June 24, 2021 |

The past 12-months have had a profound impact on the way we shop. With non-essential retailers stores having to keep the doors closed, consumers rushed to place orders online. This shift in spending has sustained over time too, with Office for National Statistics figures showing that following an initial spike in online orders, digital channels were still experiencing a 50 per cent uplift in trade four months after the pandemic had taken hold.

Retail PR Experts

 

While online retailing had gathered momentum for years before the pandemic, the events of the past 15 months have certainly accelerated that rate of change. The question that arises from all of this uncertainty is, where does that leave retail? More importantly, what should retailers be doing to keep abreast of the rapidly changing market.

Consumer safety and contactless commerce.

Fear reached peak levels during the onset of the pandemic. A study conducted by the Mental Health Foundation found that 82 per cent of adults felt stressed and worried by the pandemic. With media coverage of case numbers and lockdown restrictions seemingly endless, many have reached a point where they don’t feel safe visiting crowded high streets. While there is no saying how long these residual worries will remain, and the impact the vaccination rollout will have, it is safe to say that shoppers need to feel safe when buying from retailers.

One way retail has adapted in response to this challenge is to provide more contactless transaction experiences. Many have invested in more click and collect options for buyers, making it easier to pay with a tap, order via apps, or in supply chain infrastructure to fulfil online orders faster – this has been boosted by card companies increasing the limit on contactless payments.

As we begin to emerge from the latest raft of lockdowns, it is safe to assume that some of these fears will start to ebb, especially among younger consumers. However, for many, the concerns around crowded stores will remain for some time. Retailers should continue investing in making their customers feel safe and secure to build confidence and footfall in future.

Product visualisation in AR and MR.

One result of people not wanting, or not being able, to visit stores is a barrier to visualising what certain products could look like in their homes. Without this crucial stage in the buying cycle, many will choose to postpone purchases or not buy altogether.

Technology is helping businesses around this challenge, however. With advancements in smartphone technology, it is now possible for customers to see exactly what products will look like within various environmental contexts. Whether a new car on the driveway or a new sofa in the living room, innovative retailers are leveraging this technology to ensure this opportunity is not missed.

A recent Harvard Business Review article highlighted the success the US beauty chain Ulta has had using this technology. Since the onset of the pandemic, its GLAMlab tool has increased engagement sevenfold, with customers swatching 50 million shades of foundation on its platform. According to a 2019 Nielsen study, 51 per cent of customers are willing to use similar tools.

With this in mind, retailers in the business of selling highly personal products should be looking to AR as a way of helping their customers experience products on-demand rather than forcing them to travel.

Delivery convenience and supply chain speed.

Convenience has always been vital in retail, but the competition has never been as hot as it is now. According to a survey conducted by Bizrate Insights, 68 per cent of customers base their online purchasing decisions on the speed of delivery. How do you define ‘fast’ shipping nowadays anyway? Well, that is changing. According to the same survey, more than a third of shoppers have opted for same-day delivery when shopping online in the past six months.

This customer demand is proving to be a considerable hurdle for retailers to fulfil. It is also a trend that gives rise to a whole new retailer, muscling its way into the market to fill the gap left by the businesses struggling to keep up. ‘Dark store’ based grocery offers have begun taking hold in city centres, offering customers grocery deliveries in as fast as 15 minutes or less.

These new startups have taken the next- and same-day bar and lifted it a whole lot higher. So what can retailers do to keep ahead within this hyper-competitive market? Lean into it. The benefit of the rise of these on-demand delivery startups is the opportunity to create unique partnership offers with them. Where creating standalone instant fulfilment offers would require substantial CapEx, partnering can offer the end customer the convenience they demand without investing in a new solution.

Subscription models and automation.

Ensuring loyalty in an increasingly competitive space is always going to be a challenge. The issue retailers face is the ease switching products or services is virtually nil is that their customers are not loyal. However, what is clear is that the pandemic has heavily influenced the retail landscape, now convenience is king. Those that offer the most straightforward route from prospect to purchase will win. If that experience is a good one, customers will likely wish to repeat that experience. However, the ease of repetition is where the deal is sealed.

The value proposition on the customer’s side is cost savings and convenience. If it is easier and cheaper for someone to purchase items with high purchase frequency this way, then they often will choose to do so. For the retailer offering this service, they secure guaranteed revenue per customer and increase the likelihood of add-on purchases in future.

In the US, 15 per cent of shoppers had signed up for these kinds of services by 2018. Primarily, the trend is driven by younger consumers, who are used to subscription as a route to accessing products and services, with the prominence of services like Netflix and Spotify. Now, there are subscriptions for all manner of needs, whether replenishment services such as Harry’s Razors, food-box services such as Hello Fresh, or curation services like Birchbox. There are options for all tastes.

For retailers looking to adopt these models, the challenge remains in converting customers. Overall, conversion rates are only around 8 per cent across all services. Barriers, including commitment reservations and high customer churn, can cause issues. However, once customers are subscribed, the evidence shows that their loyalty (or stickiness) increases significantly.

Has your retail business adapted in the face of the pandemic? How effectively have you communicated the changes your teams have made? If your business requires effective communications support to reach customers, then get in touch with our team of retail PR experts. You can meet them over on our team page, and contact them directly here.