Over the last weeks since our last report, we have seen lockdown measures being cautiously lifted across Europe, usually in phases. Businesses are reopening and many children are already back in school in certain countries. Many of Europe's internal borders opened again in mid-June and there are hopes that external borders will be lifted from 1st July.

As consumers remain cautious – to a level – and social distancing measures remain in place, retailers continue to feel the impact of the ongoing COVID-19 pandemic, shifting consumer behaviour and affecting how people shop all over Europe.

We explore what this means in terms of retail sales across this report, and in more detail within the European Retail Sales – Impact of COVID-19 section.

In the course of the past three months since mid-March 2020, we have seen the level of concern of being exposed to the coronavirus decrease considerably across the leading European economies. In fact, the proportion of those worried about exposure to COVID-19 dropped by about 20 percentage points in France, Germany and Italy until the time of writing (29th June).

Spain has seen a much less marked decrease, and seven in ten Spaniards remain worried about the risk of contracting the virus. This is not completely unsurprising, seeing that Spain is at an earlier stage of easing lockdown measures when compared to the other countries.

Figure 1: Those worried about the risk of being exposed to the coronavirus, March-June 2020

Base: ^1,000 internet users aged 16+ in each country; ^^1,000 internet users aged 16+ in Germany; 500 each in France, Italy and Spain

“How worried are you about the risk of being exposed to the coronavirus?”

Source: Lightspeed/Mintel

In terms of age groups, the level of concern continues to peak among older consumers which, as we discussed in the last briefing, is a direct result of older consumers being potentially more vulnerable to the effects of COVID-19. The higher level of concern about exposure to the virus could also reflect the fact that shoppers aged 35 or older are more likely to be parents which depend on them, meaning that contracting the virus could prevent them from looking after their children.

Our consumer data continued to show an increasing shift towards higher levels of online shopping across the leading European countries. Even in Germany, where the increase in online activity took longer to show, nearly three in ten (28%) shoppers are now claiming to be shopping more online than they used prior to COVID-19.

Italy and Spain remain at the top of the list among the leading European countries, with higher levels of ecommerce reaching more than four in every ten consumers. We think this still reflects the fact that Spain is easing out of lockdown more slowly, and that many Italians are still worried about the risk of exposure considering that multi-generation households are common in the country.

Even though Germany was among the first countries to allow non-essential stores to reopen from May, allowing people to shop in-store and consequently being less dependent on online shopping, the increase in ecommerce activity has seen another increase in the beginning of June and we expect this to have progressed further in the following weeks.

Figure 3: Those claiming to have increased the amount of shopping they do online, March-June 2020

Base: ^1,000 internet users aged 16+ in each country; ^^1,000 internet users aged 16+ in Germany; 500 each in France, Italy and Spain

“Since the start of the COVID-19/coronavirus outbreak, which of the following apply to you?”

Source: Lightspeed/Mintel

Unsurprisingly, online shopping continues to peak among younger consumers and tends to decrease with age. In early June 2020, this was particularly true in France and Germany, and slightly less marked in Italy and Spain, which could be a reflection of the fact that the rise in online shopping was stronger in the latter when compared to the former.

In any case, there are numerous opportunities for retailers to bump up their online penetration among older shoppers, especially while the risk of contagion remains imminent. In recent years, we have seen older adults improve their technology skills and gain experience using online platforms. In fact, some of the opportunities arising from the COVID-19 pandemic pertain to increased connectivity through technology, allowing people – and especially the elderly – to improve family and intergenerational relationships, resulting in better quality of life by reducing social isolation and increasing self-care.

While time savings and convenience remain the leading factors that can make online shopping an attractive alternative, not only to the young but especially to older shoppers, retailers that tap into more emotional benefits of shopping online could be ahead of the curve. One way to achieve that would be to allow older shoppers to interact with an actual person for advice, guidance and even suggestions on what to buy. We think adding this human element to online shopping and giving consumers a feel of the experience they would have shopping in-store could make brands stand out tremendously, and would be highly appealing to older shoppers, especially those suffering from isolation.

Figure 4: Those claiming to have increased the amount of shopping they do online, 3rd-9th June 2020

Base: ^1,000 internet users aged 16+ in each country; ^^1,000 internet users aged 16+ in Germany; 500 each in France, Italy and Spain

“Since the start of the COVID-19/coronavirus outbreak, which of the following apply to you?”

Source: Lightspeed/Mintel

We have seen a lot of recent online activity among clothing retailers and department store, which are among those most affected by the coronavirus crisis. Some of these focus not only on promoting their products and selling but on improving consumers’ quality of live. In the UK, for example, John Lewis launched a series of free online workshops in early June to help address some of the undesirable “side effects” of coronavirus lockdown, such as poor posture from home working.

Our consumer data also shows that the proportion of consumers trying to spend less time in-store remains high and still encompasses at least half of the population across all four countries. Spending less time in-store will normally lead to a drop in sales, especially impulse sales. As result, a shift to online shopping becomes even more appealing to retailers, especially if they can find ways to cross-sell and encourage shoppers to try new products, for example through a “try before you buy” scheme. These have become particularly popular among fashion brands but could be extended to other products categories and even to services by offering consumers a ‘trial period’.

Since our last retail briefing, we continued to see the COVID-19 pandemic accelerating the shift away from cash, encouraging more businesses to move to contactless payments. Even though we have seen a slight decrease in this trend since the end of April 2020, our consumer data continues to show that at least one third (33%) of consumers are still trying to avoid using cash where possible even though the lockdown measures have already been lifted in most countries.

