The year of 2020 was the year of changes, when enterprises had been faced a lot of transformations. Some consulting companies say that we have moved ahead at least five years of new behaviors. After we have heard and seen some of these changes, we start to wonder “But how exactly do they affect retail trade?”, “What are they doing about it?”, “How do they impact the next years?” and many more other questions.
So, to answer all these issues to the company, I begin a research to understand what are these new “behaviors” that are coming out, and what are the actions of the market. I start getting the picture of what happened in 2020.
So, to answer all these issues to the company, I begin a research to understand what are these new “behaviors” that are coming out, and what are the actions of the market. I start getting the picture of what happened in 2020.
2020 the year no one predicted
At the end of 2019 we were watching the media talking about a disease spreading through China, then 2020 came more precisely in February we had the first case in Brazil. Unfortunately, in March 2020 it was necessary a social distancing, a kind of lockdown, as the virus started to spread in our country, becoming already a global pandemic. The entire world was going to live inside their homes, some countries established lockown, so people should not leave their houses, the only time they may go out was for shopping staple products, like food, medicines or looking for medical attention on really especifics cases.
In this new scenario, the retail companies were obligated to review their entire structure.
Brazil was passing through a particular situation.
Retail sales grew 1.8% in 2019, according to the Brazilian Institute of Geography and Statistics (IBGE). This is the third annual high in a row, although there was a slowdown considering the pace of recovery recorded in 2017 (2.1%) and 2018 (2.3%). Even after three years of positive rates, the sector still has not managed to recover from the losses of 2015 and 2016 and showed a loss of breath in the final stretch of the year. In December, retail sales volume fell 0.1% compared to November, the first month declined since May.
During the recession, the sector accumulated a 10.2% loss. In the last three years, the accumulated gain reached 6.3%. In other words, Brazilian trade closed 2019 at a sales level 3.7% below its highest peak, reached in october 2014. The level is equivalent to that recorded in april 2015, even at the beginning of the crisis. This situations got worse and worse in December of 2016, so that was 13.4% below the expected results.
Source: IBGE and G1
You can see the sales of retail trade year by year in the chart below
Variations compared to the previous year, in percentage
Apparently everything was sloping to an eminent disaster, and then we started to see new perspectives.
In 2020, after a record fall in April, record trade sales grew 13.9% in May, compared to the previous month, according to the IBGE. It was the biggest increase in the survey's historical series, concluded since January 2000.Despite the strong advance, the May results were insufficient for the sector to recover from the loss of 19.1% without accumulating in March (-2.8%) and April (-16.3%), in view of the impacts of the pandemic of coronavirus and social isolation distancing measures.
The chart below, you can see the sales of retail trade month by month between 2019 and 2020
Variations compared to the previous month, in percentage.
Source: IBGE and G1
Through these numbers we can see the customer’s adaptation. It took him/her some time to understand what was going on, and how he/she moved forward. And especially shows the enterprises readapting or changing the way they usually sell to their public and finding new approaches to this “new normal”.
So what are the good news in 2020?
Beyond the vaccine we all were waiting for ❤
There are some interesting news:
- Increased online sales: A good number of consumers who made their first online purchases in 2020 - 64% say they intend to continue with this habit, even when the pandemic situation normalizes. This indicates that the large number of digital transactions is expected to continue in 2021.
- Accelerated digital migration: The survey Profile of Brazilian E-commerce revealed that eCommerce broke a record in 2020: there are more than 1.3 million stores - most of them small, with revenues of up to R $ 250 thousand per year. This migration - at a fast pace - was one of the retail brands in 2020.
Ah migration case example was Fast Shop
Most of the company's revenue was concentrated offline: in 2019, stores accounted for 70% of revenue. In early 2019, the brand accelerated the digitization process. The company made a change in media investment, allocating 60% of it to digital channels, especially the virtual purchase with in-store pickup.
The strategy paid off and Fast Shop's eCommerce gained almost immediate relevance. In 2019, digital channels increased 103% in revenue and 52% in return on investment (ROI) compared to the previous year.
One of their up-to-date during the pandemic was to allow the customer, through the app, to define his location, choose the nearest or preferred physical store and select a seller with whom they wanted to talk. Thus, the seller theirself started to generate the order and send the payment method to the customer, all within the app itself.Therefore, it also accelerated the dissemination of its customer service via Whatsapp that have existed since 2018, offering a complete portfolio with fast delivery and up to 35% discount.
Source Think with Google and Fast Shop
- Search for products and services by mobile: Access to online stores has grown, but the way this access is made has also changed. According to data from Comscore Brasil, of the users who access websites and purchase applications, 72% are exclusive users of mobile, it means, they do so through a mobile device.
Interesting case of mobile UX study: Sephora”In 2019, we carried out dozens of usability studies and were surprised to find that our app did not offer a good experience. In part, this was due to outdated browsing. For this project alone, we collected more than 300 hours of remote feedback without moderation and we also conducted over 40 interviews with different users…
For example, Sephora consists of many elements: account, orders, purchase history, subscriptions, ColorIQ numbers, Sephora credit card and more. We learned that, even offering all these features, which were spread across the app, our customers expected them to be together in the same category. Therefore, we created an "I" section to gather all the information related to the user.”
Resultado
- Pix: Pix is the new payment method developed by Brazilian Central Bank which allows instant transactions - in up to 10 seconds - for 24 hours a day and seven days a week, including late week and holidays. It is not related to economical impacts caused by Covid19 pandemic. The big advantage is that these operations are free for individuals and can be done free of charge between different institutions.
