The pandemic has had a sweeping effect on eCommerce, supply chains and warehouse operations over the past few years. Rising customer demand and changes in consumer behaviour have affected how customers buy, why they buy and what they buy. The following trends show that demand will continue to grow, and customer behaviours and attitudes will continue to change.
Monitoring these trends as well as including them as part of an overall operational strategy will be critical to ensure that operations will be ready to meet consumer demands as well as be flexible enough to adapt to market and other challenges.
Trend 1: eCommerce Continues to Grow
eCommerce has seen a dramatic increase throughout the pandemic and many retailers still struggle to keep up with growth and satisfying consumer demands. Consumers who purchased products, normally bought in-person, will continue buying online after the pandemic has ended. A recent McKinsey & Company consumer survey1 identified a 15-30% growth in consumer online purchasing after COVID-19 for most categories.
For comparison, some US eCommerce growth statistics2:
Trend 2: Brick and Mortar is Growing Again
In a recent story in the Wall Street Journal3, for the first time since 2017, US retailers are on track to open more stores than they close in 2021. While some major retailers have contracted or consolidated store locations, new brands and companies that were born and grown online have found physical locations produced greater sales and an expanded customer experience. Allbirds, which recently went public, is on track to open hundreds of stores in the near future. Also, Untuck it, another online store, had originally no intention of opening physical locations; however customers requested sites that allowed them to try their unique shirts. They noticed after opening a store, online sales grew significantly in the surrounding area.
Other trends in storefront growth:
Trend 3: SKU Proliferation will Continue with the Growth of Personalization
As the consumer experience becomes more digital and personalized, SKUs will continue to grow. A recent Deloitte consumer survey4 found:
Personalization means more products in inventory and continued growth in SKU counts. Companies will need to implement inventory management systems with transparent data, and a dynamic capacity strategy to manage the growing demand for personalized products.
Trend 4: Environmental, Social and Governance (ESG) Becoming More Important to Consumers
In a 2021 ESG Consumer Intelligence Survey from PWC5, the survey found that an overwhelmingly majority of consumers are more likely to buy from a company that shares their values across the various elements of ESG. The survey found:
Consumers have shown that they are willing to turn away from brands that do not meet their standards for sustainability or ESG. In a recent sustainability survey from LEK consulting6, they found that over the past 3 years there has been a noticeable increase in the number of people who care about sustainability.
As the Securities and Exchange Commission (SEC) begins to propose and enact stronger disclosures and reporting on ESG7, companies must start to prepare to track and record their efforts and document them in their public reporting process.
Trend 5: Acceptance of New Brands and Products
The pandemic has affected eCommerce and the supply chain in numerous ways, but perhaps one outcome less thought about is the effect on brand loyalty. During COVID-19, consumers tried new shopping behaviours (buying online; including mobile devices such as phones and tablets) and those behaviours are likely to continue. These new buying practices will fuel online competition for customers between legacy and new brands. A recent survey on US buying behaviour from McKinsey & Company8 found that 36% of consumers have tried a new brand AND 25% have purchased from a new private-label brand.
The survey also identified the main drivers for trying a new brand:
Gen Z and Millennials are the main segment showing a willingness to experiment with a new or unknown brand. These emerging brands are beginning to push established brands to update their customer experience and satisfaction for growing demographics or face losing market share.
What do these trends mean for warehouse and supply chain operators?
Article contributed by Fortna – visit www.fortna.com