As many states look to start opening up their businesses, fear and financial insecurity are still the main drivers of how consumers are shopping. Fear of the coronavirus is keeping many people indoors even after being quarantined for two months, and with the number of newly unemployed now hitting Great Depression levels, fear of running out of money is leading shoppers to stretch their dollars as much as possible.

These are some of the topics I touch on during this podcast interview with Elizabeth Gretkowski, Senior Consultant at WSL Strategic Retail, as we review some of the findigs of WSL's latest research on how Covid-19 has impacted shoppers. 

When I interviewed WSL CEO Wendy Liebmann six weeks ago, the quarantine was still fresh and consumers were still in panic-buying mode. Now, consumers realize they are in this for the long haul, and so Liz and I explore what the shopping landscape will look like as we progress through the pandemic and beyond it. Interestingly, one of the results of the pandemic is the willingness to try new and emerging brands (approximately 25 percent of consumers have done this during the pandemic). This means that product discovery is now more important than ever. Fortunately, despite travel restrictions, buyers can still meet one-on-one with suppliers via ECRM's Virtual Sessions, which launch next week!

Liz wraps up the discussion with some great recommendations on how brands and retailers can survive today's challenges. Tons of great insights here!

Listen to the podcast here (or watch the video on YouTube below)

PODCAST TRANSCRIPT

ECRM: Welcome, everybody. Joe Tarnowski with ECRM here, and I have a special guest with me. Actually, once again, it's Elizabeth Gretkowski. She's the senior consultant with WSL Strategic Retail. Today, we're going to talk about some updated research they have on the impact of COVID-19 on how consumers are shopping. So, Elizabeth, thank you for joining me.

Gretkowski: Thank you so much for having me, Joe. Great to be here.

ECRM: So this is what, our third or fourth time we're doing an interview together?

Gretkowski: Yes, I think so.

ECRM: Well, always a pleasure, and I'm looking forward to digging into this research, so to start off, can you just give an overview of the research and how it's been updated since the last time when I spoke with Wendy? What was that, maybe a month and a half ago?

Gretkowski: Sure. I think you spoke with my colleague, Wendy Liebmann probably last month, but we at WSL, we do ongoing research with shoppers. So we're always in the field doing qualitative and quantitative work to understand how shoppers are feeling, how they're living, how they're shopping, why they buy, what they buy. Of course, right now, this is a really important time for us to be in the field, understanding the impact of COVID on shopping life. So we've done two pieces of research. One was in March, and I think that's what Wendy was speaking to you about. So we went back again in April to assess if there were changes, if shoppers were feeling differently and to get a sense of what the sentiment was, and how they were shopping, and how that was changing.

ECRM: Great, and so since then, we've had what, 30 million people have applied for unemployment benefits? So I remember Wendy started talking about people acting like they did during the recession. But now, 30 million unemployed people later, that's got to be really, really hitting hard. So how is financial insecurity playing into how consumers are thinking about shopping?

Gretkowski: It's a good question. Before we get into this, it's important to set up that shoppers are living in fear, and fear often drives behavior. So when we ask shoppers about their feelings about the virus, 85% are worried about getting the virus. On top of that, they're dealing with so many other stresses. They're worried they're not going to be able to pay their bills, not going to be able to put food on the table. They don't have childcare. They're homeschooling. They're worried they're going to blow through their savings. So shoppers are really feeling the burden of all of this, and so they are feeling more pessimistic about their financial situation.

So just to give you some context, we always ask the question about financial stability because it does frame up how they're going to view their shopping. So back in November of '09, it was 29% of shoppers felt pessimistic about their financial situation. Meaning, they felt like their financial situation was probably going to get worse. Now, fast forward to mid-April, that has jumped up to 40% are feeling pessimistic about their financial situation. That does, of course, vary with income. The lower income shoppers are more worried. 50% of those with incomes I think under $50,000 feel pessimistic versus the higher income, where it’s only about a quarter who feel pessimistic. So that is important to think about how shoppers are feeling concerned about their financial situation.

When you're concerned about your financial situation, what do you do? You're more cautious about your spending. So it is interesting to think about the recession type behavior that they're going to start doing when it comes to shopping. So just to give you some examples, and we know all this because we stayed very close to the shopper during the '08 recession, and then all of that financial crisis was going on. What we saw was that shoppers were trading down to lower priced brands. They were using up less. So for example, instead of taking a vitamin every day, maybe you take a vitamin every other day. Maybe you cut your vitamin in half and take half a vitamin. Maybe you put water in your shampoo to make it last longer.

