Retailers have been hailed the 'unsung heroes' of the coronavirus pandemic. Despite the many unknowns, they continued to serve the nation, got their workforce into stores, stocked warehouses and ramped up their online delivery services. Their ‘brick and mortar’ stores played a significant role when online channels couldn’t keep up with demand. Whilst keeping customers and staff safe, retailers innovated at speed to serve customers safely and efficiently: more self-check outs were installed, stores went cashless, virtual queuing apps are being tested, as are drone deliveries and till-free stores.
Coronavirus has accelerated the shift to digital in the consumer goods and retail sector, and consumers embraced the change; Sainsbury’s for example reports a rise of sales through their smart shop self scan from 15% in December 2019 to 37% of in-store sales since the pandemic started.
Businesses took one of three routes to respond:
The optimisers: these are businesses that improved and optimised their channels, e.g. local shops went cash-free in response to concerns about the close physical contact required to make cash payments, stores prioritised key workers and pensioners, and online retailers extended their returns policy in response to slower delivery services. Dixons Carphone for example started a drive-through and contactless shop, Aldi is planning a click and collect service, Côte Restaurants Home turned their outlets into ‘cook at home’ offering, Côte at Home, that offers chilled next day delivery, and TSB Bank digitised a significant amount of its offline forms, creating an end-to-end customer journey that takes place exclusively online.
The transformers: these retailers changed the way how and what they sold. John Lewis for example is experimenting with online appointments with their sales advisors while customers can’t visit the store, restaurants are becoming take aways, and theatres are selling tickets for live-streamed performances in empty venues.
The pivoters: these are businesses that completely changed the way they do business. Many of our favourite brands, have gone direct via newly introduced DTC channels. Pret a Manger for example started delivering direct to homes, and have – now that stores have reopened – introduced a monthly coffee subscription, click and collect services, as well as a new digital in-store experience. M&S started a partnership with Ocado that will provide them with a digital channel and delivery business model for their groceries range and over a thousand non-food items.
Each of these routes has one thing in common: the removal of barriers for customers to shop in the changed circumstances.
But it’s not only consumers who embraced the changes and accelerated their shift to digital. We have also observed a willingness of consumer goods companies and retailers to engage in new ways. Previously reluctant businesses moved away from traditional operating models and surprised themselves about the speed with which their organisations were able to respond to the new normal.
But what now?
Will the new normal stick? Will businesses continue to ride the wave of change, and will their customers stay on board? Five actions will need to be considered to prepare for the coming months:
Make new habits stick
The role of online and offline changed overnight; and with that consumer expectations and habits. Either because the benefits of switching between channels were clearly communicated to them, promoted through social media, in-store signage and ads, or – simply put – because there was no choice.
Over the last months, new habits were formed: previously offline shoppers became digital consumers, established digital consumers ventured into new shopping categories, and products that we thought needed an in-store, tactile experience and advice of a sales assistant – such as cosmetics and self-care products – flew off the digital shelves. But which of these new habits will stick? Do consumers really enjoy the digital experience?
Now is the time for retailers to dig deep into their data sets and understand how purchasing habits have changed and are still changing in real-time. Have the changes only been temporary or will they last? The implications of any change of habits are vast and go right across the business, from merchandising, to POS to returns. If these changes in habit will last, which barriers still need removing to give customers a seamless experience across channels?
Enhance the experience
During the crisis, we observed consumers becoming more socially, economically and environmentally mindful about their purchases, and – to some extent – more forgiving and lenient when experiences weren’t exactly to their desire. Grocery shoppers were content with receiving pre-selected fruit and vegetable boxes, long delivery times, short expiry dates, and replacement items they would not normally accept. What was ‘good enough’ in the crisis will not be good enough going forward, irrespective of whether or not the crisis continues. Consumers expect more from their retailers, and there is a need to enhance experiences to keep them loyal.
Connect digital with brick and mortar
For retailers that operate in both channels, it’s imperative that they seamlessly blend together. Having integrated operational infrastructure proved to be essential for many retailers during the crisis, so stores could take over when digital channels ran out of steam, and vice versa. Bookseller Blackwell’s for example was using its flagship Oxford store during the peak of the crisis to pick online orders, and operated as a dark store.
Everything digital must be linked to an in-store process and vice versa. Colleagues working in stores will always need to be able to deliver the digital offering offline should this become necessary; this could be the first point of contact when a consumer wants to find out about a product, or when they come to the store for a return. Being able to swiftly switch offline-to-online requires unified inventory and logistics operations, and channel-agnostic processes.
Keep on talking
During the crisis, hundreds of changes were made in the organisation and operations of retailers. Communicating changes from operations to in-store staff is key, so they can carry this information all the way to customers. The reason why the queuing in front of stores, the newly installed self-check outs, and out-of-stocks were reasonably well accepted was because many retailers put additional emphasis into their internal communications. Going forward, keeping staff well informed will remain a priority. Only this way, can they proactively work on avoiding friction in the customer experience.
The power of asking
The crisis has shown how important it is for brands to understand their customers. This is not a new message to any business and a lot has been done in this space. However, many of our favourite brands still underestimated how much further they can go in their quest to understand customers, partner with them on an individual basis, and create an intimacy that turns them from a one-time shopper into a loyal customer and advocate.
Take the example of L’Oréal: they released eight augmented reality lenses with make-up and hair colour choices, which customers can try on in any video platform they use, e.g. in a Zoom or Skype video call. This is in addition to their virtual Tap&Try online tool, which helps customers stranded with their salons shut because of Covid to try in-home hair colorants. Identifying new trends in their self-care and hair colouring segment, and responding to them at speed has helped L’Oréal to soften the blow they experienced in other product categories.
With consumer habits changing on a daily basis, it has become imperative to move from conventional customer segmentation by age, gender and sociodemographics to much richer attributes such as interests, search history, and shopping behaviour, and to do so in real-time. Interpreting these leading and lagging indicators is important, but must be complemented with primary research and direct outreach to consumers. Asking them directly about their preferences and expectations is a power that retailers rarely use.
Doubtless, the retail sector and many of our favourite brands deserve the superstar status they acquired during the crisis. The extent of change we have seen in the sector is phenomenal, but now is not the time to go revert back to BAU. Staying nimble and agile requires leadership intent and purpose, and lessons need to be learnt from the last six months and built into ‘BAU in the new normal’, one where new products can be brought to market in weeks rather than months, one where unnecessary approvals are scrapped without impacting integrity or quality, one where store assistants proudly facilitate change, and one where consumers are proud of their retailers.
This article was written in reflection of a webinar Lucy Larkin and Rob Ward co-hosted with Helen Baynes, Fmr Customer Experience Director, Cult Beauty and Net A Porter, Andrew Regan, Managing Partner BlueSeed Retail and in-store Digital Experience Expert, and Hanne Deceuninck, TokyWoky on the topic of Digital Engagement: How will retailers thrive in the future, in September 2020. You can revisit the recording here.