The Future of Post-Covid Retail: The Customer is King

The future of post-Covid retail: the customer is king

Home » The Future of Post-Covid Retail: The Customer is King

Whilst the 2020 global health crisis has changed the retail landscape in many unexpected ways, the significant transformation already underway in the sector remains and with it, the many challenges retailers are already facing into. How to make the most of bricks and mortar space, understanding omnichannel journeys, managing customer expectations and creating experiential buying opportunities are amongst the many topics on the retail agenda; it’s a complex list and it’s only getting longer.

Post By Sigma -
One of the biggest and most multi-faceted challenges is the customer. As buyer behaviours become less predictable and expectations harder to manage, retailers today are still grappling with how to ensure they are being responsive to their customers whilst still delivering to their own strategic ambitions.

There have been some major shifts in consumer attitudes and trends that in the most part, have been accelerated by the consequential impacts of Covid-19 and the UK-wide lockdowns. It has left some retailers buckling under the strain of keeping up with demand but for others, has seen some unexpected opportunities.

Data released in the summer by Retail Gazette estimates that around 17.2m Brits, which equates to around 25% of the population, intend to make a permanent switch to online shopping. It’s expected that this will generate an additional £4.5bn of UK online sales in 2020.

However, the flip side is confidence, or lack of it, in physical retailing. The Retail Gazette also reports that around half of UK consumers plan to avoid busy destinations such as large shopping centres, suggesting scepticism in the ability of retailers to reimagine the customer journey on the back of social distancing, restricted occupancy and other Covid-safe expectations.

Most importantly, however, is that consumers are still shopping, whether online or in stores. The customer, as they say, is still king and today, their influence in what they want from retail is more powerful than ever.


Ethical expectations


An emerging shift that, as a generalisation, is more prevalent across millennials and Gen Z shoppers is that of supporting brands who do what they do in a more sustainable, ethical or localised way. Understanding product provenance, knowing that those who manufacture a product do so in an ethical and moral way and being able to support more local suppliers are all important and significantly, consumers are prepared to pay a premium to have this need met.

A recent Accenture[1] report highlights that post-Covid lockdown, 56% of consumers are shopping in neighbourhood stores or buying more locally sourced products, with 79% and 84% respectively planning to continue with this behaviour into the longer term.

Sustainability is a huge area of concern, especially on the back of some very public conversations about the impact current generations are having on the planet.  A GlobalWebIndex[2] survey carried out in May, asked how the importance of cutting down on single-use plastics, reducing carbon footprints, or companies behaving more sustainability, had changed for them as a result of Covid-19.  56% citied at least one of these initiatives as having become a lot more important.

For retailers, this means is another challenge that must be faced into with real, tangible evidence needed that change is actually taking place.  There are some great examples of how sustainability and retail can work well together.  There are an increasing number of dedicated websites such as Net Sustain which only showcases brands who can evidence their sustainable credentials and leading brands such as Selfridges who are focused on increasing the visibility of ethically-sourced products.  In London, Gnewt arrived on the scene as the UK’s first entirely electric fleet of parcel delivery trucks, reducing CO2 emissions over recent years by around 67%.

The opportunities are significant and as the sector looks to its continuing transformation, understanding this real buyer expectation will help brands on their path to recovery.

Mindful retailing


Looking back pre-Covid, consumers were already starting to think differently about their expectations of products.  In a stark shift from the trend for ‘throwaway retailing’, where products are bought cheaply to fulfil an immediate requirement with no real expectation of quality or craftsmanship, more mindful shoppers began looking towards more investment pieces that offer value based on use over time.

This approach also links into the desire to shift away from some of the bigger brands towards those who are more boutique and niche, and to support entrepreneurs who are perhaps more locally based.  Stock can be more easily rotated and refreshed with the added benefit of not needing to tie up working capital in too much stock.

It’s a case of changing the industry mindset, from fast fashion to fast provisioning, in which retailers can react quickly to new trends and only buy what they actually need.  It’s possible that the



Safety versus experience


In the wake of the health crisis, safety is absolutely paramount and many retailers have successfully adapted to the more transactional aspects of this such as increased click and collect points, sanitising stations, sneeze screens and one-way systems.  However, when consumers do venture out of their home to a bricks and mortar store, they are still expecting an experience that goes beyond just purchasing a product.

