The Covid-19 pandemic ushered in a new retail reality for consumers. Immersed in the convenience, availability, and safety of digital experiences during lockdown, consumers changed their expectations and preferences. Rather than sticking to familiar patterns and brands, consumers embraced change. An alarming 71% have reportedly tried a new shopping behaviour and 37% switched from their ’go-to’ brands due to Covid-19, according to McKinsey’s consumer sentiment survey. In response, retail leaders were forced to change their trajectory, priorities, and operating model. Now, a fight to win back brand loyalty had emerged.
So, what does this mean for retailers this holiday season? It’s going to be a careful balancing act. Safety and hygiene will need to be front and centre of the in-store shopping experience. Whilst new technology must be in place to ensure a frictionless online shopping experience. If that were not enough, retailers need to master the vital equilibrium between inventory volume and demand – both online and instore. This will require a deeper understanding of customer decision journeys to quickly identify and predict when and where demand is going to change.
To gain control of the difficult balance and maximise sales this holiday season, retailers should consider employing the following approaches:
1. Just-in-time personalised offers
A torrential surge in digital data combined with fast-changing expectations spurred on by the pandemic, retailers have a once-in-a-lifetime opportunity to utilise customer insights to deliver tailored, meaningful, and relevant offers ahead of the holiday season. Activating all the customer data using a rich, real-time view of the customer can help you pinpoint who’s left and surgically target them while locking in net new customers.
Also, consider not just the front end of the journey but post purchase where shoppers can offer share their individual preferences and feedback on purchases. And, retailers should empathetically engage in the feedback, and garner insights into what they’d like to buy in the future.
2. Master the data
In a matter of 90 days, US ecommerce penetration vaulted ten years forward, with similar effects being seen across the globe (“The Covid-19 recovery will be digital: A plan for the first 90 days”). This digital surge provided retailers with a veritable torrent of data providing more information than ever before on consumers and their preferences. However, simply collecting it is not enough. This wave of data and its analysis are the secret to making the personalisation experience a reality. And it must be accessible in real-time - using both artificial intelligence and advanced analytics to reveal insights – in order to ensure smarter and faster decision-making.
3. Zero-friction experience
With customers eager to try other brands and stores, this is an opportune time for retailers to recapture and win back customers, while winning new ones. It’s now imperative that digital experiences be truly “zero friction,” delivering consistently on attributes consumers care most about: free and fast delivery and returns, clear and detailed product descriptions and images, and quick page loading. Retailers must also think beyond digital to deliver a truly omni-channel experiences – where customers have easy options for ordering online and picking up in-store or curbside, or order in-store and have it shipped to their home, etc.
4. Reboot loyalty
To create dynamic loyalty programmes, companies need to develop an underlying consumer- loyalty strategy that transcends the “earn and burn” discount programmes of the past. The evolution to next-generation programmes is essential for boosting customer engagement. Programmes that balance monetary rewards with experiential offerings designed to make consumers feel special. Exclusive events, early access and unique discoveries can provide real value and appeal to a consumer’s head and heart. Some brands will want to go even further and pursue partnerships with other consumer brands to develop a joint loyalty ecosystem around a unifying customer value proposition.
The winning formula
The simple fact is that the retail success stories this holiday season will be from those retailers that got personalisation right. The ability to target relevant and personalised offers instils brand loyalty and excites shoppers. Personalisation is set to become even more advanced as we move beyond 2020, and any retailer not already preparing itself for this certain future, risks falling by the wayside.
Brian Ruwadi, senior partner of McKinsey & Company