Shopping our way into economic recovery - Colmar Brunton
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Shopping our way
into economic
recovery
A R E V I E W O F N Z R E TA I L D U R I N G C O V I D - 1 9
During COVID-19 lockdown in NZ we
set out to understand how Kiwis are
changing the way they engage with
retail, and what opportunities this could
hold for NZ brands, manufacturers and
retailers. This report showcases our
findings and insights.
RESULTS FROM
MAY / JUNE 2020
Did COVID-19 lockdown trigger an e-commerce revolution? Females of all ages were most likely to have shopped online during COVID-19 lockdown (82%), while 55+ year old males were less likely to have done so.
Did COVID-19 trigger Do you plan to shop online in the
coming months?
an e-commerce
NO YES – Same
revolution? 23% amount as now
65%
In June nearly 4 in 5 New Zealanders had
shopped online during the month, and the
same intended on doing so in the future. NETT YES
77%
Have You Shopped Or Ordered Anything
Online In The Last Month?
YES –
Increasingly so
12%
of kiwis
ordered
In June 77% of Kiwis planned to continue or
something increase the amount of online shopping they
online in the were doing.
past month
Kiwis aged 24-44 years, full-time employees were
most likely to engage with e-commerce
consistently, while males aged 25-34 years and
Asian ethnicities were most likely to lead the way in
increasing their e-commerce engagement.
Females of all ages were most likely to have
shopped online recently (82%), while 55+ year old
males were less likely to have done so.
Interestingly, consumers in the South Island,
specifically outside of Christchurch, saw the
highest rate of online shopping across any region.
$
COLMAR BRUNTON 2020
Some shoppers experienced issues
What are the purchasing online. Brands need to understand
who their target market is and for some there
potential barriers is a need to work harder to convince shoppers
to purchase online and provide an offline
to e-commerce? option. This is why brands need to optimize
their omnichannel strategy.
51% 18%
Preferred to look at, Worried about how 38% 6%
touch and try on things returns work
34% DELIVERY
FEE IS
NO CONVENIENT/
AFFORDABLE
Felt delivery TOO HIGH PAYMENT OPTIONS
fees are
too high
A new ‘retail frontier’ for 55+ year olds…
28% Prefer to look at, touch
59%
Felt delivery 25% and try on things
takes too long, Worried about Worried about
product quality
33%
they want things now product quality
Scared to use e-commerce
(security/privacy/ 10%
fraud concerns)
The ‘lack of tactility of the online shopping
For the 55+ age group, significantly bigger
experiences’ stood out as the biggest barrier,
barriers to this “new frontier” of e-commerce
by far.
included the lack of tactile experience, uncertainty
around product quality and concerns around safety.
Interestingly this was a significantly smaller barrier
to the 35-54 year age group. Perhaps the cohorts
Families often have to stretch budgets more than
existing experience with online shopping has
most people, and are often pressed for time in
helped to ‘normalize’ non-tactile retail
their purchases. It is no surprise that delivery fees
experiences. Instead, this group of consumers
and the wait time for purchases to arrive were
worried more about product quality and returns.
bigger barriers to e-commerce adoption for this
consumer group.
Delivery fees were one of the top concerns for
many Kiwis, with research indicating that higher Delivery fees are too high 42%
‘base prices’ (which include the delivery fee) and Delivery takes too long, we want things now 35%
an explicit offer of ‘free delivery’ was more
appealing to the consumer psyche, often resulting
in better sales conversion.
COLMAR BRUNTON 2020
How is e-commerce spending data stacking up
against this?
Online shopping saw an unprecedented year on year increase in April 2020, up almost
50% versus April of the previous year.
While shopping online, Kiwis are clearly still keen as to #supportlocal, with growth
clearly driven by ‘domestic online’ spending. This, despite overseas retailers reportedly
targeting Kiwis during lockdown.
100% Alert Level 4 60%
27th March‘20
From 1 December 2019, most overseas businesses that sell goods to Kiwi 50%
80% consumers are required to charge GST on products valued at $1000 or less** 47% 50%
60% 40%
40% 30%
20% 20%
9% 7% 9% 9% 7% 8% 8% 6%
0% 6% 5% 4% 4% 10%
-1% 1%
-20% 0%
Mar-19 Apr-19 May-19 Jun-19 Jul-19 Aug-19 Sep-19 Oct-19 Nov-19 Dec-19 Jan-20 Feb-20 Mar-20 Apr-20 May-20
-40% -10%
Monthly spending vs / Same month prior year Domestic online International online
Consumers compensated for their lack of mobility by having bigger baskets in April.
In May we saw early evidence of recovery, in June the number of transactions bounced
back and basket sizes began to normalize. Long term trends remain to be seen.
