Our latest research – now covering more than 9.500 interviews with Norwegian online shoppers - indicates that Norwegian e-commerce has decreased in the first half of July. Our survey results also show that Norwegian consumers will reduce their overall purchases in August (i.e. both online and offline purchases), and the share of online purchases will likely remain at the same level. This is a notable difference compared to The Netherlands and Germany, where consumers indicated that they will shift more purchases to online channels in August. Worth noting is that August is a summer month, which may impact consumers’ purchase intent.
Our research also shows that 16% of Norwegian online shoppers say that their financial situation has become more stressed in the past month. And – since mid-June - Norwegian shoppers have become even more worried, both about their personal financial situation and their health. It is no surprise that the most important reason for fewer overall purchases is the need to save money, although this is especially evident in the younger age groups. Secondary motivations are the intention to change lifestyle by reducing overall consumption, along with having general worries about the future. And third tier motivations include the risk of becoming unemployed, as well as wanting to pay off mortgages and loans. Paying off loans has is now even more important with regards to reasons to decrease purchases in Norway in the last month. And the convenience of online shopping is a less important reason to buy online. This may lead to the conclusion that Norwegians have a very rational relationship to online shopping.
When looking at the development of online product categories, Fashion stands out in Norway, as it is the leading category in acquiring new consumers: in the second half of March, 14% of Norwegian shoppers made at least one purchase in online Fashion, and this share has grown to 20% by the first half of July.
We asked Norwegian consumers to estimate if they would increase or decrease their total number of purchases in general, as well as online purchases specifically. And we find that Norwegian consumers project that they will buy less overall in August, but are uncertain about their online purchases which are likely to stay at the same level as in July. Providing that consumers act on their intentions, this means that we can expect Norwegian e-commerce growth in August to flatten out.
Above graph illustrates which segments claim to shift purchases from online and offline channels in August. Only one segment claims to increase both offline and online purchases during August and that is the normally more risk-taking segment of younger males. Overall, we predict that e-commerce growth will be driven by the younger segments, with a high income. Older segments with a lower income are significantly more restrictive and will likely hold back purchases in August.
Even though overall e-commerce growth in Norway will likely flatten out in August, we can still expect some categories to grow in August, while others will decline. Looking back, recent growth for most categories has been driven by a combination of an expanding consumers base as well existing online shoppers buying more. But in Norway, Fashion is an exception as purchases are predominantly driven by the inflow of new consumers: in the second half of March, 14% of Norwegian shoppers made at least one purchase in online Fashion, and this share has grown to 20% by the first half of July.
At the same time, we see that especially purchases within Gardening tools, Toys and Home décor/furniture have shown a significant increase since end of March, but the future outlook is pointing towards a dampened rate of growth. And at the other end of the spectrum, Travel/transport has decreased dramatically in purchase volumes since the end of March, but here the future outlook is now pointing towards an upturn in purchases. The positive view on Travel/transport purchases is most probably a combination of summer season travelling and the fact that travel restrictions are being eased.
One of the key drivers for consumers to purchase less online is related to a deteriorated financial situation – and the share of consumers claiming that personal finances are limiting purchases has increased since end of March. In Norway, 23% of online shoppers say that their financial situation today is worse than their financial situation in pre-corona times. But looking at the recent change, the share of consumers who say it has worsened is lower (16%). And looking one month ahead, only 10% of Norwegian online shoppers think it will become worse. In fact, the outlook for August is positive as the share projecting it will become better is larger than the share thinking it will become worse.
Looking at shopping frequency, there is no significant difference between Heavy Shoppers (having made 5 online purchases or more in the past 2 weeks) and Light Shoppers when it comes to the projection of how their financial situation is likely to change in the coming month. 17% of Heavy Shoppers and 16% of Light Shoppers expect their financial situation to become better in the month to come.
