Retail is a hugely customer-centric industry, and consumers can be very demanding. Today they expect an omnichannel and personalized experience, something the retail sector has spent the last 15 years or so building up to. The Internet has given consumers access to endless shopping options, and mobile devices have put offers and information at their fingertips, anytime and anywhere. But then COVID-19 arrived, and all kinds of things changed.
Changing times, changing shopping
While stores have been closed, online shopping has thrived. According to Adobe’s Digital Economy Index report released in mind-June, U.S. online spending in May hit $82.5 billion, up 77% year-on-year, an enormous increase. “It would’ve taken between 4 and 6 years to get to the levels that we saw in May if the growth continued at the same levels it was at for the past few years,” said Vivek Pandya, Adobe Digital Insights Manager. “We typically don't expect to see surges at this level, at any time outside of the holiday season. For context, last year's holiday season drove $142.5 billion dollars from November 1st to December 31st, and that was a 13% year-over-year increase.”
China saw consumers begin to shop online in much larger numbers, while 13% of Europeans said in April that they were planning to investigate e-tailers for the first time. Italy, one of the hardest-hit nations in the world during COVID-19, reported an 81% increase in e-commerce transactions since the end of February. In the face of this rise and reliance on e-commerce, McKinsey has said that consumers that switched to online shopping will be resistant to going back to stores as they reopen with social distancing and other restrictions in place.
Rise of new tech solutions
Because of the continuing safety concerns around COVID-19, consumers are using contactless and mobile payments ahead of handling cash or touching POS terminal keypads. At the end of March, 22% of connected consumers globally used a digital wallet to buy at least one product in a physical store, according to Euromonitor International’s 2020 Digital Consumer Survey.
Other new technology-powered models have emerged and thrived. Many customers have tried using new omnichannel approaches, such as buy online, pick up in-store (BOPIS), which grew 28% year-over-year in February compared with 18% in January. These new practices look like they are here to stay, too. 56% of consumers say they have a high intention to continue using BOPIS after the pandemic.
What do retailers need to do?
Retailers with a historically strong high-street presence will need to work hard to encourage consumers back into stores. It will mean taking different approaches from the ones they had just got in place to attract customers pre-COVID-19, but those different approaches should still complement the omnichannel model.
While new tools designed to give a more personalized in-store experience, like AR and VR, might be on hold for the time being, other digital technologies can play a role. For example, with computer vision and edge computing, retailers can learn a lot from how people shop and react to offers on store shelves. With outlets already opening again, retailers must use them differently. Digital solutions can help retailers transform store formats. Technology-powered stores like the Amazon Go outlets are demonstrating that there is a low-touch, safe haven retail outlet model that could work and that does support the customer journey.
Online, brands can give customers a personalized experience via the option of customizing their products, underpinned by manufacturing geared to mass personalization. Data science can play its part here, too, by helping to predict customer demand better so that retailers can have less unsold inventory and enjoy better margins. Even in the face of the COVID-19 disruption to the industry, retail will still be all about customer experience. Frost & Sullivan predicted that customer experience would overtake price and product as the key brand differentiator by 2020. Gartner’s research finding that for 2020 and beyond, 81% of retailers expect to be competing mostly or entirely based on customer experience still rings true. It will just have to be a slightly different customer experience as retailers adapt.
The pursuit of omnichannel was about retailers being able to give shoppers a seamless and consistent experience across all channels and via all the different devices they use. That has not changed; it just rules out a few of the in-store interactive options for a time. With consumers now able to make purchasing decisions at any point along the customer journey, an omnichannel strategy remains essential for retailers. According to Aberdeen Group, companies with strong omnichannel customer engagement strategies retain an average of 89% of customers: companies with weak omnichannel strategies retain only 33%.
As retailers proceed through and emerge from COVID-19, technology will continue to be essential. There is no reason not to pursue the store of the future concept; it will just have to be done a little differently. Retailers can still use stores to educate consumers on product offerings, reinforce brand positioning, and support e-commerce sales. Before COVID-19 closing stores down, research found that opening a new location increases traffic to the retailer’s website by 37% the following quarter. The COVID-19 pandemic has underlined the importance of digital and the role technology plays in consumers’ lives as well as working life. Retailers will need digital more than ever to emerge successfully from this crisis and thrive.
For more information, listen to our webinar on how retail can survive COVID-19, and read the ebook: The retail data journey: Harness the power of data to transform your retail operations.
I’ve been writing about technology for around 15 years and today focus mainly on all things telecoms - next generation networks, mobile, cloud computing and plenty more. For Futurity Media I am based in the Asia-Pacific region and keep a close eye on all things tech happening in that exciting part of the world.