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Covid-19 impact: the accelerated shift to online retail

Full report: The True Cost of Online Retail

Covid-19 impact: the accelerated shift to online retail

3 minute read

COVID-19 has clearly been a catalyst for structural change. Online sales in Europe hit record highs during lockdowns as consumers embraced e-commerce options for the first time across many categories, while online dependency grew for others.

This is the first of five articles based on a wider piece of research on the true cost of the shift to online across Europe by Retail Economics and Alvarez and Marsal.

Inevitably, many consumers will revert to previous shopping habits once the impact of the pandemic recedes, but a significant proportion of consumers have spent more time browsing, researching and purchasing online, with these new online behaviours cemented, after having broken through the initial barriers of setting up online accounts, entering payment details and overcoming issues of trust and convenience.

Step change in online sales across key European markets - Online as a proportion of retail (%) 

Online as a proportion of total retail across Europe EU

Source: Euromonitor, Retail Economics and Alvarez & Marsal analysis (includes the U.K., Germany, France, Italy, Spain, Switzerland)

Our research shows that just under a third of European consumers think their shopping habits will change permanently because of COVID-19, with a significant and permanent shift towards online shopping particularly for Apparel, Homewares and Electricals.

We have identified three distinct consumer-driven shifts that differ by category:

  • Step-change in behaviour: high levels of online discovery that is likely to persist after the pandemic recedes.
  •  Sticky potential: some momentum in new online experiences showing potential to stick after the pandemic recedes.
  • Revert to old ways: online experiences have been less convenient compared to traditional shopping, or online had already taken hold before the pandemic

[Continued below]

View the full report here

This work forms part of a wider piece of research and is a downloadable in pdf format


Retail sector differences

Between May 2021 and a year earlier, categories such as Homewares, Apparel and Electricals have seen at least a four-fold increase in the proportion of consumers who expect to permanently increase their spending online, but levels have risen significantly across every category. Health & Beauty occupied the middle ground, seeing a significant uplift in online sales and firm consumer intentions to continue to shop online after the pandemic recedes.

Home-related products were in high demand as households increased home comfort, improved home entertainment, and adapted to remote working. Likewise, the need to refresh wardrobes during mandated store closures necessitated a shift online for parts of the Apparel sector (e.g. loungewear).

Conversely, Furniture & Flooring, and Jewellery did not experience the same uptick in online spend. Higher priced items typically involve more considered paths to purchase, commonly relying on a ‘touch and feel’ experience in-store and face more complicated delivery.

Consumers discovering new categories online since COVID-19 are most likely to continue home shopping even after the pandemic recedes

Intent to continue retail shopping online - Retail Economics

Source: Retail Economics and Alvarez & Marsal

Indeed, the extent to which certain online activities are likely to persist after the pandemic varies significantly between categories, but the differences in online maturity between the European countries surveyed are even more striking, and show that the shift to online must be looked at in the context of cultural shopping habits and existing online maturity.


Things to do now

Explore the next article in this series here

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Found this short article interesting?

This short insight article forms part of a thought leadership report entitled “The True Cost of Online”. It was produced by Retail Economics in partnership with Alvarez & Marsal and looks at the impact of Covid-19 and the accelerating shift to the online retail channel.

View Full Report Here

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