Num. of transactions (mil) Average $
160 80
140 70
120 60
100 50
80 40
60 30
40 20
20 10
0 0
Number of electronic transactions Average Value per transaction
*Source: Market View , BNZ, Stats NZ ** Source: GST Consumer COLMAR BRUNTON 2020
We observed the rise of New Zealanders ‘shop local’ sentiment. For some brands and manufacturers this could be a growth driver, for others it could pose a risk.
xx/xx groups which scored significantly higher/ lower than total
Proximity is king for
shop local Located near me
(neighbourhood/ 72%
When hearing or saying ‘shop local’ a majority area/city)
of Kiwis agreed this meant ‘their neighbourhood’ MALE, ASIAN, AUCKLAND
FEMALE, NZ PAKEHA, SOUTH ISLAND (excl CHRISTCHURCH)
or ‘close to their home’.
Small businesses stand to benefit more from
these perceptions, this means bigger brands, Products
multinational corporations or franchises have manufactured 63%
to work harder to demonstrate how they are in NZ
‘local’ too.
25-34 YEARS
It’s time to think about local or community causes
your brand can support or partner with to establish
valuable ‘local cues’.
Made by kiwis
(for kiwis)
58%
55+ YEARS; 18-34 YEARS
Made with NZ
ingredients
49%
25-34 YEARS, AUCKLAND
Brands founded/
established in NZ
46%
25-34 YEARS
“ Do your shopping in your local town instead
of online shopping.”
“ It means support the smaller companies in
NZ and in your community. Where possible
purchase their products and services.”
“ Looking at locally family owned business
selling NZ manufactured items, then looking
at NZ owned and manufactured business.”
“ Shop local to me is the local businesses in
town and also includes New Zealand made
products around the country.”
“ Supporting New Zealand businesses and
products made in Aoteoroa.”
COLMAR BRUNTON 2020
What ‘local’ means to Older age consumers were most likely to define
local as ‘being located physically close’ to them,
Kiwis differed not only perhaps because that’s what retail and commerce
by age groups, but also has been traditionally.
by location. Meanwhile consumers aged 18-34 years
(especially those below 25 years) have taken the
Kiwis in the South Island were significantly more realities of the global economy they have grown
likely to interpret ‘shop local’ as meaning places up with to heart and think that products “made by
located near to them. kiwis (for kiwis)” still count as local.
Aucklanders were significantly more likely to Brands that were established in NZ were found to
define local as “made with New Zealand be more appealing to the younger cohort, while
ingredients”, and were also the most likely to the older consumer groups thought this was not
define ‘shop local’ as “products that are enough ‘localness’.
manufactured in NZ”.
72%
58%
Auckland Total 49%
46%
54% 73%
Made with NZ
18-24 years 73%
ingredients 47%
52%
67%
Products 63%
25-34 years 65%
manufactured in NZ 58%
56%
74%
59%
35-44 years 50%
South Island 47%
80% 72%
Located near me 51% 45-54 years 42%
41%
53%
Made with NZ
ingredients
Wellington 75%
55+ 52%
46%
40%
66%
54%
Located near me (neighbourhood/area/city)
Made for kiwis Made by kiwis (for kiwis)
Brands founded / by kiwis Made with NZ ingredients
established in NZ Christchurch Brands founded/established in NZ
COLMAR BRUNTON 2020
#Support(more)Local Traditionally more local businesses
such as cafés and grocery stores are
Just under a third of New Zealanders most likely to benefit from the ‘support
said they already try to support local local’ sentiment.
where possible.
Currently support local…
A similar proportion said that they will try
to support more local in the future. Cafés 42%
Younger Kiwis were most likely to support
local more, while older Kiwis felt that they
Groceries,
were doing a lot already (less likely to Fresh Produce
40%
change future behavior).
Ready To
7% I have always tried Eat Food/ 37%
to shop local Restaurants
30% Will support local
25% NETT more
Clothing/Shoes
SUPPORT I will support a mix
/Fashion
17%
LOCAL of local, regional,
international
68% I don’t plan to Cosmetics
12% change how I shop
for or buy this
/Speciality 13%
27% Toiletries
Don’t know
However there is potential for local
clothing, shoes and fashion retailers to
be supported.
Where possible, I will try to
support more local:
Clothing/Shoes
/Fashion
29%
Groceries,
Fresh Produce
29%
Ready To
Eat Food/ 26%
Restaurants
Cafés 26%
Cosmetics/
Speciality 23%
Toiletries
COLMAR BRUNTON 2020
Does #supportlocal We observed the #supportlocal sentiment
correlating strongly to consumers’ income groups.
differ by consumer Consumers from a lower income background were
groups? significantly more likely to support local currently,
as well as showing interest in continuing doing so.
Yes it does. We found interesting behaviour
Conversely, higher income Kiwis were least likely
differences across ages and income groups.
to currently support local, although 1 in 4 said they
The 55+ age group, who defined ‘shop local’ as
would try to support more local in the future.
being located near them, were most likely to
currently support local businesses (32%), and This could give insights into the type of products
least likely to see the need to change to support and product ranges which could find a #shoplocal
more local businesses (21%). message resonate with their customer base.