We have to give shoppers credit because they have become so incredibly smart and savvy when it comes to saving money. One of the big differences between this financial crisis and what we've been through before is digital and the fact that she has all these digital tools. She has mobile apps that help her track and manage her money, and find coupons, and find the best price. So shoppers are definitely smart and savvy, and they're going to be finding ways to trade down, cut back, and make smarter choices.

ECRM: I think that also part of that, because I've been thinking in this way too, is they don't know when stuff is going to run out that they need, be it online or be it in the store. Obviously, the toilet paper was a classic example from this whole thing, but I'm seeing that across other categories, and I'm seeing a couple of things, maybe opportunities, that come up from that from talking to buyers and suppliers. I'm wondering if you're seeing this too, but the pandemic is almost driving trial of emerging brands only because that's what's there. So let's say I'm looking for hand sanitizer, and the traditional brands that are always on the shelf are not there, but let's say that buyer for that retailer found some emerging brands that had some stuff in stock and put it on the shelf. As a consumer, I'm going to get it really because there's nothing else and I need it, but I might get it and like it.

Gretkowski: Exactly.

ECRM: Then, all of a sudden, there's a new brand that now that is engaging with consumers. Are you seeing some of that happening?

Gretkowski: Absolutely. We're seeing shoppers... First of all, they've told us, they're trying new websites, different online retailers, and I think a lot of that is the inventory problem. You go to your local supermarket. There's nothing there. You can't find your brands. You can't find any replacement. So perhaps, you'll try an online retailer and get something shipped to you. So we do find I think it's about one-fifth of shoppers have already tried a new website to buy their goods, to get them delivered.

The same thing with brands, exactly as you said. I think it's a quarter that are trying new brands, and it's interesting to see because we've learned this from, again, the previous recession is that when shoppers are doing all of this trading, they realize that they discover new brands and new retailers that they like, and they don't necessarily go back to what they considered their favorite beforehand. So I think we'll definitely see a lot of this trading, a lot of this swapping. Again, this is the call to the brands to keep your shoppers engaged. Keep them in the brand. Whether they're going to trade up or down, what are you doing to engage them and keep them with you?

ECRM: Gotcha. At the same time, one thing that I've learned is there are a lot of things that I can live without.

Gretkowski: Yeah.

ECRM: It's maybe things I thought I needed or things I needed to do. Obviously, I'm not going out to local restaurants, and hanging out with my friends, and spending all that time and money out. The thing is you start thinking, "Do I really need this? Sure, I want to spend some time with my friends, but do I need it to do with that frequency, or do I need these things when I can get those things that are cheaper or lasts longer?" 

Gretkowski: It's funny you mentioned that because I think that when shoppers see so many things get stripped away from their life, whether it's, God forbid, a loss of a loved one, or even just kids' sports events all being canceled, you can no longer go to church, or whatever you used to do before, and you're forced to stay at home in isolation, you really start to think about what are the priorities in your life. We've seen that in our research. Half of shoppers say to us that they are now reevaluating what's important to them in their life, and shoppers are also really focused on staying calm. It's amazing. Again, going back to the shopper who is so smart now and so in control that she knows.

They know that they need to do things to be calm, and they're proactively managing their health and wellbeing, and doing things to stay calm. Also, the other thing is, while they're staying home and rethinking their priorities, they're spending a lot more time focusing on their finances, so thinking about, "How can I manage my finances better?" They don't want to get into the debt and all the craziness that happened to them before, so they're really trying to prioritize how to be financially responsible.

ECRM: So what are these, some of the things they're doing to stay calm? Obviously, probably a lot of self-care activities, reading, TV?

Gretkowski: Yes. There's lots of self-care going on and a lot of wellness going on. So the interesting thing is that wellness, as I'm sure you know, this has been an evolving trend. It's not even a trend. It's a lifestyle. It's been a movement for a long time. For at least five years, shoppers have been extremely focused on their wellbeing, and so COVID now is a catapult to all of that. They are more focused on their wellbeing than ever before. They are doing things like learning and reading about health and wellness. A third of people are doing more reading and learning about wellness. Another third are doing more exercising at home. About a quarter are eating healthier. Another quarter are doing more and take vitamins.

