NEW YORK, United States — Jana Nesbitt, 42, like thousands of other consumers still stuck working from home, said she has hardly bought any clothing since the start of the pandemic. She cancelled her Rent the Runway subscription as well, after using the service for more than a year.
The few things that Nesbitt, who is a media marketing executive based in Long Island, New York, has purchased have either been “fun little things that elevated my mood, or to support Black-owned or woman-owned brands,” she said.
“I’m just trying to make a more conscious choice,” she said.
While Nesbitt said she cared about the values brands communicate long before the global health crisis, how she shops for clothing today is different from her behaviour as a consumer six months ago. She’s not alone. Many consumers have picked up new habits and expectations that will likely stick even after the pandemic subsides.
Some of these habits are undeniable: online shopping has surged since March and experts believe it will continue to eclipse brick-and-mortar for good. As consumers got used to buying everything from toothpaste to leggings online, their standards for service and convenience increased. And retailers, meanwhile, must find other ways to utilise their ill-frequented locations.
Other habits are harder to measure, among them the widespread anxiety that accompanies not only the coronavirus pandemic but the current recession as well. Seeking control in a world of uncertainty, people are shopping more purposefully, using their wallets as a way to create meaning, consumer psychologists say.
How and where people shop has dramatically changed, but “the ‘why’ is changing too,” said Tamara Charm, senior expert at McKinsey. “The search for value is enormous. And that’s not just price. People are saying they’re more mindful of the purchases they’re making.”
For brands, understanding these changes will be vital for long-term survival. By far, the current market favours the consumer, whose demands were already lofty before the pandemic. Now, they're even pickier. And failure to meet these expectations can lose the shopper for good. “Every pain point is a reduction to revenue,” said Frederic Court, founder of venture capital firm Felix Capital.
But a finicky customer also creates opportunities for underdog brands to gain market share — brands adept at creating an online community, which is more important than ever for brand loyalty as people are spending more time on social media, or smaller, neighbourhood boutiques better suited to serve the consumer who’s no longer commuting to work.
1. Transparency trumps speed when it comes to delivery.
The explosive growth of e-commerce in the past decade was built around convenience, which retailers interpreted to mean receiving orders as quickly as possible. But Covid-19, which has brought a surge in online shopping but also widespread mail delays, has changed the conversation.
While fast shipping remains at the top of the list for shopper preferences, many are surprisingly forgiving of brands that can’t match Amazon’s two-day shipping.
When Jordan Hunt bought two pairs of shoes online for his fast-growing two-year-old daughter this summer, he expected his order would follow the standard shipping process: an estimated delivery after five to seven days and an easy refund if there was a problem.
It took him days to receive an estimated delivery date, but the shoes never arrived. By the time he was able to reach a customer service agent and receive a refund, it had been three weeks since the initial purchase.
“I just ended up buying a pair of shoes from a store four blocks away,” said Hunt, a 40-year-old publicist and founder of an apparel courier service called Stockist. He added that the absence of parcel tracking was just as bothersome as a late arrival – if not, more so.
“I like to know when I’d receive the item … and I want transparency throughout the whole process,” he said. “Covid started in March. If you haven’t figured out your supply chain or logistics, what’s the deal?”
Even before the pandemic, consumers valued the ability to track their package over fast delivery, according to a 2019 survey by research firm Convey and cited by RetailWire. More than 98 percent of respondents said they want a notification if a package is held up, compared to 79 percent of respondents that said free two-day shipping was important to their purchase decision.
For retailers unable to afford one- or two-day shipping, allowing their shoppers to know what to expect and then meeting those expectations can be just as conducive to loyalty, according to Lee Peterson, executive vice president, thought leadership, at retail strategy firm WD Partners. Brands can use third-party tracking services like Narvar and frequently send email updates about the parcel.
Even without two-day shipping, “just follow Amazon with the tactics,” he told BoF. “Put it in a box that’s easy to break down, send the [customer] an email when it’s coming, and then put it right on their porch.”
2. In times of uncertainty, consumers are looking for good value – and that goes beyond price.
Remember in March when toilet paper and beans were impossible to find?
According to Michael Solomon, a consumer psychologist and consultant, this was a product of mass anxiety: during an unprecedented crisis, people behave in ways that compensate for their lack of control over the world
“For all of us, suddenly overnight we felt that we have no control and no matter what we do, we’ll wind up sick,” he told BoF. “So a lot the things that people did, such as hoarding, were things that helped them restore a sense of control in their lives.”
Today, the hoarding phase may be over but as the pandemic lingers on, consumers continue to grasp for meaning and purpose, Solomon added. How this manifests in shopping behaviour could be a diminishing interest in fast fashion, he said, and a shift toward quality instead.
Some shoppers are using their values to shop, whether it’s an emphasis on sustainability or racial justice in the US.
“The search for value is enormous,” said McKinsey’s Charm. “And that’s not just price. People are saying they’re more mindful of the purchases they’re making. We had one consumer tell us she’s ‘adulting; for the first time as a consumer. The premium for companies with a strong voice and strong purpose that matches what they’re doing is rising.”
3. At first people had no choice but to shop local. Now, they’re embracing it.
An unexpected winner of the pandemic is the local, independently owned speciality shop.
