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Landscape changes fast

When retailer Next announced its results for the year-ending January 2020, one of its impressive headlines showed full-price sales were up four percent year-on-year -with online sales the largest contributor. Chief Executive Simon Wolfson also commented on the novel coronavirus (COVID-19) outbreak, believing the business would not be overly affected.

Last week, just eight days later, Next closed its warehouses and online operations after listening to its workers’ concerns about the pandemic.

With the coronavirus continuing to seriously impact every facet of life around the globe, retailers are reeling. Few, if any, have not been affected.

As the UK comes to the end of its second official week of ‘lockdown’, there have been discussions that this could be the new ‘norm’ for anywhere between three weeks to six months, or more. The only thing that is certain right now is that it’s a time of unprecedented uncertainty.

For digital retailers, it has been a time of mixed fortunes, with some forced to close their online stores, while others see a huge surge in demand.

Here, Redbox by SQLI takes a look at how the coronavirus is affecting digital retailers and the industry as a whole.

Working from home goes mainstream

While many companies, schools and colleges weren’t prepared to facilitate large swathes of their employees or pupils working remotely, it has been surprising just how quickly most have adapted.

From regular video conference calls, to chat apps and more, digital retailers have moved quickly to support their own staff and businesses, and schools in general.

Apps such as House Party have quickly become the go-to method for a catch up with friends, Facebook announced total messaging has increased more than 50 per cent in countries hit hardest by the virus, while Zoom and video conferencing have been a bit hit in business.

Adobe has made its Creative Cloud desktop apps free until the end of May, with free 90-day access to Adobe Connect if customers sign-up for a trial license between now and July 1st. Adobe Connect can help build virtual work spaces and allows businesses or schools to connect in rooms of up to 25 pupils or participants at a time.

In its first ever virtual Adobe Summit on Tuesday (31 March), chairman, president and CEO of Adobe Shantanu Narayen emphasised how important digital was in this time of chaos.

He said: “We are clearly living in unprecedented times. COVID-19 is changing everything in our life and work as we know it. Everyone is having to rethink the way they operate, including us at Adobe.”

Mixed news for digital retailers

Many retailers have prioritised their staff’s welfare and closed down both their physical and online stores, with industries including fashion, travel, entertainment and sport particularly hard hit.

Fashion brands including River Island, Next and Net-A-Porter shut down their websites, with analysts at GlobalData estimating the amount Britons would spend on clothes and shoes likely to tumble by 20 percent –£11.1bn – in 2020. Thankfully, some of these companies have continued to pay their employees for the time being.

But many countries have seen huge spikes in ecommerce use. A study from Ipsos MORI conducted between 12-14 March found 50 percent of Chinese, 31 percent of Italian and 18 percent of UK consumers said they were shopping online more.

Online supermarkets such as Ocado initially struggled under the weight of extra customers trying to secure online delivery slots, firstly through panic buying and secondly, through not wanting to leave the house to do their normal food shop.

Ocado’s website crashed several times and it, like other supermarkets, put restrictions on products and stopped new customers from signing up so they could deal with the backlog and ensure the platform could cope.

While many supermarkets in the UK have no new delivery slots for weeks, most have ensured priority delivery slots are reserved for the most vulnerable in society.

Online bank Starling – which has 1.25 million UK account holders – said transactions in supermarkets peaked in mid-March.

It said: “Our data suggests that the panic buying seen in the UK’s supermarkets over recent weekends peaked on Saturday, 14 March, with the number of transactions on that day up about 15 percent compared to pre-virus levels. Over the weekend of 21-22 March, transaction volumes fell back to levels seen before the crisis.”

The online bank’s data also shows how quickly the UK moved to shopping online. It said online shopping outstripped all other forms of spending for the first time on 24 March.

Delivery business motoring on for the eCommerce industry

While some retailers have been forced to shut their physical stores, they have turned to selling online to keep their businesses afloat. And this is on top of many buying more online to keep their children – and themselves – entertained while stuck indoors.

This has led to a huge surge in delivery businesses being utilised. Rental companies have seen a massive demand for vans from businesses crucial to preventing the spread of coronavirus, such as pharmacies, couriers and cleaning firms. Retailers, logistics companies and emergency services are among other industries that have needed to scale-up delivery logistics quickly.

E-commerce giant Amazon is continuing to deliver in the UK, but has said delivery times on some items would be several weeks as it prioritises essential items such as health, books and working-from-home products.

In the US, Amazon has launched a recruitment drive to take on 100,000 full and part-time staff to ensure it has enough capacity to cope with the surge in demand.

Adobe’s Digital Economy Index shows new trends

As part of its virtual Adobe Summit, the company also announced its first Digital Economy Index.

The Index analyses trillions of online transactions across 100 million products in 18 categories in near real-time. It uncovers digital commerce insights and trends and discovers just what consumers and businesses are buying and when.

It found a huge rise in sales of groceries, cold medication, computers and fitness equipment since the coronavirus pandemic took hold.

Between 11-15 March,fitness equipment sales were up 55 percent when compared to the 10 days before. Sales in computers and monitors were up 40 percent between 11-25 March compared to the first 10 days of the month.

Toilet paper sales were up 231 percent, and hand sanitizer, gloves, masks and anti-bacterial spray sales up 807 percent.

The Index is certain to play an important part in our understanding of the growing and evolving digital consumer story.

The Takeaways

In these uncertain times, it is important to do what is right for your company, your family, your employees and customers. There are no easy answers. If you’re working from home, ensure you take regular exercise for your physical and mental well-being.

For digital retailers that are still operating:

  • Can you invest in training on remote working? Take a look at the Adobe Help Centre to learn more about Creative Cloud apps and how Adobe Connect can help you stay in touch with your workforce.
  • Re-evaluate and assess regularly. From washing our hands more, to working from home, to social distancing, semi-lockdown and now full-lockdown in some countries – the narrative, as well as the virus, is fast-moving. No-one can predict how long our lives will be on hold for, or what’s next. Be prepared to change your business structure and operations quickly. Have regularly meetings with management and staff to keep everyone up to date.
  • Be open with your customers. Never has it been more important to let your customers know what you are doing as a business to protect them and your staff. If your products could take two weeks to get to them, let them know this and why. Most appreciate the reasons and will understand as long as they are made aware.
  • Buy now, pay later? In a time when many people are worried about whether they will have a job next week or about getting extra food on the table with schools closed, can you introduce other payment models into your business? Redbox partner Klarna allows customers to buy now and pay in 14 or 30 days, giving them the flexibility that may make a huge difference.

If you are considering closing your online store, our thoughts are with you at this difficult time. Could you use the time to plan ahead? To start planning your migration to Magento 2? Could your company do something to support the country’s battle against the virus? Gin distillers are turning to making hand sanitiser, airline staff may be assisting nurses at newly-built hospitals. Other companies are offering their goods for free to key workers. Is there anything your business could do to assist the cause? If you are based in the UK and think your business could help, fill in this form on the government website.

Finally, if you are a business looking to get online fast, or upgrade your existing platform quickly, Magento has a number of packages designed to help. Get in touch with SQLI to see how we can support you today.