Globally, 2020 proved to be a very tough year for the retail sector. Switzerland did experience limited growth in retail sales in 2020. E-commerce sales and groceries retailers fared best while clothing and shoe stores struggled. While we look forward to a better year, a second wave of infections and new strains of the COVID-19 virus have pushed back the prospect of a consumer-led recovery to the second half of the year.
In 2020, Switzerland was one of the few countries where the retail market enjoyed growth, albeit limited. As our survey of Swiss consumer behaviour last May showed, grocery retailers performed well in the early stages of the pandemic with many consumers prioritising food purchases over other consumer products. During the stricter European lockdowns in spring and winter, Swiss retailers benefitted from border closures with neighbouring countries forcing the Swiss to shop at home rather than Germany, France and Italy, a common weekend ritual.
Swiss consumers faced less strict restrictions than European consumers did for much of 2020 so the retail sector was not as negatively affected as other markets were. Countrywide, non-essential shops were closed for approximately eight weeks, from mid-March to early May. In November, the canton of Geneva closed non-essential shops and reduced opening hours to counteract a spike in COVID-19 cases. However, for most of 2020, retailers in Switzerland were able to conduct ‘business as usual’ albeit with reduced capacity, social distancing and increased hygiene measures. This reality coupled with the high standard of living, high wages, labour protection and low unemployment rates meant that consumers in Switzerland propelled the retail sector to achieve slight growth in 2020.
Consumers also embraced online shopping in ever larger numbers out of necessity and this shift online is an acceleration of a pre-existing trend. Switzerland is generally a traditional and protected market, where the penetration of e-commerce giants, such as Amazon, is still relatively low. However, Swiss retailers also needed to, and did, respond to shift in online shopping with improved e-commerce offerings, technology and website user-friendliness. Even the luxury watch industry, typically used to engaging with consumers in a face-to-face environment, reconsidered their long-standing resistance to online sales as our 2020 Deloitte Swiss Watch Industry Study highlighted.
The online shopping activity we saw in 2020 has created a new baseline for e-commerce sales from which growth, supported by increasing retailer investments in online capacity and a growing number of consumers who are more familiar with the benefits of online shopping, will continue through 2021 and beyond.
New consumer behaviour
In 2020 we saw a big shift to online and we believe this shift is now consolidating – data from Deloitte’s Global Consumer Tracker shows that 1 in 10 consumers across Europe now shop online for food. We have seen similar growth in non-food – with stores shut consumers have quickly adapted to shopping online.
We have also seen the lines between the home and the office blurred, with the home becoming an office, a classroom and a gym. This has changed consumption patterns with more calories consumed in the home and growth in spending on categories focused on the home such as furniture, garden products and home gym equipment.
And finally consumers have shopped more locally which has benefited neighbourhood grocery stores, local businesses and local producers. This was also the case in Switzerland with local shops benefiting from the large influx of people working remotely.
Ultimately, there were real shifts in the retail sector spurred on and accelerated by the pandemic. These trends will affect how consumers interact with brands in the years ahead.
1. Net Zero Retail…now!
Moving from aspiration to implementation across the whole value chain.
2. Digital by design
A digital first approach is rapidly transforming retail.
3. Thoughtful Experiential
The re-birth of the store.
The polarisation between real destinations and hyper local shopping.
5. Health becomes the new battleground
Competition in the $4.5trn global wellness industry is heating up.
6. Lead with purpose…
…and create a culture of inclusion.
Amidst all the doom and gloom of 2020, there was still creativity and innovation taking place across the retail industry, which we thought deserved to be celebrated. In this video we share some of the most inspirational moments of the year that you might have missed.
Net Zero Retail…now!
Now that the big public commitments on climate have been made and with COP26 in Glasgow on the horizon, we believe that it is the time for retailers to act. In the coming year retailers need to consider how they can begin to transition to Net Zero Retail and accelerate their efforts to decarbonise operations, products and their supply chain.
Digital by design
2020 proved to be a transformational year for retail – offering a compelling case for a digital first approach as stores closed due to COVID-19 restrictions and consumers were told to shop from home. To reach locked-down consumers, retailers had to take advantage of the only channel available, scaling their online capability. This has led more and more retailers to adopt a digital first approach.
The growth of online has forced retailers to reassess the true value and role of their stores. In 2020, experience-based retailers struggled with a lack of footfall and opportunity to engage consumers. We believe experience remains essential to the future of the store – but it needs to be more thoughtful. The cost pressures remain and investments in experience need to ensure that they make sense from a brand perspective, add value to consumers, and deliver a commercial return. It cannot just be experience for experience’s sake.
Lockdown and the growing number of people working from home has led to a return to local shopping, which we believe will continue beyond the pandemic. However, we think the market will polarise between real destination stores that will continue to attract consumers and "hyper local shopping", which bodes well for the future of the high street.
Health becomes the new battleground
One of the most notable changes in consumer behaviour last year was the increased focus on health and wellness. This has created increased demand for wearables and data-services to provide personalised programmes. Consumers have dedicated more time and more money to looking after themselves and this has created a big opportunity for retailers.
Lead with purpose
Last year we said that we believed that purpose was the new digital. By that we meant that we expected purpose to be as disruptive in the next ten years as digital has been in the last ten. In 2021, it will be more important than ever before to lead with purpose and create a culture of inclusion. Just as with digital, we believe retail leaders need to ask themselves: how do we embed this into our business?