The Covid-19 pandemic has significantly impacted the retail industry. By the same token, the outbreak has introduced changes in customer behaviour and demands. It is also bringing new opportunities for the industry, a chance for retailers to rethink their business model to further connect with their customers and to adopt the right diversification strategy.
Customers are shifting behaviour across several areas, including:
- Customers are being more selective in their purchases. There is a decline in discretionary spending or spending on non-essential items;
- Budgets have been reallocated to day-to-day essentials such as groceries;
- With the increase in awareness of health and well-being, there is an acceleration in spending on, for example, organic or natural products and fitness-related items;
- The home has been recast as office, coffee shop and entertainment centre. There is an increase spending on home repairs and maintenance.
More digital savvy
- With lockdown regulations and social distancing measures, there has been a significant increase in demand for e-commerce;
- With the surge in e-commerce, customers value a good digital experience more than ever and are prioritising brands which they can trust, and which provide safe and convenient e-platforms and secure payment flow.
- Customers have changed where and how they engage;
- Lockdown gives customers more chances to browse and discover and try new brands;
- A survey from Morning Consult reflects that, besides their own need, customers are becoming more cognisant of factors such as brands which prioritise employee care and show social responsibility:
- 90% of customers say it is important to them that brands care for their employees during the pandemic –as important to them as the brands having products they want in stock;
- More than 80% of customers say it is important that brands care about and contribute to society, stand for something beyond just profit and show sensitivity and empathy .
How retailers can adapt to support the behaviour changes and evolving needs of customers?
Capture changes in needs
- Develop a customer-centric data strategy to gather a clear understanding of customer segmentation and the behaviour of each segment, for example, lifestyle, basket size and composition, shopping frequency etc;
- Such an analysis is beneficial for retailers in predicting upcoming demands and recognising new and changing needs. This will help retailers reconsider and enhance their offerings to remain relevant to customers and make plans for product and marketing strategies
Review digital properties
- Assess the implications of the shift from traditional retail to online and proactively invest for the future;
- Move beyond basic levels of digital service and ensure a competitive user experience through web or app, by creating seamless, convenient and engaging journeys and meeting increasing customer expectations;
- Leverage partnerships to increase brand exposure by staying relevant across multiple touchpoints;
- Continue to maintain the highest levels of cybersecurity and protection of the customers’ data.
Maintaining customer loyalty and trust
- Trust in a brand has become a key driver for customers. They are more willing to spend money with brands that share their values and priorities. Retailers should take every opportunity to translate brand value and business ethics and beliefs into the customer experience to ensure consistent and customer-focused messaging across both traditional and digital channels;
- Foster emotional, community-based connections, so loyal customers will act as brand advocates to promote brands to their own social groups;
- Be open and communicate with customers about any changes or disruptions to services;
- Promote hygiene, health and well-being among employees;
- Deliver consistent positive experiences during challenging times;
- Provide incentives for first-time shoppers.
We have faced crises in the past and will face them in the future. The next ‘normal’ may look very different, and it is up to retailers to adapt responsively. Brands which listen and respond to people’s evolving desires during difficult times can build a foundation of real connection with the customers and communities they serve and emerge stronger together.