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European Retail Briefing: Inc Impact of COVID-19 - May 2020
Analyst Comment – Impact of COVID-19 on Shopping Behaviour
 
Overview
In the course of last month, we have continued to see the COVID-19 pandemic shifting consumer behaviour and affecting the lives of shoppers across Europe. Whilst the majority of countries prepare to resume non-essential retail activities or are already in the process of doing so, the effects of the coronavirus crisis continue to have an influence how stores operate.

We explore what this means in terms of retail sales across this report, and in more detail within the European Retail Sales – Impact of COVID-19 section.

Consumers are still concerned about the risk of contagion
The level of concern among consumers towards the risk of contagion has clearly decreased across the leading European economies over the past two months. According to our consumer research, those claiming to be worried about being exposed to the virus decreased from 70-80% during the last week of March 2020 (52% in Germany) to about half of consumers in France and Italy, and little over one third of shoppers in Germany two months later.

The decrease was less marked in Spain, where 72% of consumers still claim to be worried about being exposed to the virus. This is due to the fact that the country is at an earlier stage of easing its lockdown measures in the most populated areas when compared to other countries, so the threat of contagion still feels very real.

FIGURE 1: Those worried about the risk of being exposed to the coronavirus, March-May 2020
 
“How worried are you about the risk of being exposed to the coronavirus?”

Base: ^ 1,000 internet users aged 16+ in each country; ^^ 1,000 internet users aged 16+ in Germany; 500 each in France, Italy and Spain
 
Source: Lightspeed/Mintel

When looking at demographics, the level of concern appears to be highest among older shoppers across all countries. This is fairly unsurprising, considering that older consumers can be more vulnerable to the effects of the COVID-19 contagion. Also, those aged 35 or more are more likely to have children, in which case contracting the virus would not only affect them but could directly impact their ability to look after their kids.

Interestingly, Italy appears to be an exception to that trend, possibly because of the frequency of multi-generation households in the country. As a result, older Italians can potentially depend on younger family members to shop for essentials and expose themselves less by going outside. Moreover, their children are most likely adults and therefore less dependent on them, should they contract the virus and be temporarily unable to look after themselves and the home. 

FIGURE 2: Those worried about the risk of being exposed to the coronavirus, by age group, 20-28th May 2020
 
“How worried are you about the risk of being exposed to the coronavirus?”

Base: ^ 1,000 internet users aged 16+ in each country; ^^ 1,000 internet users aged 16+ in Germany; 500 each in France, Italy and Spain
 
Source: Lightspeed/Mintel

Shift towards online shopping
While we expect demand to gradually return in the long-term, retailers will be affected differently across the countries we cover. As consumers continue to spend more time at home even as lockdown measures are gradually lifted, we continue to see an increase in online demand and many of the larger retailers have been accelerating their shift to ecommerce, strengthening their platforms and creating digital and/or remote versions for their services.

Over the course of one month, between the last week of April and the last week of May 2020, we have seen the proportion of those who claim to be shopping more online increase between 10 and 15 percentage points in France, Italy and in Spain.

The strongest increase has taken place in Spain, which is once again a result of the country being at an earlier stage of its easing of lockdown measures when compared to France, Germany and Italy.

Conversely, the proportion of those claiming to be shopping more online remained fairly unchanged in Germany, encompassing little under a quarter of the population (23%). This probably results from the fact that Germany was among the first countries to allow non-essential stores to reopen in May, allowing people to shop more in-store and be less dependent on online shopping.

FIGURE 3: Those claiming to have increased the amount of shopping they do online, April-May 2020
 
“Since the start of the COVID-19/coronavirus outbreak, which of the following apply to you?”

Base: ^ 1,000 internet users aged 16+ in each country; ^^ 1,000 internet users aged 16+ in Germany; 500 each in France, Italy and Spain
 
Source: Lightspeed/Mintel

Online shopping seems to have increased predominantly among younger shoppers in Germany and in Italy, less markedly so in Spain. In France, the increase in the use of ecommerce is more evenly spread across age groups, covering about one third of the population. This could represent a potential opportunity for retailers to increase their online penetration among older shoppers, addressing the main challenges elderly consumers face when using ecommerce.

Time savings and convenience are among the factors that make online shopping particularly attractive to younger shoppers. We think retailers could benefit tremendously from encouraging older consumers to use ecommerce and home delivery services by better communicating such benefits, with a particular focus on convenience. This could include highlighting the ease with which online shoppers can refer to previous orders, how online shopping can help with budget management, not to mention the safety element of avoiding crowded spaces and the risk of contagion. It also eliminates the effort of queuing, carrying the shopping around and loading products into their car.

FIGURE 4: Those claiming to have increased the amount of shopping they do online, 20-28th May 2020
 
“Since the start of the COVID-19/coronavirus outbreak, which of the following apply to you?”

