Warren Buffett famously said, "Price is what you pay; value is what you get." In this recession, customers want bargains, value purchases, essential goods, availability of stock, and convenient ordering and delivery.
Thus, there's a big change in shopper behavior. McKinsey's July 2020 Global Consumer Sentiment survey found that consumers' top three reasons for choosing a new place to shop are value, convenience, and availability. Here is how businesses can adapt to new consumer behaviors.
Give customers good bargains
Wal-Mart had received plenty of criticism pre-recession about labor practices, and concerns that the retail giant is a threat to small businesses. However, you don't hear much grumbling these days.
Most everyone wants low prices, great bargains, and value purchases on essential items. In Q2, Wal-Mart's total revenue rose 10 percent, while e-commerce sales nearly doubled, which is a feat given the company's behemoth size. Where are the critics now?
"There is only one boss: the customer," said Sam Walton, the late Wal-Mart founder. "[The customer] can fire everybody in the company ... simply by spending his money somewhere else."
Dollar stores are doing even better than Wal-Mart. In Q1, Dollar General's same-store sales grew 21.7 percent. "We do very good in good times and we do fabulous in bad times," Todd Vasos, Dollar General's CEO, told analysts in late May.
Competitor Family Dollar's same-store sales grew 15.5 percent during the same period.
Make sure items are in stock
One-third (35 percent) of consumers are earning less income, according to a July 2020 McKinsey survey. So you'd think people are only thinking about price. No, they also want stores to be reliable and dependable in terms of inventory.
Because of disruptions to supply chains, online shoppers want items to be available. With less cash to spend, consumers are focusing on essential purchases like canned goods, hand sanitizer, and paper towels. And it leaves a negative impression when these are out of stock.
I recently spoke with Cas Paton, founder and CEO of OnBuy.com, who says the U.K. marketplace has grown 24,000 percent since 2016 and now adds up to 500 new retailers each month to give visitors more shopping choices. The marketplace does not compete with sellers on the platform and offers low commission fees.
Inventory availability is important to OnBuy. The platform works with integration partners to ensure sellers manage inventory so that buyers aren't disappointed with low or no stock.
Ordering and pickup must be frictionless
According to Adobe's August 2020 study, buy online, pick up in store (BOPIS) in August saw 259 percent growth year over year.
McKinsey's July 2020 survey found that 75 percent of U.S. consumers have changed their shopping behavior because of Covid. Also, restaurant and grocery deliveries have increased 20 to 29 percent.
Businesses can make ordering and pickup as painless and frictionless as possible. These include online delivery, contactless delivery, curbside pickup, and in-store pickup.
Managers can streamline processes, hire dependable workers, reward high performers, and optimize last-mile efforts. Supervisors should also constantly get drivers' feedback on improving efficiencies, reducing bottlenecks, and finding better practices. And there are delivery management solutions that reduce paperwork and errors.
It may be easier said than done, but customers are prioritizing convenience and safety in these historic times. When possible, companies should improve business processes, as well as alter product and service offerings to reflect changing consumer behaviors. The new normal requires businesses to adapt and to better serve customers.