OUTLOOK
A TALE OF RESILIENCE & RENEWAL
Changes to work and home life will continue to influence shopping behaviour .
After a rollercoaster two years in retail and FMCG with consumer demand and category growth themes symbiotic with the pandemic , Australia is reopening to a “ roaring twenties ” with a renewed optimism for recovery . We only need to delve into history to see the opportunity . After the last global pandemic a century ago , recovery inspired assembly lines to go mainstream and the innovation of modern conveniences like indoor plumbing , electric appliances , and cars . Covid-19 , too , has already shown us how resilience , technology , and innovation can change lives for the better , as vaccines and remote working were developed at previously unfathomable speed .
Digital technology acceleration and adoption , pandemic-driven innovation , and a re-focus on what ’ s important in our work and home lives will likely cause many of our behavioural changes and developed habits of the past two years to remain . But they will complement our newfound resilience and renewed values . Brands , manufacturers , and retailers that tune in to this will be the ones successfully leaning in to future growth .
Digital has and will influence every touchpoint of our lives With pandemic-driven technology advances in everything from work to health and home , we reassessed how and where we wanted to live our lives . Hybrid working went mainstream , with reports suggesting it could boost Australia ’ s economy by $ 18 billion 3 as people flocked to the regions away from big city living and worked and continued socialising online .
Australia ( finally ) truly embraced online technology , with 1 million more Australians taking up shopping online alone 4 . Amid multi-state lockdowns , e-commerce transactions accounted for a record 18.3 per cent of total Australian retail sales in September 2021 , while annualised sales penetration stands at 10.7 per cent ( vs . 8.5 per cent in 2020 ). 5 Hyper-convenience was also elevated by the buy-now-paylater ( BNPL ) phenomenon , in which transaction value thrived as nearly three in four Australians increased their usage of BNPL . 6
Shopping became a social activity again As lockdowns saw supermarket shopping become a “ social activity ”, pandemic purses also opened to social e-commerce , making it simple to make online purchases through social network platforms like Facebook and Instagram . The social e-commerce surge began in China , where it now accounts for over 13 per cent of all online sales 7 – and the trend is accelerating globally . Snapchat launched an augmented-reality powered Snap Holiday Market to coincide with US Black Friday sales , while Shopify became the first commerce platform to bring organic product discovery and shopping tabs to TikTok . Meanwhile , PayPal reveals social e-commerce spending was up 40 per cent in 2021 , with onequarter of Australians now shopping on social media , rising to one in three for those aged 40 and under . 8
23.3 % profitability
of Australian retailers invested in digitalisation to reduce costs and improve 9
Hybrid working could boost Australia ’ s economy by $ 18 billion 2
“ This isn ’ t just about increased use of remote working and teleconferencing , though clearly that is an important part . One can also see increased online sales , new products and services , new suppliers – and an increased focus on what ’ s important , sloughing off the inessential . Even the supply disruptions that are on everyone ’ s mind can turn out to be the constraint that spurs some creativity ... In the dynamic realm of business , innovation and investment , though , it is more a case of nothing ventured , nothing gained .”
Luci Ellis , Assistant Governor , Reserve Bank of Australia 1
The QR renaissance continues in the rise of retail tech The pandemic reintroduced the world to a “ little thing ” called a QR code ( invented in Japan in 1994 for the automotive industry ) – and this technology will take us well beyond the Covid check-in . In the UK , GetGo , Tesco ’ s first checkout-free store , allows customers to buy products by downloading the Tesco app , scanning in using a QR code and receiving a bill automatically charged to their account as they leave . Weight sensors , cameras , and AI technology track their movement and shopping . As this type of digital innovation converges on physical retail , 5G-enabled stores are leading to hyper-connectivity for retailers . This is helping them better understand inventory , customers , and their business more broadly to influence dynamic floor planning and “ smart ” personalised shopping .
But beware of a digital divide . While recent Google research finds Australian retail “ to be steadily advancing towards becoming more digitally resilient ”, it also finds that “ the market shows a split between those who have embraced digital and are thriving , and those that have not and are struggling ”. The Google Cloud Retail Digital Pulse found nearly a quarter ( 23.3 per cent ) invested in digitalisation to reduce costs and improve profitability , with 17.5 per cent wanting to improve customer experience to drive revenue and / or increase KPI scores . 10
Our lean towards green re-intensified As the pandemic-driven hygiene panic of 2020 subsided somewhat , we returned to recycling , upcycling , repurposing , reusing , and refilling with renewed passion . Australians expect brands to be transparent , and indeed to do more about ethical and sustainable sourcing , as our focus moves back to climate change and the link between green and health intensifies . Products labelled with environmental claims experienced very strong growth while food , supplements , and beauty products thrived when sourced from or deemed to be kind to nature . We ’ re well prepared to pay a premium as we re-focus on investing in the health of our planet and ourselves .
Resilience and renewed values will drive us into the roaring twenties Consumer sentiment remained strong in 2021 despite the pandemic , with increased savings ( almost double pre-pandemic ratio levels recorded between 2017 and 2019 ) 11 meaning our premiumisation cravings will continue . While much will return from our prior way of life , many new behaviours stand to survive . Successful brands will capitalise on evolving trends , address latent consumer needs , and quickly develop strong investment and supply-chain systems .
The ripple effects of the pandemic will be felt for years to come , but Australia is fronting a resilient future as we enter 2022 on the back of a good pace of growth and a more advanced digital mindset . Recoveries throughout history have been fuelled by new technologies , and a century on we ’ re at the ready again to embrace a new roaring twenties . •
Reimagining retail for the roaring twenties