Also, sustainability fits within that whole wellness thing, and I wasn't sure really how this was going to play out, the whole value around sustainability. But still, 20% of shoppers are so focused on sustainable practices even during COVID, and I think it's because it makes them feel good. At this time, they're really doing whatever they can to feel good, whether it's recycling, reusing, being sustainable, exercising, getting more sleep, meditating. We see this across the board. This is really what they're focused on during this time.

ECRM: Well, I certainly can attest to that personally. I mean, seeing what's going on out there and I’m seeing two things happen. Short-term, I think people doing things for their health like me, for example, I loaded up on immunity-boosting drinks, and probiotics, I've always taken, and some of those zinc gummies. Things like that just to increase my immunity for the short-term. But then, I think the long-term, what you were talking about earlier, diet, eating healthier and fasting. I was always trying to eat healthier over the past few years, but it's gotten a step further. I'm getting more organic stuff. I'm getting a lot more vegetables, a lot less pasta, spending more time working out because now I'm thinking more in terms of longevity too. So you have the short-term, "What can I do now to boost my immunity and all that?" But then, the long-term, "How do I make myself better prepared so that if this happens again, I'm better protected?"

Gretkowski: Exactly. Also, the other piece of wellness is the whole mental aspect of this. I'm sure we've all heard and read the headlines about the emotional and mental toll that this is taking on people, the loneliness, the depression, the anxiety. So that's the other part of this, and it's been really... It's been great to see the retailers and brands really step up their messaging. Change it up from just the standard, old 20% off, and really focus on shoppers' mental state, reminding them to be calm, reminding them that everyone is accepted. We're all in this together. So that's the other part of wellness that yes, it is about exercising, and meditating, and all the things that we're proactively doing to build our immunity right now and also long-term, but it's also the mental aspect of this. I think that's a huge opportunity for brands.

ECRM: I agree. What's funny is I've been reading books on people facing adversity. So two different things. I've been reading, and this has helped me feel better. I read a book about the plague in 1665, and I read a book about Spanish Influenza. The reason why is because it puts it in perspective. What we're going through now is nothing compared to 1914. So you read that book, and it's like, "Okay. Two years versus..." We're only in this two months, you know?

Gretkowski: Yeah.

ECRM: Then, I just read a book about Ernest Shackleton who was an Antarctica explorer, and his boat was stuck. 

Gretkowski: Oh, yeah.

ECRM: Yeah. I don't know. You probably saw the video.

Gretkowski: I saw your post.

ECRM: It’s like, "Wow, these dudes were stuck in the ice in a boat for 10 months straight, three of those months in pitch black darkness. Okay. This is not that bad now." So it puts it in a perspective.

Gretkowski: Exactly.

ECRM: But I think the thing you said about the messaging, I really think it's key. You really can't be tone-deaf when you're addressing consumers now. You really need to put things in the context of what they're going through so that you could show them that you understand, you're there for them. Sure, they need discounts, and pushing a discount or sale is important. But what's more important is, "We're here to help you, and these are the things we're doing to make your life easier right now."

Gretkowski: Exactly, or when you push the promotion, the 20% off, frame it up in a way of, "We care about you so much, we want you to have this so that you can get what you need." So there's just so many little nuances that retailers and brands could do to show their shoppers that they feel their pain, they understand what they're going through, and they really care about them.

ECRM: Yes. Or, "Here. Here, these bath bombs." Right? "You're feeling stressed. These bath bombs with CBD will help relieve the anxiety," or things like that.

Gretkowski: Yes. Exactly.

ECRM: Or like Wendy brought up in our interview, and she was really forward-thinking on that when she mentioned eventually, people are going to start seeing their roots, their gray roots showing in their Zoom videos, and guess what? Six weeks later, it's happening. In fact, I just gave myself a buzz with clippers because my hair was just getting too crazy. It's happening. People are now seeing themselves on Zoom, and they know that it's here to stay. It's not going away. Even once things get better, it's going to be incorporated in. So now, in the beginning, maybe you're thinking, "No, I'll be in my pajamas, and I'll have a ponytail. Whatever." Now, they're actually... I'm seeing a lot more people are trying to look as if they were working in the office. Are you seeing that too?