- Open Banking: It’s a technology platform that will connect the entire financial system. Its rules are defined by the Central Bank, and consumers will be able to allow financial institutions to share their personal and banking data with third parties, securely and digitally, with their express authorization. With the connection between the participating institutions and the information that will be exchanged between them, Open Banking will allow, for example, the consumer to connect his bank account to an application to analyze his financial life and thus receive investment suggestions or investment offers, products and services such as credit and insurance, in a more personalized way.
Source UOL economics
Case of example: Wechat
The Chinese applicative WeChat, created by Tencent Holdings, started out as a regular messenger, similar to WhatsApp. However, the app has evolved over time and added functionality for **payments, connections to travel and shopping services and video calls.**Nowadays, the application has the "WeChat Pay" virtual wallet functionality, which can work linked to a Chinese credit or debit card. There are also partnerships with different Chinese companies in the travel, investment and even entertainment sector. According to the company, WeChat has contributed, in recent years, to the transformation of Chinese society into a country in which cash is becoming increasingly expendable.
- Delivery application growths: More than 70% of consumers started using or increased the use of delivery apps during the pandemic, mainly because they have what they need without leaving their home.
Case of opportunity: Waze with Mc Donald’s
Waze launched in Brazil a format that will allow users of the app to expand interaction with brands. Waze Favorite Brands is a feature that allows drivers to flag their preferred brands and establishments and, with that, receive notifications and promotions notices when they are on their way.
In Greater São Paulo alone, the app has about 3.5 million monthly active users, according to internal figures. In Rio, this number reaches 800 thousand active drivers. Waze was created in Israel and Brazil represents one of the three largest markets for the company's strategic plans in the world.
Source Meio&Mensagem
Enhancing local market: Trades of all types suffered a major impact with the changes in 2020, but small shopkeepers and entrepreneurs were the most affected, which generated a movement for their valorization. Bicycle deliverers and neighborhood stores began to be used more by the population so they could continue with their work.
Source Mercadolivre
And now, what to expect of 2021?
After seeing all these new behaviors, and other forms that the users and the companies find to “interact” with each other, especially transformations that we had been through. What are the 2021 news?
- Omnichannel is stronger than ever!
According to eMarketer, eCommerce grew 19.4% in Latin America. Due to the imminent need in quarantine periods, thousands of people got used to the model. Now, accustomed to the experience, the expectation is that the border between digital and physical will become more and more blurred.Companies like Amaro and Magazine Luiza already have offered the possibility to buy online and pick up at the physical store, for example. For the shopkeeper, the relationship between online versus physical commerce has also been made more flexible, as physical stores have also become inventory and a way to reduce the distance to the consumer's home.
An interesting example it’s Nike, they are working on the concept of “Digital Retail Experience” even before the pandemic. They were working on the experience which combines retail store, eCommerce and mobile customer journeys – seamlessly.
Connecting the Store and the Online World
Imagine a solution whose partition between digital and physical overview no longer exists. To solve they sought to create a fully integrated, 'seamless' retail environment. To better connect consumer and product they sought to create an adaptive environment which engages the consumer respective to their journey. Three custom built multi-user, multi-touch terminals expanding the brand experience including information about the product and online purchasing options. Focus groups and user analysis further validated our concept while strengthening insight into today's consumer expectations.
Perhaps this store can be the beginning of the hybrid model of online and offline stores, the concept of phygital, the join of two worlds physical and digital.
Source Nike projects and Startse
- Buy what your watching
Live commerce was a trend that emerged in China and arrived with full force at West. Now, it's more and more frequent that brands make lives with entertainment to promote their products. The initiative gained momentum with Alibaba, which transformed the 11/11 shopping date into a true festival. In Brazil, Americanas is one of the companies that took steps. Entertainment is also influencing the market from another perspective. Netflix's miniseries “Queen's Gambit” (O Gambito da Rainha), about chess, made the interest in the game reach a record audience. The work boosted a 300% increase in searches for specific plays and there are reports of players who were interested and learned after watching.
Source Startse and Netflix
- Sustainability and circular economy
According to a Shopify survey, 53% of consumers prefer to buy sustainable products. In addition, 49% of customers see it positively when retailers make donations for every purchase made.Example of the movement, meet Retuna shopping mall, a two-story complex of secondhand stores on the outskirts of Eskilstuna, a small riverside city 70 miles west of Stockholm. The firsl mal in the world focused on ucycled products.
Source Huffpost, BBC News and Blog “Menos um lixo”
- Voice
Still according to Shopify, the expectation is that the voice shopping market would reach US $ 40 billion in the United States by 2020. This growth can be sustained by the sum of convenience, greater adherence to smart speakers (also called “personal assistants”, like Alexa, Siri, Google Assistant, among others) and even the voice assistants already available on cell phones.In Brazil, iFood created an application so that meals can be ordered through Alexa, from Amazon. The initiative helps to create greater recurrence in purchases, one of the goals that commerce should continue to pursue in 2021.
And last but not least… What all this content shows to us?
Well, it shows us that the human being it’s a species of adaptation. With the right resources and getting the picture of your environment, a infinitive of new probabilities can come. The sky is no longer the limit, to infinity and beyond to your imagination and creation of new perspectives.
Thanks for getting here! I hope this content helps you 😊
