As we hurtle towards Christmas, we’re seeing further regional restrictions as Coronavirus not only lingers but increases in certain areas, including the major cities of London, Manchester and Liverpool. In turn, consumer urgency and angst are likely to rise, putting pressure on retailers to perform in order to capture, and retain their business. Grocers are already seeing the first glimpse of ‘panic’ buying as consumers start to once again stock-up supplies in response to the potential of further restrictions, though luckily, we’re still nowhere near the levels seen early on in the crisis. But as Christmas approaches, the pressure will further rise across the categories, as consumers become desperate to double down on a holiday season to help escape from the reality of a second-wave world.
This time around, consumer tolerance for issues across the purchase journey will be much lower than it was during Covid 1.0. There’s now sentiment among consumers that retailers have had ample warning and therefore, have had adequate time to prepare and get their shops in order; they just don’t care about the complexity underlying a retail business. In addition, there is a whole new population of users that embraced online shopping for the first time over the past 6-9 months and they’ve gone from having no expectations of their digital experience to being ‘ecommerce savvy’. The digital luddite who had never shopped online before and who started, out of desperation six months ago, most likely went online and started with the same brands they’d always shopped in store with. Their brand loyalty was strong, and they purchased regardless of the experience, disregarding pain points as ‘normal’ and were just happy when the items arrived (on time or otherwise). However, many of those same luddites have now continued shopping online and are now aware of the power they have at their fingertips. Brand loyalty is now being tested to its very limits. With a newfound ability and a willingness to jump around the web and buy from whomever can fulfil their needs at the right time, and at the right price, that has increased exponentially, convenience wins out over loyalty.
Retailers are always highly focused on preparing and managing peak and this year, those without ecommerce channels (and supply chains to support them) are scrambling even more. As consumer expectations rise, retailers will need to find creative ways to enhance the online brand experience as much as possible and find ways to overcome their own limitations (and the limitations put on them by the government) in order to meet those expectations, or risk customers moving on quickly. In this digitally enabled world, exacerbated by Covid, we increasingly see polarization between the winners and the losers. On the one hand you have retailers who are reporting healthy (and in some cases record breaking) earnings and profits, yet on the other side is the steady stream of bankruptcies and restructurings. Recent figures showed retails tore closures hit record levels in the first half of 2020 alone. These results tend to align themselves with few exceptions to a company’s ability to make the shift and sell online, or at least seamlessly blend their physical and digital channels together.
Assuming stores don’t get shut down entirely in the case of a second national lockdown or “circuit breaker”, it’s almost guaranteed there will still be limited footfall into stores as the novelty of visiting wears off. No matter how the holiday season plays out, there simply won’t be crowds pushing their way down the high street and fighting through stores for the hottest trends and best Christmas deals. At best, traffic in store will be muted. That means that retailers need to think about creative ways to use that very expensive asset in order to maximise the value.
One option for retailers is to turn stores into fulfillment centers, either partially or as a fully dark store. Moving your staff out of crowded warehouses and using your stores to ship locally could solve a lot of problems, not to mention offering customers faster delivery options. Of course, while that sounds simple, the challenges of getting that up and running at any scale are significant, especially at speed. From routing of orders, to tracking (and optimization) of inventory, to decision making on returns and scheduling of staff, there are a myriad of challenges to be overcome.
However, the prize for figuring those things out is also being able to offer a genuine, high speed, click and collect service for your customers, fulfilled out of a store, as fast as your customers could want. Customer demand for click and collect is increasingly high, especially if there isn’t the usual wait before being able to make that collection. Of course, click and collect in a Covid world, creates a whole new set of problems for retailers to consider, the most immediate one being minimisation of contact between customers and with employees – so finding a contactless collection (and returns) solution is also a recent area of focus for retailers (it also has the benefit of minimising the number of staff required, lowering costs).
A more experimental option is the idea of virtual shopping, having trained employees in the stores, connected to consumers via digital technologies and do the shopping on their behalf. Taking the idea of the personal stylist to the next (remote) level, this employee would consult with the client and then walk through the store, with the customer on the line, showing them items, discussing pairings and sizes. Solutions like this improve the customer experience, allow for increased cross and up-sell and allow the retailer to take advantage of store real estate that is not being used to full capacity.
Christmas is an important period for retailers every year, but this year it’s critical and for some retailers, it’s do or die. It’s not yet too late, and retailers need to be doing everything in their power to ensure that their online presence is not only robust and will support the significantly increased demand, but also that it is an end-to-end experience for their customers that represents their brand. That’s what builds trust with consumers and keeps them coming back year on year whatever the circumstance.
Guy Elliott is the Senior Vice President of Retail at Publicis Sapient