Gretkowski: Yes. I've seen different things. In fact, I was thinking about that when I got dressed today. I was like, "Should I wear something like I'd be giving a presentation, or is this work casual?" But I do feel like now, there's this whole new sense of humanity coming out, which I love seeing in people. I was worried. I'm like, "Gosh, my three-year-old is going to come running through the door during this interview." It's bound to happen, but this whole new sense of realness is coming out, and it's really beautiful to see that, but I do I think that shoppers know this, and they are buying hair color. They're buying the Madison Reed. All these things that we've been seeing. All these online direct-to-consumer brands who have real value propositions. Shoppers are going to be buying these and doing these at-home treatments. In fact, we already see it in our research that doing at-home beauty treatments is up right now. Although, the flip side of that is that spending time on your beauty routine has gone way down. So I don't need to put on a full face that's going to last all day, but I'm going to touch up my roots basically.

ECRM: You touched on something before when you mentioned what consumers are spending time doing, and one of the things is they're spending a lot more time on social media or online just to stay informed and busy. What kind of things are you seeing in your research along those lines?

Gretkowski: Well, it's interesting that most of them are watching the news, which I don't know why if you're trying to be calm. But half of them are doing more watching the news, playing video games, watching movies, the whole entertainment aspect. But really, it's about the whole wellness piece, and doing more cooking at home, spending more time with pets. You only can do so much when you're home.

ECRM: Where do you see this going? As we start to get out of it, which we're at least attempting to do with states starting to open up, how do you see this continuing on shopper behavior and how the retailers and brands are addressing it as we open up more, and then in a... and this is looking a little bit further out once the pandemic passes, what's the lasting impact?

Gretkowski: Well, I think there's a couple of things. One is the financial piece, which I think I already touched on, which is just that shoppers are going to be more cautious about their spending. There's something we used to talk about called the cautious pause. So even when they get back to spending and shopping in the stores, they're going to get to the checkout, look at their basket, take the item out and say, "Is this a smart use of my money?" So that. These behaviors are going to be ingrained, and they're going to be ingrained for years to come. I don't want to make predictions about the economy, but when we looked back at the '08 recession, it wasn't until 2015 till we really saw these behaviors stop or I should say decrease, so they're going to be... This, the saving money, cutting back, prioritizing their spending, is going to be here to stay for a while.

Wellness is going to be here to stay for a while. I think that COVID is just ramping it all up a lot. To your point, if there's going to be a second wave of this, what can I do right now to make sure I don't get it? These are all concerns that they have. So they're wanting to get in the best shape possible. Again, when we talk about wellness, I think it's really important to remember that we're speaking holistically. It's about physical, emotional, mental, financial. It's across the board. They just want to feel well.

But I think when it comes to shopping behavior, the big thing, and we haven't really talked about this yet, is online shopping. It's no surprise that shoppers are staying out of stores and they're shopping online. We see about half and half. So 50% still prefer to go to the stores, but the other 50% are finding new ways to shop. It might be shopping online and doing curbside pickup, drive-through pickup, delivery, what have you. There's just going to be a lot more of these alternative ways to get goods and services moving forward.

But the interesting thing that I just want to call out is that what we've been tracking for the past 10 or so years is that when shoppers start to buy online and they realized that... "Wow, it was easy. It was convenient. It was quick. I got great prices." They stick with it. So coming out of this, we're going to see shoppers who bought online for the first time. They're going to stick with this behavior, and they're going to rethink the reason to go to the store, especially as retailers are now rethinking the stores, getting rid of merchandise, and sampling, and all of this stuff. Are shoppers really going to go, and browse, and sit down, and have craft beer, and listen to a concert at the store anymore?

I mean, maybe not. It might be awhile before we get back to this, but I think the important thing to remember is that those who are buying online right now... Let's take a category for example. For beauty, 43% of women have purchased beauty online in the past month. Of those 43%, 28% have done it for the first time. So those people who are now doing it for the first time are more likely to stick with this behavior. We've asked shoppers. "After this is all over, are you going to still shop online?" Three-fourths say that they do.

Now, we know that what they say they do and what they actually do is different, but still, three-fourths of those who buy online say they're going to stick with it. So I think this is going to be the biggest shift, and it's really important for retailers and brands to think about their distribution strategies, think about how shoppers are getting their products. You've got to innovate new ways to get your products in their hands in fast, convenient, clean, transparent ways. Whether it's click-and-collect, drive-through, Instacart, Uber, whatever it is, that's really what needs to be done right now to prepare for the future.

