Although we are not out of the woods yet, smart retailers have already started to revisit their short- and long-term strategies to fit the post-COVID-19 landscape. This crisis has accelerated a number of trends, influenced by a few key drivers:
Here are our predictions for 4 key consumer shopping behaviors that will persist as we move into recovery mode and beyond:
While consumers will prefer efficient, contactless transactions for more common purchases, they will also want joyful, indulgent shopping experiences to satisfy their need for retail therapy. This is a great opportunity to give them a reason to shop with you instead of Amazon or your competitors.
Many retailers rose to the occasion during lockdown with valuable, on-brand content and experiences to entertain and interact with customers stuck at home. Rather than simply pushing product and discounts, the best ones provided activities & tutorials (Joann and Party City), live remote events with access to experts (Lafayette 148 and Haus), or home hair and beauty how-tos (Madison Reed and Clinique). They’ve developed meaningful relationships with customers beyond the sale that will foster loyalty for years to come.
Moving forward, retailers can add similar customer-centric initiatives that support the new normal of distancing and safety while preserving value. Those who offer remote styling and personal shopping support like Stitch Fix, BaubleBar, and Neiman-Marcus are a step ahead. Saks Fifth Avenue stores are offering appointment shopping with services such as dressing rooms prepped in advance with selected items to try on. Other retailers are reducing assortment but being more thoughtful about what they offer, which not only manages costs, but also provides opportunity for a more focused editorial voice to appeal to the right customers.
Admittedly, this is not a stretch. Since most physical stores were closed during lockdown, consumers quickly shifted their shopping activity online out of necessity. We saw online orders increase 47% during Q2, and online returns doubled across our platform during this period. Though we expect some correction in the balance of ecomm to physical retail as stores re-open, a portion of this increase in online share will stick.
What some may not realize, though, is that this shift in channel mix also means challenges for retailers including higher return rates at higher costs, and may require reprioritization, developing some new muscles, and a more holistic operational approach.
To adapt to this reality (if not already down this path), retailers will need to focus on two key areas: differentiation of experience including some of the strategies outlined above, and cost-efficiency. Implementing an online portal to handle returns and exchanges is a great way to manage costs in multiple ways: reducing customer support contacts, preventing ineligible returns, “saving the sale” with easy exchanges, directing returned product to the closest or most efficient location to save shipping costs plus get product back into the sales cycle faster, and providing timely data to help identify product issues such as size or fit which can be used to prevent returns in the first place.
Over the past few months, we saw a 50% uptick in Narvar Concierge returns drop-offs at Walgreens, whose 8000+ neighborhood-accessible locations stayed open as essential businesses. People could pick up prescriptions, household essentials, and groceries in the same visit. McKinsey observed a similar trend of fewer trips with higher basket sizes persisting in early-recovering markets like China.
Given that it will be an extended period before consumers are comfortable moving and interacting freely, the ability to consolidate shopping trips and services like this will continue to be important, even as non-essential stores spin up again. Even before the pandemic, we found that 16% of consumers dropped off their last return at an alternative location, with 51% of those citing convenience as the primary reason.
One of the best learnings from this pandemic is that companies can be nimble in a crisis. The proliferation of new options and models that were stood up in days or weeks — rather than months or years — attests to a latent capability for innovation at speed within our organizations. Retailers often partnered with tech and logistics companies to complement their in-house capabilities to get these services to market in a challenging environment.
Whether it be curbside, drive-through pickup or drop-off, same day delivery, scheduled pickup & delivery, ship-from-store, or contactless transactions, consumers have become accustomed to a plethora of convenient options, and we expect demand for many of these to continue.
Take BOPIS (buy online pickup in store — or curbside, as the case may be) for example. There are a few reasons adoption has skyrocketed: the customer has confidence that inventory will be there, combined with the ability to conduct a contactless payment and reduce the amount of time required in the store. We also saw a 50-70% increase in printerless returns during lockdown, with customers losing access to office printers for labels, and opting to have a QR code scanned on their phone instead.
The economics of these offerings and whether fees may be introduced to make them sustainable will vary by retailer and has yet to play out.
Despite the immense challenges the industry faces as we emerge from this crisis, these are still times of great opportunity. McKinsey Senior Partner Brian Gregg explains that there has been a “loyalty shock” due to panic shopping and supply chain insecurity early in the pandemic: they found that 20% of shoppers tried other stores or brands over the past few months, with half of them expecting to continue those relationships.
This disruption in the status quo has created an opening for brands to compete harder for consumers’ attention and spend, and keep it well beyond lockdown. It’s been proven that investments in CX benefit overall company health and growth, so staying in tune with consumer expectations in this new world will pay off.
Andria is Global Director of Marketing & Communications at Narvar. She grew up in entertainment at iconic brands like EMI & MTV before pivoting to ecommerce, most recently at Walmart.com.