History tells us that the retail sector is resilient and filled with innovative people. The internet was supposedly going to finish off the high street; but instead brands now look to meet consumer demand with omni-channel retail experiences, combining bricks and mortar shopping with the latest online platforms.
The current recession, triggered by the global pandemic, hasn’t quite reached the depths many have predicted – yet. But the retail sector, and high streets in particular, have been disproportionately hit by government-enforced shutdowns. Many are struggling in the current climate. For instance, Scottish retailers lost £1.9bn in sales in the first four months of the COVID-19 pandemic.
However, the sector is nothing if not agile and innovative. But there are conflicting fortunes within the retail sector. For instance, food sales were up 3.3% year-on-year in July (and an average of 8% in the previous four months). And while they have been affected by the reopening of the hospitality sector, food sales remain solid and have benefited from a strong online offering. Figures out from Waitrose show 77% of British consumers now do at least part of their grocery shopping online.
As with all times of economic hardship, success stories emerge as businesses adapt to new market conditions. In this article, I will take a look at the significant part marketing will play in the retail success stories that will emerge as a result of the COVID-19 pandemic. And I will explain how the right promotions could save many of the retailers that find themselves in a precarious position in the future.
Define your market
Just as with offices across the country, retailers rushed at breakneck speed to digitise their business as lockdown took effect. For some, it was the creation of a new online offering that had previously never existed. Others rapidly updated and optimised their current online presence to deal with spiraling demand.
The enforced change to buying habits doesn’t look like abating any time soon. Many people are still afraid to venture into crowded public places as frequently as they did before.
Now is therefore the perfect time to reassess your market and truly understand your customers. The digital marketplace has become even more congested, and as such it is increasingly important to define your customer.
My colleague Mark Dodds, chair of CIM’s food, drink and agriculture sector interest group, has said: “The issues for retailers going forward will be mainly internal and strategic. E-commerce for some of the high street retailers has not been their most profitable channel because of the large infrastructure and systems investment required. But the pandemic may have changed this and, as things settle down, online has the opportunity to become a more important profit stream.
“If retailers still believe that the money is to be made in store, where they can attract consumers with impulse buys, the role of the marketer will be to convince consumers that it’s safe and hassle-free to enter their stores. Depending on how government guidelines develop, this may be a challenging message to get across.
“If the future is online, then we will see a shift in spend from ‘traditional’ media to more personal and direct messages encouraging those who have not yet done so to give online a go.”
Invest in your brand
Defining your market is essential for large and small retailers. However, so is assessing your brand to make sure your vision and values are still relevant to your customer base, according to Jamie Malcolm, retail marketing consultant to among others Samsung, Red Bull and Watchfinder.
Jamie told me: “Spending a bit of time on your brand vision and purpose will be incredibly valuable. There will be pressure to attract customers and to spend money on advertising, which is understandable. However, if your brand is misaligned, you will miss your target market, which no one can afford to do in these challenging times.
“This brand assessment will also help you define your ‘why’, which will strengthen the authenticity of your messaging.”
Build an emotional connection
The 2008 recession saw a change in customer demand. There was a greater emphasis on authenticity and purpose. Consumers wanted more from the brands they engaged with. They wanted an emotional connection. This hasn’t changed as we go through the COVID-19 pandemic.
Jamie Malcolm added: “Brands need to build on the emotional connection they have established with their customers. For instance, local marketing is going to be vitally important. During the first lockdown, by necessity people relied heavily on and supported their local suppliers. Despite our globally interconnected world, there will be opportunities to build your business through your local market.
“Communities, both physical and online, will also be a vitally important channel for your brand. Just as people came together to help each other during the lockdown, as we advance this will continue to be the case.
“An authentic brand will be part of this community, not trying to sell but to support its members. Find your community, become part of it. This isn’t going to make an immediate impact, but it will provide the building blocks for long-term survival and success.”
Focus on retention
Relationships are the key to success for retailers in these challenging times. You will probably have an existing customer base: communicating with them is crucial.
This is perhaps not going to drive sales today. But doubling down on these relationships will build the emotional connection you are looking for. It is also likely to increase referral business, which is always valuable.
Maximise your high street experience
The lockdown has heightened the pressure on physical shops. Increased investment to meet social distancing measures and to protect staff, added to reduced footfall, has undoubtedly taken its toll on many well-known names.
However, physical retail remains important. In May, online share of retail spending was 33.4%. This reduced to 28.9% by July. So how can marketing help the high street retain its relevance and make it through these tough times?
Susan Rose, Marketing Director at Slaters, said: “High street retail has been amongst the hardest-hit sectors during COVID-19. Customer experience is now critical to the in-store approach for retailers, large and small. Organisations also need to increase their research to identify niche opportunities. There is a definite opportunity for independents focusing on niche markets.
“So many of the high street stores matched those in the out of town shopping centres. We now need investment to make the experience our primary focus.”
The rise of retail-tainment
It’s time for ‘retail-tainment’. The in-store experience now, despite the challenges of face masks and social distancing, has to inspire and entertain. If the transactional nature of the stores is reducing, then the entertainment factor has to increase.
The management of queues will be important. With a competitive market, retailers may find that people have little patience for waiting unless there is some benefit or distraction to keep them entertained and ensure that their customer experience is a pleasant one. If queues and one-way systems are the new norm, there will be less browsing and fewer impulse buys. The role of the staff will be paramount in managing expectations and ‘upselling’ once the customer is in-store.
The shopping experience now starts well before the customer walks through the door. Retailers need to ensure that whenever it does start, their customers feel engaged, important and happy to spend. The experience can go right back to customers’ email in-boxes where they should receive communications about what to expect when shopping in-store, how queues will be managed, and what steps retailers are taking to ensure a safe and happy shopping experience.
If retailers can take all this on board and develop engaging marketing campaigns to attract consumers and address any fears they might have, the retail sector could well surprise the analysts in the coming weeks and months.
By Ewan Anderson, CIM Scotland’s board member and vice chair of communications