The direct-to-consumer (D2C) market has expanded into almost every retail sector and is set to be a lasting winner from the COVID-19 crisis, a study by GlobalData has found.
The data and analytics firm said that lockdown measures have compelled brands around the world to explore new selling channels, with many adopting D2C for the first time, with positive results.
'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,' GlobalData said.
Other consumer goods brands to embrace D2C in India include Britannia and Marico, the firm said.
With millennials and Generation Z shoppers increasingly confident about shopping online, the barriers to entry have been 'significantly reduced' for brands to leverage the D2C channel, hence a ramping up of these activities in recent weeks.
According to GlobalData, challenging circumstances presented by the pandemic have changed the purchasing preferences of consumers. Most consumers find ‘trust’ an important factor when purchasing products.
According to GlobalData's Consumer Attitudes and Behaviour Globally – Week 1 survey, released in June, 84% of consumers stated that trustworthiness, risk-free service and familiarity are factors which influence their choices of products/services.
In addition, 43% of consumers somewhat/strongly agreed that they try to buy products only from their favourite brands – indicating that D2C channels have the potential to reach targeted consumers equally well, if not more, than traditional e-commerce channels.
“The development of comfort seeking is a trend reversal," commented Hrishabh Kashyap, retail analyst at GlobalData. "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."
With the pandemic continuing to unfold, brands which communicate trust to the shopper are performing particularly well, potentially opening up additional D2C opportunities.
"Thus, it becomes extremely important for the brands to reach out to consumers, express themselves through innovative products and service offerings, and win their trust for the future," added Kashyap.
© 2020 European Supermarket Magazine – your source for the latest retail news. Article by Stephen Wynne-Jones. Click subscribe to sign up to ESM: European Supermarket Magazine.