With a second national lockdown in place in England, we’re looking at what the changing retail landscape means for businesses and their consumers; identifying what your business should focus on now, and in the run up to Christmas.
During the first lockdown in March, many retailers saw their digital transformation efforts fast-tracked. For businesses, those projects that were once a ‘nice to have’ became an overnight necessity. Not least to comply with government guidelines, as stores were forced to close, but to facilitate changing consumer needs.
Whilst there have been some huge success stories of retailers who’ve either weathered the 2020 storm, sadly there have been businesses who’ve lost out and had to shut up shop. Cath Kidston and TM Lewin are just two of the brands who have closed their UK stores this year to go online-only. Oak Furnitureland and GO Outdoors both had close calls, before being saved from administration, and Debenhams has been in and out of administration twice in the last 12 months, not helped by the pandemic. And without the option of an online experience, Primark has reportedly lost £2bn in sales due to pandemic and expects to miss out on £375m more in second lockdown in England.
In this article from Etch Growth, we’re looking at how we can navigate the next four-weeks, and what you need to do as we come out the other side and back into a tiered system. If we’ve learnt anything in 2020, this isn’t about trying to plan for the years ahead, but use everything at our fingertips (including data, learnings from other countries or the previous lockdown, and tools) to put your brand in the best possible position moving forward.
Changing consumer habits
According to Think With Google, one study has reported an 87% surge in e-commerce penetration in 2020, growing more in a few short months than it had in the previous decade.
Undertaken before the announcement of the second lockdown in England, research from YouGov for The Grocer found that 40% of the UK will choose online when Christmas food shopping this year - a figure we only expect to rise as we move into December and the Coronavirus risk is still high. In a bid to keep up with demand, retailers such as Sainsburys and Waitrose have partnered with Deliveroo and Uber Eats to deliver hot food and/or groceries, and Tesco is exploring drone deliveries [Source: Charged Retail].
Looking forward to the festive season, reports are predicting that overall spend will balance out to total the same as last year, with in store spend decreasing, and online increasing. ParcelHero’s head of consumer research David Jinks says:
“Last Christmas, we spent £25.43 billion online and £53.15 billion in stores. This year, our research shows the situation will be reversed and we’ll spend more online than offline in the first truly digital Christmas.”
Taking learnings from lockdown 1.0, we saw consumer demand for homeware, DIY equipment and food delivery services increase. We should therefore expect a similar pattern this time, with similar trends rising alongside seasonal shopping habits. This tool from Think With Google allows you to see retail categories rising in real-time.
And what about for when the restrictions ease, and stores can reopen, hopefully in time for Christmas? According to Global Web Index's 2020 Commerce report , the shift to online spending is in-turn accelerating omni-channel shopping expectations. “For instance,” they say, “in our late-April research, 22% of users will continue to buy more things online for in-store collection, and 27% will do more research online before making in-store purchases.”
Europe is still the only continent where consumers still prefer to shop in-store than online. Proving the case for an omnichannel presence. And when they do reopen, 18% of internet users say a more personalised experience would persuade them to return to stores.
Like this year so far, consumer habits have been on quite the journey. From economic uncertainty, to increased digital adaption and media consumption, GWI reports that existing online shoppers expanded the range of items they buy online, whilst baby boomers have expanded their media consumption behaviours, opening up new ways for brands to engage with everyone in the online purchase journey.
With all this in mind, where should you be investing your resource and budget right now?
1. Be present where your customers are
With limited resource, media spend and relevant creative (Christmas photoshoots with extended families are not going to go down well as uncertainty around social distancing restrictions over Christmas mounts), now is the time to revaluate how you’re using media channels. Stop and consider what you want to achieve and put in the time to research how your customers are consuming media right now. This may have shifted from pre-pandemic customer research, so putting the time in now means you won’t be wasting time planning print ads when your customers may be watching Tik Tok videos.
According to Global Web Index's 2020 Social Media report, social media usage this year has actually plateaued. This is particularly interesting as, without the pandemic, we may have seen a decrease in usage due to increased concern around wellbeing, but things have balanced back out. Where we have seen shifts, are in the way people are engaging with social media. For example, whilst staying in contact with friends and sharing photos have dropped, finding entertaining content has become even more prevalent during the pandemic. Using social media to access news has increased engagement, and social networks are constantly offering new features, including the ability to shop directly from the platforms.
2. Ensure your communications are respectful, timely and relevant
At the start of the pandemic, consumers were forgiving of advertising and brand communications that hadn’t been updated to reflect the state of the world. We were all in this together and empathy was high. But we’re 9+ months in, and it wouldn't be wise to test customer loyalty with communications that don’t reflect the current state of play. This means segmenting by geographical location to reflect the stage of lockdown across the UK, but also reading the room and respecting attitudes to shopping, gathering and celebrating.
3. Customer service has to be tip top
Nervousness is high at the moment, and generations are being forced into new ways of shopping. Don’t use the channels on which you’ve established a customer base for just broadcasting messages, add a layer of customer service. Be available, accurate and human. This can be achieved by using smart AI technology alongside your customer service team. AI can handle the answering of frequently asked questions, speeding up response time and providing 24/7 support. But not only that, it can use data to analyse trends in support requests, providing valuable insight to help shape business transformation.
4. Learn from brands embracing digital transformation
Back in August we looked at what we can learn from brands that have invested in their online presence, as customer expectations and requirements for online shopping skyrocketed. Whilst keeping what’s right for your audience in mind, embrace change. We’re seeing US brands adopting e-commerce livestreaming to boost sales after this took off in China. Presenters and influencers are streaming 30min to hour-long sessions where they showcase products and share tips and advice for using them. This sees a simple concept that QVC and home shopping channels have been doing for decades, colliding with social media and resulting in sales of epic proportions. A Tommy Hilfiger livestream show in China during the summer attracted 14 million viewers and sold out of 1,300 hoodies in two minutes, according to the brand’s CMO, Michael Scheiner.
5. Optimise your online channels
Staying on top of a constantly changing digital landscape has never been as difficult, or as important as it is right now. Spending time optimising your online channels whilst your physical stores are closed is a great opportunity, especially if you have underutilised staff with rich product knowledge. We’ve discussed ‘nice to haves’ becoming ‘necessities’ and in depth product information is a great example of this in many cases.
6. But remember, offline isn’t dead
As well as preparing for stores eventual reopening, there are options for your physical store space, depending on restrictions for your industry and where you’re located (always check government legislation). Of those who will be celebrating Christmas, 50% of UK consumers expect click and collect options from brands. But you can also make the most of having empty stores with products on show for live streams and video chat with customers, bringing your store into their living rooms.
What about the future?
Reports out of China show the future is bright, and this is something we can expect to continue. “For the first time in eight months, there’s a positive retail sales report showing 0.5-per-cent year-on-year retail growth in China, and 15.8-per-cent growth in online retail sales of physical goods,” Dudarenok told Inside Retail Asia as China started emerging out of the crisis.
So as we start another four weeks in lockdown, now is the time to prepare your retail business for the here and now, especially for the run up to the first truly digital Christmas, and beyond. Consider how equipped your retail business is to take advantage of the increase digital consumer activity this Christmas, and the constant changing consumer habits and trends.
To help plan for the short and longterm, get in touch to find out about the Etch Growth Marketing Opportunity Assessment. We’ll audit your online presence and media plans to identify quick-win opportunities and mid-long-term opportunities to maximise growth in the current climate.