The changing habits of the omnichannel shopper 2020

Peter Bond & Sri start a six part series with Bryan Gildenberg, SVP of commerce for Kantar on the 2020 omnichannel shopper and how many base assumptions we make may have permanently reset itself. We will cover everything from Amazon, ecommerce, retailer that are winning or losing and end with some predictions, true Bryan style...

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Here's what we asked Bryan in episode 1 : the changing habits of the omnichannel shopper.....

1. How are omnichannel shopper expectations changing and which expectations have accelerated in the pandemic? 

If you want to simplify shopper expectations, they kind of boil back to that classic business paradigm of faster better cheaper. So the biggest shift that the digital world has presented is that the shoppers basically said faster better cheaper. Lets not pick two. Lets pick all three. The faster better cheaper sequence is probably important as well. It might be better faster cheaper or faster better cheaper. People are beginning to understand that the delivery of value in this new world is going to have price anchored somewhere in there but then a lot of the differentiation that's going to come on is the speed and friction of the experience as well as the quality what you get.

2.   What new habits are being formed by pandemic shoppers?

Bryan expresses a point of view which might be might run counter to other people's points of view. I have two parallel thoughts on this number one I think the idea that anyone has established habits in this era is insane. That just doesn't make any sense at all. Everyone's lives are so dislocated at the moment that the notion that any of this is going to become habitual behavior easily and seamlessly just seems to be deeply ungrounded in human behavior. So I think what's legitimately happened is two things. Number one a lot of habits are in flux and to the point made before Whereas Amazon used to be just a habitual purchase and you knew would show up tomorrow or next day. A lot of things that used to be habitual and less conscious behavior had been in your conscious mind because you've got to actually now make choices about this stuff and really think about it. The only thing that is 100 percent certain about human beings and this is all the work of Daniel Kahneman and everybody else that's ever done behavioral economics. Nobody wants anything in their conscious mind for any period of time. So I would think right now the best way to look at this is that habits are in flux and because people are being forced to think through things they didn't have to think through before. So my argument would be here that most of the winning of new habits isn't work that's already been done it's work that's going to be done once people get new choices in the end. My former colleague Walker Smith at Kantar has a wonderful way of saying this because the most important word in the phrase the new normal is the new. It's learning what people are trying to do is to build normal out of the variety of suboptimal choices that they have available and that once the real choices they have come back in a meaningful way the new choices they've made are really the fight to hold onto that behavior. I don't think the acceleration of new behaviors is as much of a way up as people think.

3.   What omnichannel solutions do shoppers expect in physical stores?

What happens is that a new expectation that shoppers are going to have of stores because of what was alluded to earlier. Its going to vary a lot by region. I guess one big implication to that is hygiene is the new requirement. I think this is still going to be a very real and true thing and that you know either from a consumer satisfaction point of view or just straight up from a liability point of view I think retail stores are going to spend a lot more time cleaning themselves than they have in the past. That's got really interesting implications for a series of downstream choices retailers need to make about how to meet these new shopper expectations. A lot of which in the end are going to be around how many other things can you do apart from the basics hands down. So I think that what you're going to find is that retailers are going to be looking at digital and omni channel tools as a way to bridge the gap between the basics and a better experience, and sometimes those tools will supplement the basics. So you know the person who invents an efficient robot that can clean shelves is going to make a fortune. So there also will be a digital experience that helps to bridge the gap for a retailer. If I know that I may not have as many people around to help shoppers because I've got so many of them doing basic in stock and hygiene work how do I use say my mobile app as a way to provide services that I used to rely on people to provide. So you know that's everything from better in-store navigation all the way up to a sort of better information and more detail around products and stuff like that. So I think there's a there's a couple of things here. I think you're going to find that shoppers are going to expect their mobile technology to do things for them that people used to. So way finding on mobile in-store it's going to have to get much better knowing whether something is in stock or not is going to have to get much better. I think there's a lot of bells and whistles stuff that retailers are going to try. But if they just got way finding it in stocks right on mobile so that you had a 99 percent correlation between what's on your phone and what's really happening instead of an eighty five percent correlation that would be a huge step in the right direction.

