24 Jul 2020
Posted in Retail
Direct to Consumer emerges as an alternate sustainable retail strategy post-COVID-19, says GlobalData
The recent lockdown sprees have compelled the brands to look at alternative ways to provide consumers the products they need. Therefore, many brands are offering direct-to-consumer (DTC) home delivery services for the first time amid the COVID-19 lockdown. The brands are offering DTC service in almost every sector and categories of retail that is expected to continue and grow even further after the pandemic, says GlobalData, a leading data and analytics company.
This comes as no surprise given the in-store shopping restrictions and subsequent comfort seeking from consumers. Many traditional retailers and brands are now using the DTC approach. For instance, during the nationwide lockdown in India which led to non-essentials’ store closures for many weeks, Nivea, a leading beauty and cosmetics brand in India which usually sells its products through retailers and distributors across different store formats both online and offline, collaborated with Swiggy and Zomato to offer its service through the DTC channel.
Similarly, other brands and mainly fast moving consumer goods (FMCG) brands such as Britannia, Marico, also started operations across India. Since most of millennials are now comfortable shopping online, the barrier to entry is significantly reduced for brands to leverage the DTC channel and hence, they are more confident in their approach than ever.
According to GlobalData, the difficult times of the pandemic have changed the purchasing preferences of consumers. Most consumers find ‘trust’ an important factor when purchasing products. According to its June 2020 survey of ‘Consumer Attitudes and Behaviour Globally – Week 1’, 84% of consumers stated that trustworthiness, risk-free and familiarity are factors which influence their choices of products/services. Accordingly, 43% of consumers somewhat/strongly agreed that they try to buy products only from their favourite brands – making it evident that these DTC channels hold potential to reach targeted consumers equally well if not more than the traditional ecommerce channels.
Hrishabh Kashyap, Retail Analyst at GlobalData, comments: “The development of comfort seeking is a trend reversal. Before COVID-19, we saw an increasing number of experimental consumers who like to try out new and different things and were not so concerned about the brand or retailer while experimenting. However, during COVID-19 crisis, the trend has been reversed as consumers revert back to traditionally popular products and are sticking to their trusted brands.
“While the pandemic continues to unfold, brands which consumers derive comfort from and trust, seem to perform well. Thus, it becomes extremely important for the brands to reach out to consumers and express themselves through innovative products and service offerings and win their trust for the future.”