Covid-19 has changed how we work – and few sectors are undergoing as much change as retail. A huge drop in sales during March seemed to sound the death knell for at least some sectors of the industry. Online sales, on the other hand, have rocketed and new approaches are emerging among those retailers that are learning to be agile.
“Covid-19 has really accelerated a bunch of inevitables. A lot of things are just happening a lot faster,” says Steve Hewett, global vice president for retail customer experience at the tech and consultancy firm Capgemini.
For many companies, online is exploding. “This was already happening,” says Hewett. “But some companies are achieving the sort of online growth in weeks that they expected in three or four years.”
This has implications for how companies do business, and it’s likely to be crucial to be able to deliver a hybrid online/offline experience to the post-Covid-19 customer. Here are five trends currently reshaping the retail sector:
Brands are getting chattier
It seems that customers engaged with brands more during lockdown. “For years, buying something meant going to a physical place, seeing the branding in the store and understanding who that brand is,” says Adrian McDermott, president of products at Zendesk, a customer relationship management software company. “We need to establish the digital equivalents of finding, meeting and having those conversations.”
Zendesk research found that 35% of people surveyed preferred to message with a chatbot if it meant an issue was resolved faster. Additionally, says McDermott, there has been a 3,000% increase in WhatsApp traffic between brands and consumers using Zendesk Sunshine Conversations in the past year. Bots can reply to customers immediately and staff can use it as a communications channel too.
Messaging has become mainstream and this, he says, “has been driven by boredom and our desire for efficiency and our desire to establish slightly more about anything we buy or use than we can just from the website”. This, of course, is a challenge if you’ve set up your brand to deflect that type of interaction, but Gartner research suggests that by 2022, 70% of all customer interactions will involve emerging tools such as chatbots, machine learning and mobile messaging – up from 15% in 2018.
Customer loyalty matters even more
The Zendesk Customer Experience Trends Report 2020 found that customer expectations are at an all-time high and loyalty is fleeting. According to the research, half of customers will switch to a competitor after just one bad experience, and 80% will leave after repeated bad experiences. “The acceleration towards online has resulted in the erosion of loyalty,” says Hewett. “When that’s eroded it becomes about the delivery, and this is going to start raising alarms and opportunities. If we don’t better support and service these customers we are going to lose them.”
At the same time, the report finds that 52% of customers will go out of their way to buy from their favourite brands. Consumers have had time during lockdown to properly inspect a brand’s values. “There’s a broader, societal look at a brand that drives loyalty and shouldn’t be forgotten,” says McDermott.
Prices could remain “sticky”
Rajesh Bhargave, a consumer behaviour expert, suggests that retailers need to be wary of changing their prices – whether up or down. “Consumers tend to remember what they paid previously and would view price increases as unjust in poor economic conditions.”
Dropping prices is not always the answer either. Many consumers will have taken a financial hit and their wallets will be closed for concessionary spending. A knee-jerk reaction might be to cut prices to bring back that demand but, says Bhargave, associate professor of marketing at Imperial College Business School in London, this could have negative long-term effects and erode pricing power: “If you’ve been paying £10 for a meal and suddenly that’s £8 you start to wonder about the quality of the meal.”
Brands have to add value
Instead of dropping prices, brands are likely to start looking at different ways to add value, says Bhargave. “If people want to dine at restaurants, they might want a more private and safe experience,” he says. “So how can you start offering a different service that charges a higher price and offers better value?”
Video calling is another area that business is only starting to explore. “With so much taking place on Zoom, is there a higher-end service you can provide in this area?” Selfridges, for example, is offering online beauty and styling appointments, with products then delivered to customers at home.
This is part of a move towards getting more revenue from fewer people, and appointments for in-store shopping also fall into this category. “It’s all part of offering a more customised, high-end experience,” says Bhargave.
To bring the joy back into shopping, some stores are putting their energies into their window displays to encourage browsing and others are providing queue entertainment.
The need for a new kind of agility
Things may never be the same. “We’ve almost got to hit the reset button,” says Hewett. “People are returning to school and the office and there’s no playbook on what the wants and needs are.” Moreover, whatever they are could change dramatically again. Hewett adds: “There’s an organisational need for agility that wasn’t there before, as brands aren’t able to be as tactical as they would like.”
Things are changing fast. But you can be faster. Zendesk’s CRM software for support, sales and customer engagement is quick to implement and easily scales to meet the changing needs of your business. Learn more at zendesk.co.uk/retail