For many, this experience will have to bridge on and offline, because some elements of post-Covid shopping simply aren’t the same.  Some of the more innovative and responsive brands quickly grasped how they can offer interaction and engagement through their online space by thinking creatively about what was important to their customer-base.  Nike, for example, offered up its NTC Premium streaming workout service for free, after a similar move translated to increased digital sales in China[3].  US brand Zappos put its customer service employees to work on a hotline[4], chatting to those who called in about whatever was on their mind as a kind of public service initiative. And since then, many others have jumped in to try and build community with customers online.

In stores, ensuring the basic hygiene factors are in place are key before focusing too far on experiential elements.  A recent study by First Insight[5] found that 78% of women would not feel safe testing beauty products, 65% would not feel safe trying on clothes in a dressing room and 66% would not feel safe working with a sales associate.  Hand sanitizer and limited occupancy were measures most people (80%) said would make them feel safest, though masks (79%) also ranked high.

It’s possible that personal technology could have an increasing role in offering something akin to a ‘normal’ experience, with customers encourage to load up apps or sites on their own tech and walking through a journey side by side with a sales associate to achieve the desired outcome.

There are also other senses than touch and feel to play with, and for those brands who can evoke an emotion or reaction through smell, sight and sound, there is plenty to experiment with to make shoppers feel engaged in the moment.


Service standards


The global pandemic hasn’t directly changed customer service expectations, mainly because this was already a significant area of focus as part of the transformation of the sector. What it has done is shine a light on how consumers are targeting their purchasing to specific channels and identify that with each channel comes a very specific set of expectations.

In stores, contactless has become the default and for good reason – a Shekel[6] survey shows that 87% of buyers prefer to shop in stores where there is a contactless or automatic payment option.  Many leading grocers are offering mobile payment options with consumers able to scan their products as they shop and pay from their mobile using a range of payment options.  It’s likely that this approach will be adopted across the wider sector with apps playing a much more significant role in the end-to-end customer journey.

A retailer’s ability to accurately reflect stock and confirm if a purchase is possible as part of an online journey has also created a much greater focus on inventory management and logistics.  Consumers expect to be able to purchase a product and have it confirmed and ready for delivery the following day, if not the same day, and only upfront management of expectations at the point of purchase can go any way to mitigating a sense of frustration at perceived poor customer service.  As a result, distributors are increasingly reliant upon a supply chain which not only offers visibility of current stocks but can also simulate future sales and optimise delivery networks and inventory in real time.

Retailers have had to adapt in order to meet the growing demand and expectations of consumers when it comes to deliveries. Supermarket chain Aldi recently announced that it was teaming up with the takeaway courier service Deliveroo in the UK to offer grocery home deliveries in just thirty minutes[7]. Aldi had previously never sold groceries online and has adapted its offering hugely to satiate the demand.

Flexibility, agility and responding to real-time needs are proving key to meeting expectations of customer service in such unprecedented times.

Price


Consumers are experiencing an unusual relationship with product pricing as a result of the Covid-19 crisis.  On one hand, value matters because these are economically challenging times and with a lack of certainty about employment and income, consumers must be careful with discretionary spend.

On the other hand, many consumers are experiencing working from home and as a result, no longer have the daily expenses associated with commuting and office-based working and consequentially, aren’t visiting city-centre shops in the same way.  This, coupled with the reduced need for spend on office-wear, health and beauty products and evening-wear, means discretionary spend is perhaps higher than it typically would be.

Sales, promotions and discounts are all still absolutely needed to draw footfall through the door, or virtually into the website, but increasingly consumers are prepared to invest a little more in their purchases.  Low priced is different to cheap – there’s still an expectation of quality but consumers have a little more time and patience to look around, do their research, compare prices and make the product choice based on more than just cost.

Retailers are going to have to work increasingly hard to stay competitive but attractive.  Understanding and offering value is going to be key to maintaining the trust and loyalty of customers who are faced with more and more choice both on and offline.



Looking forward


Consumers overwhelmingly want to get back to normal.  They crave what’s familiar; face masks, hand sanitising and not being able to touch a product before purchasing are definitely not conducive to a memorable and positive shopping experience.  However, it’s the reality of today and those brands who can help consumers see past the Covid-safe compliance to a brand that cares about their buying journey and the experience they have purchasing, are the ones who will fair best in their recover.

The consumer is complex because there is no single persona on which to base a recovery plan.  In these unprecedented times, retailers have a unique opportunity to try something new or different because now more than ever, anything goes to keep the customer happy.


Read the future of post-Covid retail: the current state
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