Among others, job security of local employees
Meanwhile, younger consumers were most willing could be one message to embrace, to appeal to
to shift behaviour towards supporting more local these cohorts.
businesses, with almost a third (30%) of under 25
year old's saying they would support more local Nett Support local
goods and services where possible.
Below 50k
72%
CURRENT FUTURE income
I have always I will try to
tried to support support more
local/ domestic local/ domestic 50-99k
income 69%
where possible where possible
More than 100k
18-24
YEARS 32% 30% income / 66%
Prefer Not To Say
25-34
YEARS 23% 31%
35-44
YEARS 30% 27%
45-54
YEARS 27% 22%
55+
YEARS 37% 21%
COLMAR BRUNTON 2020How has the ‘shop local’ sentiment impacted the shopping baskets of Kiwis?
In June, more than 1 in 2 Others were less likely to have recently
visited a mall, including:
New Zealanders had visited
a mall in the past month. Income under
Below 50k49.9 k
income 41%
Around 1 in 5 said they
couldn’t wait to go back Rural
Rural 33%
after lockdown levels
South Island
changed (or businesses Other SI
(excl Christchurch) 31%
re-opened). North Island
Other(excl
North island
Auckland) 42%
Visited a mall in the last month
YES NZ Pakeha ethnicity
NZ Pakeha 48%
52%
55+ Years
55+ 41%
NO
48%
Some consumers were more likely than
others to have recently visited a mall,
they included:
18-24 Years
18-24 76%
Asian Ethnicity
Asian 66%
Auckland
Auckland 64%
Christchurch
Christchurch 72%
Urban
Urban 61%
Full-timeFull
employed
time 55%
White collar
White-collar job
application 58%
Family Households
HH with family 59%
Households withkids
HH with Kids 60%
More than 100k100K+
income 56%
COLMAR BRUNTON 2020In June, there were mixed Some consumers were significantly more
likely to visit a mall soon:
intentions from consumers
about visiting malls
Don’t usually go
Can’t wait to go back Christchurch RANK 1
as soon as lockdown
there anyway
levels allow
24% 24%
18-24 Years RANK 2
Asian ethnicity RANK 3
North Island RANK 4
(excl Auckland)
Others indicated being significantly less
Won’t be going in the Not sure if I will likely to visit a mall in the coming months,
next few months go there for now they were:
18% 27%
Unemployed RANK 1
Home-makers RANK 2
Females RANK 3
55+ Years RANK 4
Wellington RANK 5
COLMAR BRUNTON 2020‘Malls’ the word Within Auckland, Sylvia Park had the most
people raring to go, followed by the three
biggest Westfields.
The locations set to benefit most from the
post-lockdown excitement of re-engaging Sylvia
Park
24%
with retail are local town shopping
centres. In June, around half of New Westfield
19%
Zealanders said they were excited to Newmarket
pop in for a visit. Westfield 17%
Albany
My Local Westfield
16%
Shopping Centre/ 48% St Lukes
Town Centre
Dressmart 16%
Onehunga
29%
27%
26%
23%
This was more pronounced in the
South Island.
52%
NORTH ISLAND
55%
SOUTH ISLAND
COLMAR BRUNTON 2020Some categories were worse-affected than
others, but there remains recovery potential for
each of them.
3,000
Spending ($Mil)
2,500
2,000
1,500
1,000
500
0
Oct 2018
Oct 2019
Feb 2019
Mar 2019
Apr 2019
Mar 2020
Apr 2020
Feb 2020
May 2018
May 2019
May 2020
Jun-20
Jul 2018
Jul 2019
Jun 2018
Jun 2019
Aug 2018
Sep 2018
Nov 2018
Dec 2018
Jan 2019
Aug 2019
Sep 2019
Nov 2019
Dec 2019
Jan 2020
Consumables Durables Apparel Hospitality
Panic buying in March 2020 resulted in a 23%
In the News
increase in consumable spending (measured via
electronic transactions) compared to the same
time last year. To put this into perspective, that
exceeds the annual spike observed for Christmas
over the last 2 years.
Due to the lockdown, durables and other products
took a nose dive over the same period. NZ was
under lockdown measures for all of April, and this
resulted in a 72% decrease in spending on
durables, a 89% decrease in spending on
apparel, and a 9% increase for consumables
versus same time last year.
NZ moved to alert level 3 on April 27th, which
saw the opening of non-essential retail stores and
shopping malls. This had a significant impact on
durables and apparel transactions. Within a
matter of weeks durables recovered to higher
than pre-Covid-19 levels (March 2020).
At the start of June apparel transactions remained
below last year’s spend, we see the resulting
closure of outlets making headlines recently.
Thus far hospitality had shown the weakest
recovery, but positive momentum had already
been made by kiwis taking it upon themselves to
drive domestic recovery in this area.
*Source: Stats NZ** Note that the YoY increase in consumable spending may also be due to more electronic
transactions in place of cash as stores encouraged the use of contactless payment like payWave as a
measure to decrease COVID spread Source: Newshub COLMAR BRUNTON 2020For more information contact Yasmin.Handrich@colmarbrunton.co.nz
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