Figure 6: Those claiming to be trying to avoid using cash where possible, 3rd-9th June 2020

Base: ^1,000 internet users aged 16+ in each country; ^^1,000 internet users aged 16+ in Germany; 500 each in France, Italy and Spain

“Since the start of the COVID-19/coronavirus outbreak, which of the following apply to you?”

Source: Lightspeed/Mintel

The shift to contactless payments is among the trends that already had momentum and were simply fuelled by the pandemic. In addition to the impact on banks and financial institutions in terms of the amount of cash they need to keep available, the frequency with which they must restock ATMs and other factors, the trend is forcing many retailers to review their business practices and encouraging them to adopt contactless and other forms of non-cash payments as quickly as possible.

Nevertheless, it is important to keep an eye on how this progresses, especially while lockdown measures continue to be lifted. Especially when businesses that are more reliant on cash payments such as pubs and restaurants are allowed to reopen, we might see a change to that trend. Some small businesses that initially reopened from lockdown without accepting cash were already changing course after finding some customers refused to use cards. In any case, we expect consumers to have the last say about whether and how far businesses can limit options on cash payments.

In terms of demographics, our research shows that older shoppers seem particularly prone to avoid making cash payments, especially in Italy and in Spain. This is also true in Germany, albeit to a slightly lesser extent.

Figure 7: Those claiming to be trying to avoid using cash where possible, by age group, 3rd-9th June 2020

Base: 1,000 internet users aged 16+ in Germany; 500 each in France, Italy and Spain

“Since the start of the COVID-19/coronavirus outbreak, which of the following apply to you?”

Source: Lightspeed/Mintel

As a result of the pandemic, we have also seen consumers buy products online and pick them up in stores at greater volumes than prior to the crisis. Nevertheless, in spite of the trend of avoiding cash payments, tools like Click & Collect still have surprisingly low penetration among consumers.

Even though there was an increase in the use of click and collect alternatives, the proportion of those who claim to use the service more often is still substantially low. In Germany and in Spain, as little as 3% and less than 10% of consumers, respectively, claim to be using click and collect facilities more often. This represents a tremendous opportunity for retailers to increase the use of such services, as well as their derivatives such as mobile scanning and payment.

Figure 8: Those claiming to be using click-and-collect more often, April-June 2020

Base: ^1,000 internet users aged 16+ in each country; ^^1,000 internet users aged 16+ in Germany; 500 each in France, Italy and Spain

“Since the start of the COVID-19/coronavirus outbreak, which of the following apply to you?”

Source: Lightspeed/Mintel

While the service is fairly widespread across the leading retailers, others have recently decided to join and attempt to capitalise from the increase in non-store shopping. In Poland, Lidl has started testing a click-and-collect service at one of its stores from mid-June 2020, which should help customers to avoid social contact during the pandemic and limit waiting times.

In response to the decreasing sales amid the COVID-19 pandemic, we have seen a first phase in which retailers attempted to expand their online sales amid the rising non-contact trend. Now we are beginning to see some retailers focusing on enhancing the experience of shopping online.

Live commerce and tools like livestreaming are beginning to emerge as a potential game-changing tool for the retail sector and could transform the act of shopping from home, especially for younger consumers who enjoy video-based content on mobile devices. Despite its boom in China, livestream commerce is still in its infancy in Europe and there is huge potential to increase its use in the region.

In addition to fulfilment tools like ‘Click & Collect’ and ‘Scan & Go’, there is plenty of room for retailers to launch marketing tools enabling customers to interact with retailers in real-time. As an example of lessons learned from other regions, South Korea’s Lotte department stores actively target younger shoppers in their 20s and 30s with its livestreaming tool. The service allows customers to get instant feedback via live chats with a host, who helps them choose and buy products. The goal is to encourage customers to buy by engage with them and offering an in-store experience at home.

In Europe, live-stream commerce technology would work well for department stores as a means to keep shoppers engaged, interested and encourage them to buy without having to visit the stores. Online giant Amazon launched its live-stream shopping platform 'Amazon Live' in 2019 while Facebook and Instagram are reportedly piloting their own versions of the service as well.

The feeling of personalisation provided by virtual consultations and the empowerment of ‘commentary commerce’ would work equally well in sectors where shopping is based on trends and wherein tailored guidance is important such as fashion, beauty and personal care. In London, Space NK created a new online platform offering live-streaming masterclasses and remote 1-on-1 appointments.

When asked what they think the impact of the COVID-19 pandemic will have on their country’s economy, many shoppers still maintain a rather pessimistic outlook. Our consumer research shows that the coronavirus crisis is expected to have the most negative impact on employment, with nearly two thirds of Spaniards (65%) having an extremely negative outlook on the level of unemployment, compared to 46% in Italy, 39% in France and 35% in Germany.

Economic growth is believed to be the second most affected factor, followed by the cost of living and the price of property in their respective countries. While the level of pessimism seems to increase with age for factors like economic growth, unemployment and house prices in the other three countries, in Germany it appears to be more evenly distributed across age groups.

Figure 10: Those claiming to have an extremely negative outlook on the following factors, 3rd-9th June 2020

Base: 1,000 internet users aged 16+ in Germany; 500 each in France, Italy and Spain

“What impact do you think the COVID-19 outbreak will have on the following factors?”

Source: Lightspeed/Mintel

Interestingly, when it comes to the cost of living, the proportion of those claiming to have an extremely negative outlook peaks for consumers aged 35-44, also encompassing those aged 45-54 in France. In any case, it will be interesting to see how this sentiment progresses in the upcoming months, and whether the gradual return to a semblance of ‘normality’ will affect how consumers feel about the economic outlook for their respective countries.