On 1 May 2020, the Prime Minister of Australia said that:
“Initial actions and measures implemented during the COVID-19 pandemic in Australia have been largely successful at slowing the growth of cases domestically and ensuring the national health care system has the ability to cope with cases, and surge when required.”
Moreover, as the Government can find and contain outbreaks in a swift manner, there might be some relaxation in the restrictions while keeping Australians safe.
There are currently around 1000 active cases in Australia, and daily infection rates have been very low over the last week. The declining cases and improved safety measures can help to ensure a safer movement of people in the country. However, normalcy in human life is expected to get delayed, especially in the shopping behaviour of the people.
The lockdown has managed to keep the Australian behind closed doors for a significant time allowing people to shop for essential items either through online modes or by visiting the stores by strictly adhering to the safety and social distancing norms.
The current ecosystem of social distancing measures developed and installed to tackle the highly contagious nature of COVID-19 pandemic has already changed the way people are shopping across the globe. A more concerning part for the retailers is that the existing shopping behaviour is expected to persist even after the lockdown is lifted and the operations in the economy are slowly opened.
Since the intended lifting of the lockdown simply implies relaxation in some of the restrictions, the complete normalcy in the environment is not expected to return. A higher number of services shall be accessible to the people with utmost safety and security, and social distancing measures shall remain to be a definite requisite amidst all this.
Due to the social distancing measures, there is likely to be a limit on the number of staff in-store as well as the number of shoppers allowed at a time in a store. Going out in public places and waiting in queues for shopping might not only be frustrating for the people but shall also make them more vulnerable to catching the infection.
Employees at stores have been equipped with safety equipment like masks, and glass shields, among others, to maintain contactless payments and delivery of items to the customers.
High Online Sales for Retailers
A significant shift that has been seen in the shopping behaviour of the people is the growing intent towards online shopping during the lockdown. Online sales for businesses selling essential items have skyrocketed. Moreover, online payment service providers have seen a massive jump in the number of transactions during the lockdown period due to contactless payment measures to be followed.
Adaptation has been the need of the hour, and people have acclimated to the changing times, willingly or unwillingly. Online service providers have also employed several measures to tackle the growing online sales and contactless home delivery requirements.
Woolworths Group Ltd (ASX:WOW), the retail giant in Australia has witnessed a surge of 34.0 per cent in its online sales that touched $817 million during the first 13 weeks of the calendar year 2020 (till 5 April). The Company’s overall sales from continuing operations saw an increase of 10.7 per cent to $16.5 billion during the same period.
Under these highly uncertain times, people have been stocking up long-life grocery items such as toilet paper, cleaning items, rice and pasta. An important observation that WOW highlights is the significant shift away from behind-the-counter products to pre-packed goods. This shift may be due to the concern of contactless procurement of products; however, this remains unsupported by customer validation.
Orders Surge for Food Retailers
Moreover, home delivery from restaurants and food retailers has seen a surge during the lockdown with consumers spending substantial money on online food delivery. Families, as well as people staying alone, have all become used to doing their online supermarket orders as well as food orders. These people may not want to venture out of their homes to buy food and essentials for quite some time until the disease completely vanishes away.
Domino’s Pizza Enterprises Ltd (ASX:DMP) has been progressively reopening its store in France, with about 70 per cent of stores now trading while the Company’s Japan and Germany business has continued their strong sales performance, with sales significantly increasing in Japan.
A key idea that has resulted in smooth operations and increasing demand of Domino’s services is the ability to the material shift to food delivery in all operational markets as customers are in a state to abide by the restriction to stay home where possible.
Post lockdown too, the scenario is unlikely to change much. Restaurants might not allow customers to avail the dine-in facilities for a considerable period citing the social distancing measures and safety of its employees and customers. Moreover, customers too might abstain from going out to dine and buy food when they can have the convenience of getting food delivered at home in a safe and secure manner.
Shift in Behaviour in Other Services
Not only the shopping for essential items has seen a shift in consumer behaviour, but also the online gambling businesses that have seen a surge in demand by more than 70 per cent. Since everybody is staying indoors, gamblers have found their way to stay in business by offering online gambling services to its customers and have seen ready acceptance from the customers.
Another industry that has witnessed a surge in its subscription is online TV services. With people locked in homes and not much to do, people are tuning in to their favourite shows and binge-watching shows.
A major driving factor that is expected to drive the change in the behaviour of customers is their spending ability. With stranded economic activities, people are experiencing losses in employment and closure of small businesses. With very less left to spend, it shall be interesting to see how people manage to navigate through these tough times and respond to the uncertainty.
There is no investor left unperturbed with the ongoing trade conflicts between US-China and the devastating bushfire in Australia.
Are you wondering if the year 2020 might not have taken the right start? Dividend stocks could be the answer to that question.
As interest rates in Australia are already at record low levels, find out which dividend stocks are viewed as the most attractive investment opportunity in the current scenario in our report.