August 6, 2020
Periscope by McKinsey reveals tech-driven consumers are reshaping retail

A new report commissioned by Periscope by McKinsey revealed how tech-driven consumers are reshaping retail’s next normal, with coronavirus concerns helping to accelerate consumers’ demand for digital. Periscope by McKinsey is a suite of marketing and sales analytics solutions that help companies achieve sustainable revenue growth. The report also noted the significant gap between shoppers’ desired experience and what retailers actually provide.

In early March, Periscope by McKinsey fielded consumer surveys across the U.S., U.K., Germany, and France with more than 2,500 consumers to understand what they value most in digital and in-store experiences, as well as among the retail technologies that tie the two together. To see the impact of COVID-19 on consumer preferences and behavior, the survey was repeated in mid-June.

“While disruption and fierce competition are certainly nothing new for retailers, the pace and intensity of COVID-19-related change and their effect on consumers is unprecedented,” said Brian Ruwadi, senior partner and global leader of Periscope by McKinsey. “This is a pivotal time where we’re seeing not only changing loyalties and a shifting leaderboard, but an opportunity to really connect with consumers in new ways as they reformulate their habits and decision journeys. As retail leaders plot how they will bounce back, they also need to look beyond the immediate challenges and issues. In parallel to quickly recovering revenue, it is critical to engage in long-term planning and accelerate future growth.”

Retail reimagined

The new era for customer experience surveyed more than 2,500 consumers in France, Germany, the UK, and the US, to closely examine where the biggest changes in consumer behavior are happening.

Conducted before and during the pandemic shutdowns, the report shows a significant gap between what consumers want in shopping experience and reveals what retailers are actually providing and it also reveals three consumer trends.

Consumers seek tech-forward shopping experiences

Whether it’s digital tools such as screen browsing, easy mobile payments, or ordering online with seamless curbside or in-store pickup, shoppers clearly want technology to elevate their in-store experience. The flight to digital and increased customer expectations have created new challenges for how retailers serve their customers.

Yet, in the first run of our survey, more than 35% of shoppers reported zero exposure to even the most talked-about or basic in-store technologies such as digital screen browsing and mobile or contactless payments. In the second run of the research in June, consumers were then asked which forms of communication/experience they would like to see offered by retailers in the near future. The top three findings in each market revealed a clear difference in cultural preferences:

  • US: mobile payments 30%; mobile app orders 28%; apps to scan barcodes 25%
  • UK: mobile app orders 34%; mobile payments 28%; self-identification at terminal 24%
  • Germany: mobile payments 29%; self-identification at terminal 21%; apps to scan barcodes 20%
  • France: mobile payments 22%; mobile app orders 21%; digital shelf labels for info 21%

An end to ‘normal’ shopping decisions

Rather than sticking to familiar patterns and brands, consumers have embraced change amid great uncertainty. In the four countries surveyed, 40% of consumers said they tried new brands or made purchases with a new retailer between March and June 2020. Loyalty was particularly vulnerable in the U.S., where 46% of consumers made the switch, followed by 44% of their U.K. counterparts.

Consumers’ top reasons for making the switch across all four markets included competitive pricing and empathetic retailers that support their employees during the pandemic with initiatives such as increasing wages, giving extra sick leave, or paying for lost wages.

Switched due to competitive pricing:

  • U.S. 51%
  • U.K. 48%
  • Germany 41%
  • France 36%

Switched to a “caring” retailer or brand:

In the U.S. and France, almost a third of consumers (27% and 26%) cited this as a reason for switching brands while 19% of U.K. and 17% of German shoppers considered this important.

Safety and convenience becomes more critical

New concerns such as safety and hygiene are now top of mind. More than 50% of respondents say they want stores to follow guidelines to help keep shoppers and employees safe, such as the installation of plexiglass at the checkout, the use of masks, and availability of hand sanitizers, while 59% say it’s important for stores not to be too crowded.

Also, frictionless experience is now even more important. Consumers being able to find what they’re looking for quickly and easily has increased in importance in every country since March, and was ranked among their top three browsing priorities. This ability was especially valued by 65% of U.S. consumers, 59% of U.K. consumers, 52% of German consumers, and 47% of French consumers. Additionally, 52% of shoppers questioned in early June stated that fast checkout was an important part of a great purchasing experience.

New e-Commerce expectations

E-commerce spending has surged during the shutdowns, as the appetite for digital and contactless ways of shopping has intensified. In the U.S., it was up more than 30% from the beginning of March through mid-April, compared to the same period the previous year.[1]

In all four countries surveyed, McKinsey & Company observed higher shopping activity in several categories during the shutdowns.

Categories with the biggest uptick in the U.S. were:

  • Apparel
  • Children’s products
  • Beauty (US)
  • Grocery (US)

Delivery & Returns

While free delivery and returns and fast delivery continue to be the important features for consumers when purchasing online, several digital attributes did skyrocket in value during the crisis.

Clear Product Information

The importance of informative product descriptions and clear product images at a time when consumers couldn’t see, feel, or test products in a store ranked as one of the top three factors for a great online browsing experience in all the countries surveyed. U.K. consumers led the charge with 70% of post-shutdown respondents ranking this as a key consideration, followed by 57% in Germany, 56% in the U.S., and 51% of French shoppers.

For more information, download the “Retail reimagined: The new era for customer experience.”

[1] Market research firm Rakuten Intelligence

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