Commercial districts like Midtown Manhattan remain empty as thousands of commuters continue to work from home with no immediate plans of returning to the office. This means that instead of hopping into the Macy’s in Herald Square after work, people are relying on e-commerce as well as their local boutiques, pharmacies and general stores — many of which are quickly adopting digital retail as well.
In a May survey by ZypMedia, a television advertisement placement company, more than half (53 percent) of respondents said they are more likely to buy from a local business instead of a national retailer during the Covid-19 crisis, and among this cohort, In fact, of those consumers who are more likely to buy locally during the crisis, 68 percent said they will continue to make purchases at local businesses post-pandemic.
“We’ve seen astute local stores start Instagram accounts and offer deliveries and online orders as people are working from home so much,” said Court. Smaller stores with just one or two locations will have an easier time integrating convenient features such as buy-online, pickup-in-store, and therefore could easily gain an edge over larger chains, especially if they’re located in more residential areas.
But beyond convenience, consumers are also opting to shop local to support their communities, numerous recent surveys have found, especially as thousands of small businesses have already shut down in the wake of the crisis.
“Instead of buying my running shoes from Nike, these days I’ll buy from Brooklyn Running Company in my neighbourhood instead,” said Hunt. “I can get the same product in both stores but I want to support my local store.” He added that this preference will likely stick even after he returns to work.
4. Heightened inequality spells trouble for mid-tier retailers.
In the wake of the 2008 financial crisis, dollar stores and off-price retailers rose to prominence while luxury labels too retained their ground, even after hiking up prices. Everyone else in between, nonetheless, struggled, kicking off an ensuing decade of bankruptcies.
This was the beginning of the great bifurcation of retail, economists say, and today’s crisis will only exacerbate the disparity as unemployment remains above 8 percent in the US, or double the rate at the start of 2020 and Congress has yet to pass the next iteration of a stimulus bill.
For fashion retailers, it means that spending overall will remain sluggish for months — if not, years — to come. Retail spending has only slightly recovered since May, when the US consumer economy reopened. The ones struggling the most currently are retailers catering to mass consumers: department stores like Macy’s and mall staples like J. Crew, which filed for bankruptcy in the spring. Meanwhile, big-box retailer Target said in its August earnings report that apparel sales grew by double digits compared to the same period last year, and luxury conglomerates like LVMH and Kering are able to rely on Chinese consumers to drive growth in sales.
Without a robust mid-tier customer in markets like the US and UK, fashion brands must now pick one of two sides, according to Solomon. “Increasingly, we are a society of haves and have-nots,” he said. Retailers, therefore, “must first decide which side of the road they’re on. Are you in business class or are you in coach?”
Charm agrees. “It will be very important for retailers to keep a careful eye and a granular eye on the consumer,” she said. “Different incomes and different geographies react very differently so you [need] to look at your microsegment.”
For instance, Gen Z consumers care three times more than Boomers about sustainability, Charm said, while higher-income consumers are more likely to shop online across the board.
5. Building an online community is more important than ever.
Confined at home all day, consumers are also spending more time on social media. Between late March and early May, about half of adults in the US said they were using social media more since the pandemic began, according to the Harris Poll cited by eMarketer. Nesbitt, for instance, said she’s been exposed to so many new brands in recent months, especially as Instagram users circulated lists of minority-owned businesses to support at the height of the Black Lives Matter movement.
For fashion companies, this means having a presence on an assortment of social media platforms is more important than ever. While cultivating an online community has been growingly vital for brand-building in recent years, the pandemic has made it absolutely necessary, according to Court.
“People are no longer browsing the stores but [browsing] Instagram instead,” he said. “There is this increased pressure on designers… and small brands to become content creators.”
Failure to do so, he added, will result in “your business shrinking and shrinking.”
Building an online community is also an effective way to build brand equity at a time when consumers are particularly discerning, Solomon said. “If you're not a premium brand, maybe you can use community to retain customers — creating the sense that your brand can provide a safe haven for people.”
Investing in this tactic doesn’t require intensive capital or even a team of new experts: it’s as easy as creating an Instagram or TikTok account if a brand doesn’t have one yet, and tending to it by hosting live events, posting creative content and collaborating with like-minded labels or influencers, experts say. It’s a strategy to which breakout brands like Reformation and Nanushka attribute their viral success.
6. Before visiting a store, people want to know what’s in stock.
The age of coronavirus, the breakout star of omnichannel features by far has been BOPIS: buy online, pick up in store. According to Adobe Analytics, sales using BOPIS surged 259 percent in August year-over-year and has continued to rise throughout the pandemic.
But even without making the purchase online, consumers want their shopping experience to be as streamlined as possible — and that means knowing exactly what to buy if they do decide to make an excursion to the store. While grocers and many independent boutiques make this possible for shoppers, speciality retail is behind, according to Peterson.
“If I’m going to the store, I know exactly what I want,” said Hunt. “What I need is inventory transparency. Sometimes I’ll call the store and ask if they have something in stock, which is a pain.”
But even when some retailers have an online inventory tracker, Hunt added, it’s often inaccurate. And one bad experience is enough to keep consumers like him away for good.
Disclosure: Felix Capital is part of a group of investors who, together, hold a minority interest in The Business of Fashion. All investors have signed shareholder’s documentation guaranteeing BoF’s complete editorial independence.