buying products (from groceries to technology) online. This means store traffic may be permanently reduced and we may see the sales floor contract in some cases to level-set with reduced traffic.”
Koenig also believes that retail stores will continue to act in a dual mode of storefront and local distribution center. “Curbside pickup will remain a key strategy to win business. Therefore, it’s clear physical stores will remain important and play more of a supporting role for online sales.”
Supporting the New ‘Office’
The way in which people live and work has changed dramatically as a result of the pandemic, which will continue to fuel the need for consumer technology. NPD’s Arnold, who has over a decade of experience eyeing consumer tech trends and usage, believes that the structure of the workforce, in this working-from-home state, will be a mainstay.
“One of the anticipated enduring impacts of the pandemic will be that everyone will become a remote worker in some measure and will need the technology to support that. Going forward, I think more households will have a home office setup, so everyone can be productive remotely.”