4.   Can Amazon 'convert shoppers' that are walking in competitors physical stores? How?

Any time the retailer creates a moment where trust is broken. Amazon has an opportunity to step in via the phone and close that gap. You know Amazon may not be loved by everybody but you know it is certainly one of the most trusted institutions in America. So you break that trust gap and a variety of ways you break that trust gap by emphasizing brands that aren't the brands the shoppers most comfortable with in a way that doesn't help them orient, you break the trust by being out of stock the stock or by being too expensive. And I think that any time where the shopper goes OK this is uncertain to me how am I going to get certainty - certainty is on their mobile device. The minute the shopper stops looking at whatever the retailers try to do and starts engaging with their mobile phone. Of course Amazon has a chance to win that Amazon's over fifty five percent of mobile commerce in the United States. So if I'm in shopping mode already the thing that retailers have to do is to keep the shopper out of their non captive web basically. And as I said I think the easiest way to do that is by retailers screwing up the proposition rather than something that I mean it sounds like a geo fence proposition at Wal-Mart start now beaming them notifications saying I know you're in the salad dressing aisle at Wal Mart salad dressing. That's that's not a really good use of time. But for Amazon as a resource especially given the role that they're playing as the default search engine particularly for Prime members - 58 percent of America that rely on Amazon as their primary reference point for shopping if you end up sending somebody back to a reference point the likelihood that Amazon then converts from there is pretty high. So yeah, I think Amazon has probably the richest set of content for any e-commerce. And if omni channel retailers aren't able to present that content to help build that trust to your point and convert the sale then people are going to open up their phone they're going to find it there and there's a good chance that they're going to actually execute a transaction even while they're walking the aisle of the store. So I think to the problem is that the retailer - that we'll talk about this later in terms of things that Amazon doesn't do well either with this podcast or another one.But the problem is is that the minute you start to get into an item specific conversion decision the one thing Amazon's really good at is in comparison. So that's that. And as a retailer that's a fight you're going to always find it hard to win. You know it's like the classic 80s movie War Games where the computer discovers the only way to win is not to play.

5.   Are shoppers turning to private label in the pandemic? What would accelerate this conversion? 

Again - all I'm going to I'm going to be on this island by myself. But I don't get the Amazon private label thing as much as other people do. The fundamental business problem Amazon is trying to solve is not the gross margin they make on the selling of categories that are a trivial part of their first party business which is a trivial part of the retail business which is a trivial part of the commercial enterprise. That's a lot of work to accomplish something that's not really all that important to you. And as a result it's something would Amazon get the same gut level motivation to build a great private label program that other retailers would. I do think in general you're right. Availability clearly chased people into private label in a number of categories that they hadn't considered before. And yeah that's that's not necessarily a new habit. But that's an experience really. You know what that worked out all right. So I do think private label will do can do reasonably well.I think the other thing is it's always important to remember that private label is one thing particularly in America where you've got retailers that build private label which is a straight up look alike private label. You know it looks like the brand and it's cheaper versus something that's a little bit more designed but not meant to be a premium positioning and you know nice brands of Walgreens is a good example that all the way up to something like organics at Safeway which is a much more premium proposition and then kind of the gold standard of a U.S. private label which is Kirkland Signature at Costco and then you start to get into things in Canada like Loblaws President's Choice which isn't really a private label, it's a great brand that happens to be owned by Canada's largest retailer.

6.   Are there specific capabilities of the digital shelf that consumers desire (sorting, filtering, lifestyle tagging, etc.)?

So much of what the shopper is looking for isn't necessarily bells and whistles but just the easy and fast. That frictionless nature of content creation I think is a is a big piece. When you start to get into categories where the shopper either has to or wants to now make a decision then the content you're talking about is incredibly important. You know the most meaningful content you can deliver because of the way in which the human brain processes information as readers. So you can process a number of reviews at one time they have very easily visually coded systems that allow for quick processing and multiple points of perspectives. You can read the ones that you care about. I think going forward there is an opportunity for enhanced content. But it's got to be meaningful right. There are categories for which that makes sense in categories where it does not. I would probably think what the use case is being low engagement or high engagement. So as an example you know toilet Toilet clog remover. Right. Not a high engagement category necessarily but the use case might be. So there's probably an opportunity to show people you know OK if you're looking for that item you've got a problem. How do you build supplemental concepts around that helps that person solve that problem. I think that's probably the way to think about it which is where are the use cases going to create something meaningful that somebody would be interested in rather than how do we get them interested in the brand which seems to be where a lot of that conversation starts and where a lot of the suboptimal content clutters the screen. So. I'm speaking the high engagement and low engagement with content. Will there be a new kind of somewhat of a behavioral shift to online only in certain categories.

