Chris Baker, SVP & Head of Retail North America, Visa Inc., was amongst the inspiring speakers of the 7th RLC MENA Summit that took place virtually in March 2021. In his presentation, he went discussed the last 12 months, and he analyzed the major shifts to consumers’ behavior due to the pandemic. He then presented the “next normal” in retail and what this new status quo means for the industry’s players.
As he characteristically said “If I think back over the pandemic there have been a few different stages from the consumer behaviour and a retail perspective. In the early days it was about preparedness and panic buying, and the question was if a retailer was essential or not. Since those days most of the world has been in a relatively stable state of “covid-normal” if that exists, where movement and interaction has been restricted and shopping behaviours and retail offerings have really evolved as a result.”
Consumer behavior shifts: What changed in 2020?
As Baker mentioned, there were swifts at multiple levels concerning consumers’ behavior. First, a shift on what people were spending on. The share of experience from travel to home shifted massively, the move from restaurants to the grocery was a huge shift too, as were purchases from work clothes, suits and formal attire to athleisure and other items to wear around the house. These were major shifts that are still going on.
Additionally, a move in spending was observed, where are people buying from and how and when are they buying outside of the house. Following the above, the big question is what is going to remain? What’s going to go back and what’s going to continue and even accelerate?
Retail’s Next Normal
Chris Baker believes that people will go back to traveling, to restaurants and to the offices in some form of a new normal and this will largely represent a version of what we saw pre-pandemic.
Who will lead us to the next normal? To date, much of the spending during the pandemic around the world has been driven by lower income groups. As he noted “If you combine that higher-income spending potential with the return to cities, we really think we are going to see high income, denser urban areas driving a lot of the recovery and a lot of the spending in the new normal including international travel destinations”.
Moreover, the fact that the 55+ age group basically tripled in that time, shows that that’s really going to change behaviors post-pandemic and a lot of that will apply to the older demographic.
Where are people going to shop? Many consumers were forced to or chose to try new brands and new stores during the pandemic, with more than half expected to continue to use those brands post-pandemic. Therefore, a lot of this move to e-commerce but also shift in terms of what brand you are shopping on e-commerce channels is part of the post-pandemic story as well.
In the MENA region, nearly 96% of consumers expect their use of e-commerce to stay at current levels or increase post-pandemic, and merchants of all sizes and segments are also embracing e-commerce and digital payments.
In the MENA region, nearly 96% of consumers expect their use of ecommerce to stay at current levels or increase post-pandemic. 
Chris Baker
Are stores dead?
Stores are not dead, but theywill continue to evolve more quickly. Stores will serve different purposes from an experiential perspective, theyare increasingly serving as part of the omnichannel operation, therefore retailers need to focus on optimizing their operations with and around the stores, while lot of changes are expected from an automation perspective, both in stores and at warehouses.
In the MENA region smaller retailers are embracing all digital forms, getting online, changing business models, and taking contactless payments, so we think this is going to really move faster than ever before.
How are consumers shopping and paying?
Cash usage which has been a long-standing trend has dropped significantly during the pandemic. About a quarter of consumers surveyed by Visa will use less cash after the pandemic than they do now.
Saudi Arabia is a top ten contactless country globally, and its progress over the last couple of years on that is just astounding. This will continue to be an area of focus for many retailers. The digital payment ecosystem grows and evolves, and cryptocurrency and block chain spaces are ofincreasing interest.
Finally, for the future,Chris Baker sees many new ways to pay in terms and how you actually deliver the value. Subscription models, offers and memberships or new programs that really tie consumers into their ecosystems,buy now-pay later or instalment payments are all becoming just as important as the product or the shopping experience.
Retailers just focus
Retailers need to understand how the business and consumers are changing and performing to plan and move forward. They also need to understandwhat people are really spending on over time and study the data for opportunities to win new customers or win back customers that were lost, as well as drive loyalty throughout the business.
Simultaneously, the digital experience is paramount and will really be THE experience going forward. However, delivering a profitable omnichannel model will be another challenge for retailers who will also need to put payments to the center of their operation to create seamless, delightful, frictionless customer experiences.
