Retail's Wild Ride: Analyzing Shopper Behavior at Different Stages of COVID-19
Tracey Ryan O'Connor and Brittany Viola
To call 2020 a tumultuous year for retailers is an understatement. As COVID-19 spread across the globe in the early months of 2020, retailers in the U.S., and abroad, shuttered their stores and made the shift to online-only commerce. This sudden move forced brands to focus on the digital experience they deliver to both existing customers and those new to e-commerce.
Retail sectors across the industry were affected in differing ways but they all shared a consistent hurdle — the need to make as much of their inventory available as possible, solely through their online channel. The adjustment for most was anything but easy, considering supply chain challenges and constraints, amidst a slew of other pandemic related side effects.
Since the spring, the retail world has continued to adjust to the swings of the retail roller coaster brought on by a global pandemic. More recently, as restrictions eased and brick-and-mortar locations re-opened, retailers had to readjust once again, re-navigating the balance between serving both online and in-store shoppers.
Retailers know that many shoppers have learned and adopted new habits over the past several months, having shopped from the comfort of their home for much of 2020. But what does this new retail world really look like right now? How has it changed from the early days of the pandemic versus the present day? And how does it compare to this time last year?
Qubit has been tracking shopper behavior through its personalization platform and has found interesting trends and insightsthat have taken shape throughout this challenging, but fascinating, time in history. Specifically, Qubit studied the impact of the pandemic and e-commerce outcomes in the following retail sectors: luxury, affordable luxury, fashion, beauty, and general retail (e.g., home and garden, furniture). Each sector poses differing trajectories based on their varying e-commerce results.
Affordable luxury is recovering
Affordable luxury ($500 to $2,000 per item) initially took a major hit early in the pandemic — and this was not limited to store closures as online sales also dropped significantly. Falling e-commerce revenue may have been due to a combination of factors including consumer uncertainty about the economic impact of the pandemic on their personal incomes, coupled with decreased demand for dressing in-style as events and gatherings were brought to a halt.
However, at the beginning of fall 2020, we saw noteworthy recovery online for this category — visits rose 82.4% and revenue up by a whopping 122.7% in September versus April 2020.
This “bounce back” has brought this sector back to parity with fall 2019 levels (revenues are currently up by 11.7% YoY). Qubit analysts believe that the recent surge is fueled by many shoppers stocking up on new office attire with some returning to the office and others ramping up their wardrobe as they continue to work from home.
Luxury online revenues kept afloat during pandemic and are way up year over year
Comparatively, luxury brands experienced quite different outcomes during the pandemic, seeing positive results throughout. While growth between April and September 2020 was relatively modest (19.8% up for visits and revenues holding steady, up by 0.8%), we see tremendous gains from a YoY perspective when comparing this fall to the fall of 2019 — revenues have jumped by 114.9% and visits have increased by 36.3%.
For luxury, recreating the in-store experience is quite difficult, but both savvy shoppers and luxury brands are getting the hang of it. While Qubit projects positive growth for the luxury segment online, it may take up to three years for the sector to fully recover from the loss of in-store purchases caused by the pandemic and physical store closures. Looking ahead, Qubitpredicts continued growth for luxury brands, largely driven by millennial/Gen Z consumers, especially those in China.
Beauty e-commerce revenue down since early in the pandemic but significantly up since last fall
Although there were less site visits in September 2020 versus April 2020 in the beauty sector, (dropping by 11.8%), revenue has not declined at the same rate, down by just 3.7% in this same timeframe. The dip was to be expected as salons and stores have since reopened.
Looking at annual trends, however, we see that visits rose by 18% and revenue grew by an impressive 78%. Qubit predicts continued growth as consumers increasingly become more comfortable purchasing beauty products online, with skincare purchases soaring and brands offering more variety in their offerings, including new lines and products for men.
Fashion bounces back steadily
Fashion brands suffered in the spring due to store closures as well as lacking demand due to event cancellations and general uncertainty. We are now seeing e-commerce in this sector steadily bouncing back with online visits increasing throughout the pandemic by 16.4% and revenues up 11.8% from April to September 2020.
Qubit attributes this growth to closures and restrictions easing as well as a relative return to normalcy, with more people going out to eat, taking vacations, etc. From a year-over-year perspective, visits are up by 5.7% since last September and revenues have followed, increasing by 14.8%. Overall, we are seeing momentum and positive signals for further growth as we look ahead.
General retail (home and garden) normalizes after early pandemic spike
Early on in the pandemic, retailers selling general items, such as home and garden supplies, furniture, pharmacy goods, etc. saw a dramatic spike in April 2020. Since then, the spike in this category has normalized, with online visits and revenues dropping by 22.3% and 44%, respectively.
This is not too surprising, as many shoppers were likely making one-time purchases to stock up. However, from a year-over-year perspective, there have been gains overall in this segment with visits increasing by 22.4% and revenues up 49.3% as of September 2020.
COVID-19 has accelerated the shift online that we were already observing since the so-called “Retailapocalypse” and the collapse of shopping malls from recent years. Brands that learn how to meet their customers where they are right now, tapping into their shopping preferences and building online experiences accordingly, will survive and thrive in this challenging moment in history and beyond.
Tracey Ryan O’Connor
As the vice president of North America at Qubit, Tracey Ryan O’Connor is responsible for managing the U.S. business development team and overseeing Qubit’s strategic accounts in the company's growing fashion, beauty and retail brand portfolio. Prior to joining Qubit, O’Connor held sales and marketing positions at Reflektion, Neustar and Oracle.
Brittany Viola is a product and digital marketing manager at Qubit. As a member of the marketing and sales team, she is responsible for developing go-to-market strategies for Qubit’s product portfolio. Previously, she’s worked in operational, strategic and marketing functions at companies across B2B SaaS, retail and a consumer app startup.