The overall change in future financial outlook can be explained by a shift in composition of the Norwegian online consumers; more Norwegian consumers have started to shop online since the second half of March, but at the same time the share of Heavy Shoppers (which showed a rapid increase up until the second half of April) has decreased since mid-June.
Norwegian online shoppers’ worries decreased continuously from the end of March up until mid-June, but have since started to increase again. At the end of March, 35% of Norwegian consumers said they were worried both about their personal health and the same share expressed a worry about their personal financial situation. Norwegian consumers’ financial worries have grown from 25% in mid-June to 29% in mid-July, and health-related worries from 21% to 27% in the same period.
But in contrast to consumers in Germany and The Netherlands, we can conclude that the overall level of worry among Norwegian consumers is significantly lower. Norwegians have - all along - been more worried from a financial perspective rather than from a health perspective, which is the opposite when compared to Dutch and German consumers.
When we connect worries to e-commerce behavior, we see that the level of worry has a powerful impact on consumers’ online purchases. A general conclusion is that the more worried a consumer is about health- as well as finances, the more online purchases a consumer does. And when mixing in shopping frequency, we see that Heavy Shoppers (5 or more online purchases in the past 2 weeks) are most worried, followed by Medium Shoppers and Light shoppers.
Since end of March, the increased number of online purchases in Norway is largely driven by consumers shifting purchases from brick-and-mortar stores to online channels. 15% of Norwegian online shoppers say they have started shopping more online and less in physical stores in the past month, and 9% say they have started shopping more in physical stores and less online. And not surprisingly, the more purchases a consumer currently makes online, the more a consumer states that they have shifted their share of purchases from offline to online.
To understand the shift in a larger context, it is important to note that the share of Dutch, German and Norwegian consumers who have shifted to online purchases is higher than the share who have shifted to offline purchases. In this regard, The Netherlands displays the largest difference (22% online versus 9% offline), followed by Germany and Norway.
The projected online/offline balance for August is also positive towards online purchases, as 14% of Norwegian online shoppers claim they will shift purchases to online in August, while 10% claim they will shift purchases towards offline.
In the first phase of Norway e-commerce development, we saw a rapid increase in e-commerce purchases up until the second half of April, with e-commerce up +32% compared to pre-corona times. In the second phase, going into the second half of May, growth halted and a plateau was reached at +23% growth. And during June, growth rates both dampened and recovered and has by the first half of July declined slightly to +18% growth since the corona outbreak.
As we do not see an increase in offline purchases during the past month, this dampening of online purchases should not be interpreted as consumers shifting purchases from online to brick-and-mortar stores, they have simply made less purchases overall.
The share of Heavy Shoppers (having made 5 or more online purchases during the last two weeks) almost doubled in Norway from pre-corona times (5% of online shoppers) up until the second half of April (9% of online shoppers). The peak in share of Heavy Online Shoppers also corresponded to the peak in total number of online purchases in Norway that we saw at the end of April. During mid-June, the Heavy Shopper share was 8% and by the first half of July the Heavy Shopper share has decreased to now represent 6% of Norwegian online shoppers. From a merchant perspective, Heavy Shoppers are a relatively small but critical segment, as they only represent 6% of Norwegian online shoppers by the first half of July but they stand for 27% of all online purchases.
We see interesting developments in the motivations to purchase online over time. In Norway, the fact that prices are cheaper online has increased continuously in importance as a driver to make more purchases online. And ‘convenience’ has decreased in importance as a reason to purchase more online. And since end of March, the fact that stores and restaurants were closed and having to take care of family at home were two important reasons to increase e-commerce purchases for Dutch, German and Norwegian consumers. But these have now significantly decreased in importance.
As for the barriers for consumers to decrease online purchases, the share of consumers who have virus-related concerns around receiving packages has decreased continuously. On the other hand, a limited personal financial situation has increased in importance for making less e-commerce purchases.
Stay tuned for new consumer data in our dashboard soon, as well as updated country analyses at the end of August.