Shifting consumer sentiment pushes shoppers towards digital in a post-Covid world

It’s been recorded that 2020 was the worst year for many economies around the globe. Europe’s GDP is expected to shrink by 7.4% due to the coronavirus pandemic, with Spain and UK set to be worse affected with a 10.3% and 12.4% GDP decline respectively.

It doesn’t take an economist to work out the problem here – when consumers are confined to their houses for months on end, there is little to spend their money on. Those who were lucky enough to keep their jobs during the pandemic also found an opportunity to “save for a rainy day”, or perhaps we should say “save for catastrophic storm”, as the world awaits the financial repercussions of the pandemic?

Uncertainty does not encourage consumer spend – we’ve seen a significant shift toward spend on value and essentials, while many analysts are pointing to consumers switching brand loyalty at an unprecedented rate. But it’s the way consumers are behaving and the move to digital channels that gets really interesting. Let’s take a look at a few of those significant changes:

• Zoom has replaced the office, but city centres need workers to thrive.

• Online grocery shopping has boomed, yet it is more expensive for supermarkets to fulfil.

• Clothes shoppers are using their bedrooms as the new fitting rooms, but fashion retailers are struggling to manage high-volume of returns.

• Gym classes have been streamed free into peoples’ living rooms, so why would consumers pay for expensive memberships ever again?

• And Netflix, Disney+ and Amazon Prime have proved that films don’t need to be screened at cinemas (despite 007 insistence to keep postponing its latest premiere).

What started as a global health crisis has clearly been the accelerant in our transition to a truly digital-first world.

Beauty and the beast

Let’s deep-dive into the beauty industry as a classic example of changing consumer habits in retail over the last year. While the fashion industry has suffered over the last 12 months as consumers have no need for new clothes as they rarely leave the house, and now it seems beauty is next to be shaken up, as the Australian make-up brand, Becca Cosmetics has become one of the first beauty casualty of Covid-19, ceasing trading after 20 years.

The problem here is that customers are spending less money on make-up in lockdown, even when they do leave the house, make-up rubs off onto the inside of the masks we all have to wear today. But beauty as a whole isn’t in turmoil, instead consumers are moving away from make-up and towards skincare in a bid to take part in the #selfcare revolution.

The beauty industry needs to remember while customers are spending less on make-up right now, that doesn’t mean they won’t ever replenish their favourite products. Brands need to reach out and engage potential customers through blogs, tutorials and social media activity, with a focus on rejuvenating skin right now. As consumers experience more freedoms in the coming weeks and months, content on how to create the latest make-up trends may catch their attention.

Digital innovation

A number of brands really stand out in this space – the beauty subscription box Birchbox springs to mind as an example of a retailer which encourages typically brand-loyal beauty customers to try samples of new and interesting products. For a monthly fee, shoppers receive a small, brightly-designed box in the post with sample sizes of various products based on their preferences. If they like a product, the website provides a discount if they wish to buy the full-size item. From an industry that is known for its intimidating beauty halls in department stores, this digital-first company really started to shake up what was “normal” in beauty.

Meanwhile, a number of the more traditional players have realised the necessity of digital to drive beauty sales. L’Oréal has invested in augmented reality technology to allow shoppers to “try-on” make-up and hairstyles virtually – this tech can be installed via a “magic mirror” in a store, or used via a customer’s smart device at home. The mega-brand has also experimented with AI recommendations to help customers choose the correct foundation shade, as well as 3D printing to print personalised jars which can be filled with fragrance.

Fight for digital spend

These are two very different examples of how beauty is reacting to changing consumer sentiment. But it won’t just be beauty which will be fighting for consumer spend in the coming months, and thinking digitally about how to engage your customers will be critical for success – we need to offer customer experience and strong communication channels that people need and want in difficult times. Because for a nervous and money-conscious consumer you will need to work harder to encourage them to spend their hard-earned money with you, when they are finally ready to do so.