If we had a crystal ball to show us what retail in the fourth quarter will look like in 2020, it could look like this: the coronavirus makes a mild resurgence as some models predict in October, which requires another round of social distancing, which takes its toll on foot traffic. The economy is recovering slowly, but people are wary after months of uncertainty and are spending wisely.
Another crystal ball may show just the opposite, that the economy comes roaring back and coronavirus cases stay reassuringly low.
We may not have a crystal ball, but one thing is for certain, retailing will never be the same after coronavirus. We should plan for a fourth quarter that considers the changes that are likely to affect shopper behaviors; millions of apps have been downloaded, and millions of curbside orders have been fulfilled. People will be on the lookout for the low prices and favorable delivery options they’ve seen in the past month. They’ll care about how companies help their communities. What’s more, the shoppers that do venture into stores will be more concerned about their health and safety. It’s important to not only adjust to these changes, but to have a communication strategy that helps your customers adjust with you.
Bet on New Shopping Options to Go Mainstream
According to Taobao, there were 400 million users watching its more than 60,000 live-stream shopping shows in 2019, which made $28 billion. Their volume on live-stream apps doubled in February during the lockdown. Live-stream shopping can include anything from a fashion show to an influencer interacting with products and encouraging people to purchase in real time — much like adding social elements to home shopping TV. These new digital interactive shopping options are poised to grow globally and the coronavirus will only increase the speed at which people adopt them.
The right bet to make is to be flexible and find the best way to personalize service for individual shoppers and for different regions as life slowly returns to a new normal. This matters across channels. More than ever, customers will want a seamless experience that moves from digital to mobile to in-store and back again. Brands should be studying how different shoppers and different regions that open back up first change.
For example, if Millennials continue to watch and shop live-stream, or if the older population keeps using the apps they recently downloaded, brands will need to expand their definition of multichannel to include these new options for the long term.
Lots of couch shopping could stick around even as stores reopen. Grocery apps are skyrocketing, and the convenience of grocery delivery will likely keep many of the new adopters coming back. Similarly, eMarketer predicts that subscription services will continue to grow, albeit at a suppressed rate, but more traditional stores may introduce subscription options. Local retailers have taken to social media to increase engagement with customers, which could create a lasting new link; older customers that may choose to stay home more often. And retailers will likely need to stick with their new curbside and delivery options well after lockdown dissipates.
Whatever changes retailers make, it’s important to communicate what’s changed early and often. Amazon is announcing ahead of time that it plans to manage nonessential shipments again soon. Patagonia shares its decision to be closed on its homepage. And for new customers, new welcome series are likely in order.
Retailers might need to share detailed information on how curbside pickup orders work. Many people have started downloading shopping apps for the first time. They’ll likely need a bit more support than a typical new customer.
Plan for the Pros and Cons of Same-Day Fulfillment
Many retailers were already experimenting with same-day fulfillment in Q4 2019. Target chief executive officer Brian Cornell said in Q4 2019 that 80 percent of their growth in the previous quarter came from new same-day delivery options based out of the back of their retail stores, rather than standard shipping from a fulfillment center. He noted that 40 percent of their costs go away when someone selects BOPIS or curbside pickup over normal online ordering and home delivery. That cost savings helps even more in 2020 as retailers are trying to find as many ways as possible to save on costs.
During coronavirus social distancing, a lot of BOPIS has been converted to curbside pickup, and while that also saves money, it’s not as attractive when it comes to earning extra from incremental in-store sales. A recent survey shows that 98 percent of retailers surveyed see incremental sales from BOPIS, which could all but disappear if brands don’t find a way to lure customers back into store if shopping can go back to normal by Q4.
If it can’t, brands will need to be creative with their upsell offers for curbside shoppers. For example, offering pre-order bundling, BOGO discounts, using in-app messaging to bring frequently bought items to the forefront for individuals when they are en route, having outdoor displays of hot items for shoppers to request when they’re in line waiting for pickup, and testing post-pickup messaging streams that differ from traditional post-purchase streams.
Using personalization can help give individual customers the service they need at scale. For example, personalized and behavioral send times can be used to cut through inbox clutters as organizations continue to send more e-mails. After pickup or purchase, brands can trigger a personalized post-purchase series to keep customers engaged.
For example, brands can target certain content to recent purchases, such as sending workout videos to people who purchased new exercise equipment, or recipes to people who purchased cooking products. Tying in incentives to join loyalty programs could increase engagement further.
Reassuring Customers, No Matter What
Again, the uncertainty of the Q4 shopping climate means that brands will need to plan for several scenarios. If coronavirus is a distant memory by then, it’s possible that retailers see major increases in foot traffic as people are relieved to be back to normal. However, there are many other likely scenarios that require creative thinking. Without a vaccine available, it’s likely that there will be some levels of social distancing cropping up around the globe all year, and there will be lingering shopper concerns that alter how they should or want to shop. For example, shoppers will be less likely to want to try on makeup from shared sample products, or to try food samples at stores. They might want clothes to be disinfected between try-ons, or need to be reassured that touch screens are cleaned frequently.
Touchless payments will surely increase. What’s more, with unemployment and economic insecurity, many shoppers will be much more frugal, looking for good deals, and focusing on products that offer value for the dollar.
VIP programs have never been more important. Frequent shoppers may be feeling the economic strain, or be lured by low prices at competitor stores. Focusing on loyalty points and highly personalized offers can help. Nike has been offering an ongoing exclusive 20 percent for its NikePlus members, for example.
Every place where brands can think through possible scenarios early will help them not only pivot as reality unfolds, but also to plan their communication strategies going into Q4. A recent McKinsey survey of 2,500 Chinese consumers indicates “cautious optimism”— a gradual regaining of confidence, which should increase spending. Each region will see their own ups and downs in the coming months.
Being ready means being flexible, and communicating that flexibility across digital channels so that brands can continue to serve customers as we open our doors again.
Jason Grunberg is senior vice president of marketing at Sailthru.
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