ECRM: Great point. I agree. I think if any retailer is not seriously considering e-commerce and click-and-collect, if they're not doing it already, then they should be seriously considering that because it really... The landscape is going to change tremendously. Some people are forced online because of out of stocks in the store, and other people, like you said, they don't want to leave the house. They don't want to be around people. Maybe they got parents with them that have existing conditions. They don't want to risk it. But then, they get so used to it. We've actually seen the same thing in parallel with the virtual world. When we launched our virtual meetings, people coming on originally because there's no place else to go. But once they do it, they're realizing, "This is so easy. I'm still getting the same result.”

Gretkowski: Right.

ECRM: Sure, we're not obviously face-to-face in store. That face-to-face relationship, you can't replace that 100%, but we're starting to realize we got good bandwidth, this is a pretty good approximation, especially when you don't want the other alternatives. So I think that online is going to be a major part. I'm certainly shopping online a lot more for things that I never got before and same thing. It's just so easy to just click "Reorder" now that I'm going to stick to those categories. Fortunately, I'm here in New York. I have a lot of smaller stores right around my block, so I can pretty much just dart in and out, but not everybody is in that situation. They probably don't want to drive to a store and deal with all that. So looking forward, what recommendations do you have for retailers and brands? You talked about some strategies, the five strategies to survive in your research.

Gretkowski: Yeah, so we do have five strategies to survive that I would like to suggest to the listeners. I do want to just preface this by saying that everything that we've talked about is so high-level, and there are so many nuances when we think about specific categories, when we look at specific shopper segments and even different regions across the US. That's one of the things that we love to do at WSL is really help our clients understand these future scenarios and what the future is going to look like. But for the sake of this conversation, of course, there's five things that we suggest to help brands and retailers survive now.

Number one, as I already mentioned, is to feel their pain. Again, just in the messaging, in the promotions that you do, in the marketing, it's so important to be relevant to the place where your shoppers are at. They're feeling fearful. They're feeling anxiety. They're feeling scared about their financial situation. So there's just a big opportunity for brands and retailers to say, "We understand. We feel your pain, and here's a little way we're helping."

Here's an example. I mean, this is so little, but it's just so smart. So again, going back to '08, Staples and Office Depot. Everybody had lost their jobs, and people were on a job hunt. They came out with an advertisement that said, "We want to help you find a job, so come in whenever you want, and you can print your resume for free." Totally small, doesn't cost them a thing, but just a way of saying, "We really care about you. Here's how we're going to help you out." So that's number one, feel their pain.

Number two is understand this new context that we're living in. You cannot return to retail and expect to do business the way that you've done before. This really requires you laying everything out, how you do business, how you sell, how you go to market. Deconstruct it all and basically rebuild it, considering the new landscape that we're living in and the new shopper that we have before us. 

Three is keep your shoppers in your brand. Again, as we already talked about, there's going to be so much trading up. There will be trading up, believe it or not, and trading down, but the important thing is that you keep your shoppers engaged so that when they do make the switches, they stay with you.

Four is be where they want you to be. Not where you want to be, where they need you to be, and this really talks to your distribution. I have to wonder about these premium beauty brands who are in the mall. What's going to happen to them? They have got to rethink how they're going to how they're at retail. It's not just them. It's everybody else too. Everybody has step back and rethink about it. If you're in a mall and people are no longer going to the malls, how are you going to get your product to shoppers? So again, you have to be where they are. You have to be truly omnichannel, and it has to be easy.

Then, the last one is just about embracing “well,” because wellness is... It used to be a lifestyle. Right now, it is life-saving, and shoppers are so focused on it. There's a tremendous opportunity for brands to frame up their message, their products, their marketing, everything in a wellness frame of mind. It doesn't mean you need to have recyclable packaging and you need to be organic. Even just the mental... the nod to the shopper's mental wellbeing. "Hey, you're beautiful just the way you are. Take the CBD and you'll be calm." Whatever it is. There's just a really big opportunity to resonate with the shopper's desire to be well.

ECRM: Awesome. Well, those are certainly great recommendations to wrap this whole thing up with. For those of you who are interested in learning more about WSL and what they do, the website is WSLStrategicRetail.com. Did I get that right?

Gretkowski: You got it right.

ECRM: All right, and then also, they have a Future Shop Podcast, and they have a ton of content all around dealing with COVID-19 and how to survive and thrive in the midst of all of that. So Elizabeth, thank you so much for joining us, and I look forward to keeping this going and hopefully, eventually, doing this with you guys in person again.

Gretkowski: Hopefully soon, Joe, and thank you so much for having me. It was fun as always.