Base: ^ 1,000 internet users aged 16+ in each country; ^^ 1,000 internet users aged 16+ in Germany; 500 each in France, Italy and Spain
 
Source: Lightspeed/Mintel

Independently of how much they have increased the amount of shopping done online, the proportion of consumers spending less time in-store remains high across all four countries, representing at least half of the population. This trend is likely to have a negative impact on sales, especially on impulse buy, and therefore represents an additional encouragement factor for retailers to increase their online presence. When supported by the good use of social media and other digital tools, the rise in ecommerce could partly offset the decrease in in-store sales that retailers are bound to experience.

FIGURE 5: Those claiming to limit the time they spend in-store, 20-28th May 2020
 
“Since the start of the COVID-19/coronavirus outbreak, which of the following apply to you?”

Base: ^ 1,000 internet users aged 16+ in each country; ^^ 1,000 internet users aged 16+ in Germany; 500 each in France, Italy and Spain
 
Source: Lightspeed/Mintel

Opportunities for non-cash payments
Another change in consumer behaviour we have been observing as a result of the COVID-19 pandemic is a marked decrease in the use of cash payments. While this trend has slightly subsided in France and in Germany since the end of April 2020, our research shows that between one third and half of consumers were still trying to avoid using cash where possible by the end of May 2020.

FIGURE 6: Those claiming to be trying to avoid using cash where possible, 20-28th May 2020
 
“Since the start of the COVID-19/coronavirus outbreak, which of the following apply to you?”

Base: ^ 1,000 internet users aged 16+ in each country; ^^ 1,000 internet users aged 16+ in Germany; 500 each in France, Italy and Spain
 
Source: Lightspeed/Mintel

In terms of demographics, our research shows that older shoppers seem particularly prone to avoid making cash payments, especially in Italy and in Spain. This is also true in France, albeit to a slightly lesser extent but interestingly not so much in Germany, where avoiding the use of cash peaks for consumers aged 25-34.

FIGURE 7: Those claiming to be trying to avoid using cash where possible, by age group, 20-28th May 2020
 
“Since the start of the COVID-19/coronavirus outbreak, which of the following apply to you?”

Base: ^ 1,000 internet users aged 16+ in each country; ^^ 1,000 internet users aged 16+ in Germany; 500 each in France, Italy and Spain
 
Source: Lightspeed/Mintel

In spite of the trend of avoiding cash payments, tools like Click & Collect still have surprisingly low penetration among consumers. This is particularly true in Germany and in Spain, where less than 10% of consumers claim to be using click and collect facilities more often. This represents a tremendous opportunity for retailers to increase the use of such services, as well as their derivatives such as mobile scanning and payment.

FIGURE 8: Those claiming to be using click-and-collect more often, 20-28th May 2020
 
“Since the start of the COVID-19/coronavirus outbreak, which of the following apply to you?”

Base: ^ 1,000 internet users aged 16+ in each country; ^^ 1,000 internet users aged 16+ in Germany; 500 each in France, Italy and Spain
 
Source: Lightspeed/Mintel

Examples like the initiative by Italian grocer Coop Italia, dubbed ‘Kiosk Coop’ and created to help consumers maintain physically distant shopping during the coronavirus crisis, could prove effective to other retailers as well. The devices allow customers to pay for their orders online and then pick up their orders in specific collection areas. Alternatively, the technology allows for a click-and-collect service, where customers check in to have orders placed straight into the boot of their car.

FIGURE 9: Kiosk Coop device developed by Coop Italia to support social distance shopping, May 2020
  
Source: ESM Magazine

Many shoppers remain pessimistic about the future
When asked what they think the impact of the COVID-19 pandemic will have on their country’s economy, many shoppers still maintain a rather pessimistic outlook. Our consumer research shows that the coronavirus crisis is expected to have the most negative impact on employment, with nearly two thirds of Spaniards (65%) having an extremely negative outlook on the level of unemployment, compared to 46% in Italy, 39% in France and 35% in Germany.

Economic growth is believed to be the second most affected factor, followed by the cost of living and the price of property in their respective countries. While the level of pessimism seems to increase with age for factors like economic growth, unemployment and house prices in the other three countries, in Germany it appears to be more evenly distributed across age groups.

FIGURE 10: Those claiming to have an extremely negative outlook on the following factors, 20-28th May 2020
 
“What impact do you think the COVID-19 outbreak will have on the following factors?”

Base: ^ 1,000 internet users aged 16+ in each country; ^^ 1,000 internet users aged 16+ in Germany; 500 each in France, Italy and Spain
 
Source: Lightspeed/Mintel

Interestingly, when it comes to the cost of living, the proportion of those claiming to have an extremely negative outlook peaks for consumers aged 35-44, also encompassing those aged 45-54 in France. In any case, it will be interesting to see how this sentiment progresses in the upcoming months, and whether the gradual return to a semblance of ‘normality’ will affect how consumers feel about the economic outlook for their respective countries.

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