The retail world was on a path to embracing new digital technologies and recent information suggests that the advent of COVID-19 has boosted adoption, as businesses flex and change. However, what remains unclear is whether this adoption will lead to long-term change in a digital retail environment.
More consumers and businesses turning to e-commerce channels and online
Back in 2003, China was facing adversity and upheaval during the SARS crisis – and it was during this time that Alibaba launched its consumer facing site Taobao. At the time, millions across the country were turning to the internet to order everything they needed during self-imposed quarantine. This ultimately led to a major shift in consumer purchasing behavior – and this has been a lasting shift with McKinsey and Company reporting that Chinese consumers were expected to spend $1.5 trillion through e-commerce retail channels in 2019, representing a quarter of total retail sales volume in China, and more than the retail sales of the next ten largest markets in the world combined. Alibaba was ranked the largest online retailer based on web sales in the world in 2018.
While this has continued to grow for China, seventeen years later, the internet has again become increasingly necessary for doing business – and this time it is on a global scale.
Before the end of 2019, the International Wine and Spirit Record (IWSR) forecast that e-commerce for alcoholic beverages would be worth US$45.5 billion by 2024. Further to this, across the 10 countries they studied, online sales were growing at a rate of 15 per cent each year. China is the biggest online market for alcohol drinks, followed by France and then the United States of America (USA). But in our current environment this may change.
When social distancing rules or lockdowns were imposed in many countries, to tackle COVID-19, online retail experienced a surge in business. In the United Kingdom (UK), IRI reported that the performance of online supermarket channels increased its share from an average of 5 per cent during January and February to 6.5 per cent in week ending 21 March 2020. This is almost the same as in the lead up to Christmas, which peaked at 7 per cent.
While online retail has grown rapidly – with Nielsen reporting that it attracted more than 600,000 new UK shoppers – this influx has placed pressure on supply and online delivery capacity. In the USA, Nielsen reported that online alcohol sales experienced a triple digit increase in March and April, while wine was much more modest, up 32 per cent in week ending 4 April 2020. Many wine producers were also increasing their focus on e-commerce by ensuring they had the right structures and strategies in place to meet demand.
In the USA, new digital-based distribution models like LibDib have been given further relevance as they offer a three-tier compliant online distribution platform to sell wholesale alcohol. During the lockdown, LibDib have been encouraging wine retailers to learn how to sell wine remotely through their open marketplace.
While the e-commerce channel has been positive for retail, within the hospitality sector there are numerous accounts of operators changing their business model and going online to survive. Wine Intelligence has highlighted some great examples of where businesses are turning to the digital world to drive engagement and support the on-premise through new innovations using apps and social media platforms to conduct virtual hangouts and online wine tastings. Online alcohol delivery has grown rapidly in a short space in time and findings from a Nielsen / CGA on-premise study shows 9 per cent of USA consumers have ordered a takeout / delivery with relaxed liquor laws during the crisis.
Various research studies have indicated that advertising should continue, especially through digital mediums such as WeChat, as importers and distributors who establish a personal link with customers can get an extra edge. Media consumption, according to Nielsen, was predicted to rise 60 per cent in North Asia during the lockdown in China. ListenFirst noted from their study into alcohol brands and social media that engagement activity with nearly 300 brands on 3 large social media platforms found activity was up 327 per cent in March 2020 compared to last year. They also found that the number of wine tweets increased 66 per cent to 3 million and that brands did well by acknowledging the virus in their marketing. A handy infographic has been developed by Wine Intelligence on how to market wine during and after COVID-19.
Wine retail in the future
Along with finding opportunities to offset losses by selling online or hosting wine tastings in the short term, retailers and hospitality businesses should be taking time to understand how new technologies can further enhance future business strategies.
Euromonitor have been tracking the evolution and reinvention of the global retail environment, which they reported in their What’s New in Retail Edition 4 Emerging Global Concepts report. Many of the concepts present a glimpse of the future from stores that can operate unattended, smart cameras identifying items at the checkout, fully integrated app-based shopping experiences in store, subscription services for vending machines, a matching app (like a dating app) to alleviate product choice overload, and 3D shopping with virtual reality.
This latter concept comes from Germany with the launch of Acameo’s CUUUB in 2018, a virtual reality e-commerce solution that brings brick-and-mortar retailers to life online. It achieves this by allowing online shoppers to browse virtually though the store, like Google Street View. Additional features include access to product information and messaging features that allow friends from around the world to shop together from their lounge rooms.
Digital concept - German digital communications company Acameo’s CUUUB
Source: Euromonitor International; What’s New in Retail Edition 4, Emerging Global Concepts report
Other technologies to consider further in the future of wine as posed in a Beverage Trade Network blog were drone deliveries, holograms and multi-sensory virtual wine tasting experiences that capture the sights, sounds and smells. Wine producers and tourism regions are already investing in some of these concepts including Brancott Estate Wines in New Zealand and Riverland Wine with their virtual reality project, Riverland on the verge.
Why embrace new technologies
It has become evident over the past few weeks that investing in digital for the wine community has allowed many to take advantage of potentially under-used channels and having to make this shift quickly has been challenging. Technical innovations are continuously being developed and provide opportunities for businesses to review these in their strategic planning activities in a more considered way to find new avenues to build brand, engage and serve both new and current customers that helps them stand out from the competition and improve sales.
New digital technologies are changing retail as companies of all sizes seek ways to add value to the standard shopping excursion and stand out from the crowd.
Consumers prior to COVID-19 were demanding changes to be made in the retail space in order to customise and tailor product choices, and enhance convenience. Competition is fierce in the wine space and being able to take advantage of new technologies and find new customers will continue to exist post-crisis. Certainly, Wine Intelligence is suggesting that it is too early to draw any conclusions on wine consuming behavior changing dramatically, with 52 per cent of Australian regular wine drinkers not trying any new alcoholic drinks after restrictions are lifted.
Talking to your customers during a crisis can provide an edge and build brand presence. Registrations are now open to attend a free webinar Marketing through a crisis, which will provide some practical suggestions on using digital channels to your advantage.