To sustain their business and market share, retailers have always had to focus on what consumers value. In the late 2010s, with proliferating media channels, apps and content, what consumers came to value was:
- Convenience—making it easy to use a service or shop for a product.
- Connected experiences—making sure consumers come away from every touchpoint feeling that marketers understand them, how and when to reach them, and their needs.
Since March 2020 during a crisis that has disrupted supply chains, broken shopping habits and created many new friction points in the shopping experience, both have gotten considerably more challenging.
A new retail landscape
Shoppers still want convenience and good experiences. But those two things do not mean what they used to—everything’s changed.
For one thing, pure performance marketing—advertising programs based on generating a specific action like a lead, click or sale—are not enough to build trust with today’s consumers. They’re looking for more.
Wedbush analyst Seth Basham and Michael Felice, principal in consumer practice at Kearney, told Retail Dive in July that today “customer loyalty is driven by the overall shopping experience rather than heavy promotions.” i
Part of the overall shopping experience during the pandemic involves how a business conducts itself. A recent McKinsey & Co. report on consumer sentiment and behavior since the crisis startedii notes, “Consumers have a heightened awareness of how businesses interact with stakeholders, local communities, and society more broadly. The actions that businesses take during this pandemic are likely to be remembered long after COVID-19 has been conquered.”
Even the basics have changed
Convenience and shared experiences remain essential, but the basics to deliver those come with an added degree of difficulty.
Today convenience means not only easy/requiring little or no effort. It means well-suited to the current situation, for example that products are produced in a safe environment and offered for sale in a safe format. And to create positive experiences, retailers have to make sure new points of friction don’t interfere with the shopping experience.
Consumers surveyed by McKinsey from mid-March through June said that when deciding where to shop, they look for retailers with visible safety measures such as enhanced cleaning and physical barriers. In addition, they buy more from companies and brands that have healthy and hygienic packaging and demonstrate care and concern for employees.
The upside of this disrupted environment is that it’s created new opportunity to reach and convert people into fans. The COVID-19 pandemic has shocked consumer loyalty, according to McKinsey. When consumers couldn’t find their favorite brands at their favorite stores, it opened the door for them to try something different – either a new brand, a new retailer, online shopping or buying online and picking up in store.
McKinsey’s Consumer Pulse survey in June found that 75% of U.S. consumers said they had tried different shopping behaviors since COVID-19, looking for value, availability, and quality or organic merchandise, and more than 60% said they planned to continue the new behaviors post-crisis.
The making of loyal shoppers
How can both online and offline retailers take advantage of this opportunity?
John Keenan, founder of Anthem and an executive within Quad’s Data & Analytics practice, notes that in this new environment, marketing has to change. “Brands must find ways to assure they can continue to be trusted,” he says. Promotions, special offers, discounts are part of the marketing mix. But investing in additional communication materials that tell shoppers what you’re doing to ensure their safety is essential. Retailers need to document that they are doing everything possible to be responsible actors for their customers, employees and communities.
Focus on the new meaning of convenience
For the foreseeable future, convenience is a prerequisite for loyalty. Loyalty is about trust, and to create trust retailers and the brands they carry must deliver on their promises to ensure safe products and a safe, easy shopping experience.
Remove friction points
- Address supply chain issues and/or set up alternate sourcing to ensure product availability
- Address transportation issues or, at the least, manage consumer expectations so products arrive when expected
Brands that have invested in direct communications with customers and a friction-less shopping experience are seeing returns in customer loyalty.
i Retail Dive, “DTC brands struggled with profitability prior to COVID-19. Now what?”, July 6, 2020
iiMcKinsey & Co., “Consumer sentiment and behavior continue to reflect the uncertainty of the COVID-19 crisis,” July 8, 2020