A recurring symptom of the COVID-19 pandemic worldwide has been the shuttering of physical shops around the world. For some retailers in some sectors, earlier omni-channel focus paid off and there was a consumer shift to digital channels; for others, the loss of the store network was akin to severing an arm.
As the closure of stores was an early indicator of the severity of the pandemic, so their re-opening is seen as a sign of some form of return to normality - whatever that ends up looking like. China, first to close, was first to re-open. Stores across the US have been opening at varying paces, egged on by President Trump’s demands to get the economy going in the run-up to November’s election. And across Europe, shops have begun to set out their stalls again, with today seeing the UK’s non-essential retailers able to open their doors for the first time in 3 months.
All this does raise a number of issues. The post-COVID shopping experience is not going to be the same as it was before the pandemic triggered shutdown. Social distancing rules are still in place in most locales; entry to stores will be strictly limited; changing rooms and toilets are closed for reasons of hygiene; and store staff are facelessly masked-up, behind plastic protective screens at the counters and most definitely not pouncing to offer advice and upsell as soon as you set foot through the door.
The big question that remains unanswered is how consumers will react to the ‘new normal’? In the UK this morning, TV channels have been running pictures of eager shoppers standing in line around the block at 6am waiting for their local branch of Primark to re-open, three months of being starved of cheap apparel having built up enormous pent-up demand.
But once the novelty factor fades, will consumers be comfortable returning en masse to the physical aspect of the omni-channel mix or has the shift towards digital been cemented? Retail industry veteran Terry von Bibra, Director at Numenos, former Alibaba Group General Manager and one of Amazon’s early management team in Europe, points, as so many commentators have, to the shifts in the nature of omni-channel retail as a result of the COVID-19 virus as accelerant:
Consumers are at the heart of all changes in technology and in retail. It's always technology playing the enabler role. That's not changing here. So, it's the changing consumer who's going through this current crisis who is both the primary reason for the speed of this transformation, but they're also the ones who are ultimately going to determine which of these changes persist into the ‘new normal’.
Of the changes happening right now in retail, how many of those changes will actually remain and continue as the COVID crisis proceeds? No-one knows the answer that question - I certainly don’t - but I think it's going to be a very interesting thing to see, between new adaptive behavior versus human habits, which of those wins out when it comes to these new behaviors.
Global consultancy EY is running an ongoing research program to attempt to answer just that question. The Future Consumer Index, polling 12,843 people across the UK, US, Canada, Brazil, France, Germany, India, UAE, Saudi Arabia, China, Japan, Australia and New Zealand, explores consumer sentiment and behavior, with the intent of identifying temporary reactions to COVID-19 vs long term fundamental shifts.
Its latest data - covering May 2020 - finds that less than half of US consumers (47%), for example, expect shopping to return to pre-COVID norms and that a digital-first mindset is hanging on despite stores being open.
Globally, 52% of respondents say that they will change the way they shop over the coming year and it’s heath concerns that are driving this view. Some 70% say that hygiene and sanitation in shops is now a top priority in a more risk-aware world, hardly surprising given that 78% of US consumers and 57% of UK ones anticipate a second virus outbreak within the next six months.
This all combines to create a new challenge for omni-channel retailers. Never mind the obsession with chasing the fabled Gen Z shopper (who does love stores!); the new demographic that needs attention is what EY calls the Anxious Consumer. And the anxiety comes in multiple forms. Taking the US and European survey respondents as a whole, 47% say they would be extremely uncomfortable trying on clothes in a store, while a further 21% describe themselves as uncomfortable with the idea, while 37% and 28% have the same reactions respectively when it comes to the idea of going to a shopping mall.
There are two retail responses to this, suggests EY. The first is awareness of the need to make the Anxious Consumer feel safe. That will include measures like visible social distancing signage, lessening footfall inside a store at any given time and even reducing what’s on offer to sell in order to cut down on protracted browsing the aisles. The second is a need to go bigger on digital in-store, through apps or contactless payments or self-service kiosks.