7.   Which categories have pandemic shoppers gravitated the most to for eCommerce?

I don't think everything's just good to go back to normal by the way just so we know. I just think that assuming that the habits that people have now are going to continue is - that's the part where I get a little worried. That just doesn't make a ton of sense. I think that what was implicit in your question was a correlation between engagement and the category going online that I don't think is necessarily true. ‘I think a number of shoppers are going to use online as a way to get out of buying low engagement categories and in essence when you look at how the massive growth at Costco has seen during covid is an exercise in - I like a high engagement shopping experience in which I can buy a huge number of categories I never want to buy so because I'm going to buy a one hundred and thirty seven million units of the product and never worry about it again.’ And so I think it is gonna be really really interesting - there's a segment of shoppers who can afford the pantry load. We're going to find retail not the world's greatest experience that are going to look to channels like club and online as a way to pantry themselves out of a shopping trip. So I think that's going to be a big piece of this. And then from an engagement point of view look I mean you know there are a bunch of categories that we've all had to buy online in the last two or three months because the stores were closed and now this may change the way people buy. I think in particular it'd be interesting if I had one piece of research I could do on this. It would be to assess people's satisfaction with the seasonal preparation for summer that they had to do online and do seasons become something I start to do online perhaps because I know how one of the big problems that Amazon has always had and seasons is because it's a combination of items that you don't usually buy. So the algorithm can never work it properly. Just one of the reasons why brick and mortar retailers tend to outperform Amazon seasonally.

8.   Have shoppers expanded their portfolio of retailers in the pandemic or have they just shifted the balance of purchases from in store to online?

Yes I think you did see more shoppers using resources like Target dot.com Kroger dot.com and Sam's Club dot com in particular as solutions to getting consumables. It's really important to remember what a small percentage of the US population use any of those Web sites. So I mean the basis points share gain that those three retailers had an household penetration I think is less in aggregate than Amazon had an increase in household penetration and the purchase of consumables during it. So Amazon's growth rate is lower because we have 40 percent of America already lining it. So Amazon going from 30 to 37 is a 20 something percentage growth rate. Now Kroger going from point four percent of Americans to one point to is the 300 percent increase and everybody starts talking about it.

9.   Who do consumers trust more: brands or other shoppers? How does that impact omnichannel engagement? Post-pandemic, which categories will shoppers not be returning to the old way of buying?

Number one I do think apparel is going to be a wide open question. And that's got enormous implications for the economics of the physical footprints - it's all things in that a disproportionate amount of the profit in the US retail ecosystem is driven by apparel. So whether you're a mall or whether youre target or Wal-Mart the way the relationship people have with new clothes which has been fundamentally changed at this point how that relationship restarts is going to be fascinating because that's one where obviously we're not going to keep our current habit because we have to go outside again. But at the same time I think that that gets weird in a hurry. I think the categories that I think the rest of this- I don't wanna say it's obvious but I think if you're in a category you just have to look how fundamentally did the need states for the category change during parts of profit that we're going to continue once the world reopens. That's everything from home technology to breakfast cereal. So now there's just a bunch of categories that are going to that have shifted and then I think if you're in any category that's related to say the office lunch time experience of beverages you're going to have to reintroduce yourself as a habit to consumers that may not be going into the office every day. So I would say that that's a big one. And that is the last one is just travel and travel based retail. So many brands make a ton of money selling stuff that they're selling stuff as a result of travel and despite what's happening to the airline stocks at the moment and it just doesn't seem real that we're going to get back to a level of the travel that we were at six months ago any time and any time in an 18 month business planning horizon. So I think that's got some open questions as well.

We're back with episode 2 of this series on Amazon's role in omnichannel transformation in a few days. Tune in and join the conversation.

Our intent is not to forecast the future or suggest there's only one way. Our ambition is to see the CPG industry progress in delivering maximum value for the consumer via quality products widely available to all.