YoY growth of e-com up by 68% in Apr: Deloitte

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Year-on-year (YoY) growth of e-commerce was up by 68 per cent in April 2020, surpassing 40 per cent of total retail sales, according to consultancy company Deloitte Consulting, which found convenience continues to reign supreme as more than half of consumers are ready to spend more to get what they need. In 2019, 40 per cent of consumers were willing to pay the same or more for private labels; COVID-19 has further accelerated private brand sales.

Consumers have increased spending on hygiene, sustainable products and organic sales in recent months, with income disparity likely to continue to play a key role in the growth of these categories, Deloitte said in a press release.

Deloitte's report, ‘The future is coming ... but still one day at a time’, examines a different way to think about the future path of these industries.

"Moving forward in the COVID-19 environment, retail and consumer products companies should be vigilant to identify and react to the emerging disruptive forces and trends at play in the industry. As the saying goes, 'Think globally, act locally.' This can also be applied to retail, meaning retailers should be dramatically more granular in their understanding and operations. While it may be tempting to prioritize game-changing technologies, the data tells us the consumer economics of convenience and cost are more important than ever," said Bobby Stephens, principal, retail and consumer products, Deloitte Consulting.

There has been a surge in mobile payment usage, delivery app downloads and buy-online-pick-up-in-store (BOPIS) adoption. For many, this acceleration is driven by scarcity of other options, while others have opted for these models because they perceive them to be safer and healthier, the consulting firm said in the report.

COVID-19 has accelerated digital channel growth in recent months. By mid-April, online orders grew by 130 per cent YoY, with meaningful gains in categories where digital commerce penetration had been historically low, such as grocery.

The spike in digital orders has had significant fulfillment implications for retailers, with order picking and last-mile delivery adding to the cost and complexity of the exercise. While consumers have demonstrated a willingness to pay for on-demand fulfillment in the short term, it remains to be seen if they will continue to offset the cost of delivery in the future.

Overall, while digital growth remains strong, the ability to profitably pursue that growth remains under tremendous—and growing—pressure, said the report.

The dramatic shift to e-commerce has also hastened the redefined role of the physical store, and many retailers have reimagined their stores to serve as order fulfilment centres to meet digital demand and drive last-mile execution.

But, it is not yet clear whether this acceleration will be sustained by consumers maintaining digital shopping behaviors or the sector will see a normalisation to pre-COVID trends as restrictions are lifted and stores reopen, the report added.