There are opportunities to be had here for the savvy retailer, suggests EY, posing three key questions:
- Can you create a map of the journey your customer takes, from acquisition to loyalty, and work out how to replace any physical touch-points that are no longer possible with digital ones? For example, what’s the best way to provide a virtual demo of a product that would normally be experienced in a store?
- Can you encourage anxious consumers back into a shared physical location like a clothing store or bar by rethinking how that location works and using digital technology to help consumers re-embrace the physical? For example, live-streaming sales events from inside the store could be a simple way to show that shopping with you is fun and safe.
- Can you give anxious consumers greater transparency across your manufacturing, supply chain and delivery process, so they know you take their concerns seriously and can feel comfortable about buying from you?
There are ways to address consumer anxieties through more innovative application of technology, suggests Jenny Griffiths, CEO & Founder of Snap Vision, a London-based tech company which provides visual search tools for retailers among others:
This is a really good opportunity to prove that technology shouldn't be there for innovation’s sake,. It shouldn't be there for fancy new widgets. It should really be leveraged by brands to help them try better brand experiences for their customers. Things have accelerated hugely and now's the time to prove the real value of technology.
There are some obvious use cases here, she says:
One of them is around helping people deal with not being able to try on clothes. So, giving people the opportunity to shop by shape rather than shop by trends, because you know what works for your body shape. It minimises returns….Returns is going to be a huge inconvenience. Just from a practical point of view as a consumer, you don't want to go back to a shop necessarily to go and drop it off and you really don't want to go to the Post Office. I think returns is going to become front of mind for retailers and consumers.
Less face-to-face contact for advice obviously, especially in the fashion industry. This is a huge pulse of retail experience and seeing brands, especially luxury brands, become more creative with that will be quite interesting, whether it's opportunities for video conferencing for talking through your wardrobe.
Contactless payments have already attracted more attention from consumers as a result of COVID-19, but this could be taken further, reckons Griffiths:
Do we need to be using pin pads? Even really simple things like, where are you going to put contactless payment points? Do you want to be driving people to the back of the store as you traditionally have, to make sure they've seen the products, or do you want to make it kind of fast, in-and-out? And if you're taking that approach for safety, how do you still encourage discoverability on the other side. That's going to be a huge debate for retailers.
And if fears of a second wave of COVID-19 come true, there’s the prospect that lockdown - and therefore, retail store shutdowns - could become a recurring feature of life. Griffiths says:
If we have to kind of keep sliding in and out of this kind of new normal and the way that we used to run... it's [about] how can retailers begin to protect themselves against this happening again? Do they want to be actively using online as a channel and have experiential things in-store? Do they want to make it easier to manage inventory between in-store and online [and] do things like automated tagging using AI? Hopefully in the back of retailers minds will be this kind of future-proofing…the brands that will really win long term will be looking in that direction.
While this is a time of elevated crisis, von Bibra argues that the need to change operating models and transform has been apparent for years. It’s now far more urgent to wake up to that reality:
The existential risk to many offline stores is they now need to integrate online and offline. It's even more critical.One possible benefit here is [COVID has] put them in a situation where it's no longer a 'nice-to-do'. Omni-channel and online is not a nice to have for retailers. Overnight, it has become an existential necessity. So that is really pushing the omni-channel push I wish it could have happened without [COVID], but it's absolutely, helping to drive it.
For me I think one of the most interesting question is, why is it taking a crisis of this scale, a crisis of a generation, to provide the necessary impetus for true retail transformation?
The last point is a good one, but at this juncture it is akin to the old joke - Q; How do I get from A to B? A: Well, I wouldn’t start from here! Unfortunately here is where we do have to start, even if the destination of travel has a lot of uncertainties associated with it. With those questions in mind, we’ll take a look at how a number of omni-channel retailers have tackled some of the specific concerns of the Anxious Consumer in practical terms in a follow-on article tomorrow.