A very different season of gift-giving
It’s no secret that the winter holiday season is the busiest and most crucial season for retail businesses. In past years, people would flock to retailers to search for the perfect gift for family, friends, and loved ones. The global pandemic has changed many things, but this is still likely to remain true. Albeit in fewer numbers.
What has changed though, is the way consumers are approaching the season of gift-giving. The fear of COVID-19 will supercharge a trend that has been unfolding for many years now. In-store sales are waning, online sales are skyrocketing. Retailers are faced with a daunting challenge.
In order to be prepared for these uncertain times, retailers and marketers need to fall back to the basics: analysing consumer behaviour and adapt business and promotional strategies as much as possible.
Salesforce has recently released their predictions for key trends that will influence the 2020 holiday shopping season. One of the key trends is the change in consumer behaviour. Salesforce highlights four key determinants that are expected to influence consumer behaviour for the 2020 holiday season.
What are your customers thinking?
The first determinant would be confidence in delivery. As you’ve probably noticed (i.e. you’ve bought something online this year), many businesses have struggled with timely delivery. Although this isn’t typically a dealbreaker throughout the year, it is during the holiday season. Not knowing if the gift for your loved one is going to arrive in time for Christmas is bound to induce stress. With this in mind, it’s safe to say that many will choose to buy gifts well in advance.
Scarcity of popular products is another determinant that will surely entice savvy consumers into purchasing goods much earlier than in previous years. Issues such as reduced container capacities and volatile demand are likely to impact supply and demand, resulting in uncertainty for both consumers and vendors.
Historically, deals and promos have always been the most crucial influence on holiday season sales, and despite the turmoil that is 2020 this isn’t going to change. However, with economies around the world reeling from the pandemic, consumers are going to be on the lookout for the best deals even more.
Finally, safety is expected to be the biggest influence on consumer behaviour when compared to previous years. Fear of infection and uncertainty about stores remaining open will result in more consumers buying/ordering gifts in advance, online.
These behavioural changes are sure to result in reduced in-store sales, with consumers turning to online shopping instead. As such, the temptation for retailers to go all-in on the online shopping experience is substantial. However, the retail situation is a lot more complex than a simple increase in online activity and a decrease in offline sales. The focal shift from offline to online sales has various implications. One of the largest is the strain on the supply chain. Buying online is incredibly convenient for consumers, but keeping up with the sudden increase in demand of home delivery is a tall task for most retailers. This shift, together with social distancing measures in distribution centres are expected to pressure last-mile delivery to the extent that traditional delivery providers will run out of capacity. Although it might not be apparent at first glance, physical stores are sure to play a pivotal role in the upcoming holiday season.
Forget the Retail vs E-tail narrative: synergy is the name of the game!
Those that view the future of offline retail as gloomy should consider this: framing the changes the retail sector is experiencing as “brick and mortar vs. e-commerce” marginalizes the roles stores (can) play in driving online sales. As highlighted by this insightful article, retailers have more to gain by focusing on how they can leverage physical stores for competitive advantage against their digital native adversaries.
A large percentage of customers still prefer shopping in physical stores as opposed to online. Multiple factors play a part here: people enjoy touching, feeling and trying products before purchase (even though fear of the pandemic is likely to deter some from doing this). They also enjoy taking products home with them directly after purchase. They also love the ability to browse and discover new things. In short, they love the experience of offline shopping.
Retailers have known this for a while, and have done their best to turn holiday gift shopping into a true experience. Most shoppers are also more likely to buy products online if they can return it in a local store (and once in the store they have the tendency to buy other items as well). So, even if the majority of holiday sales happens online, the presence of local stores will factor significantly into consumer decision-making.
Many retailers have begun investing in e-commerce (duh!), but often times still view their offline and online presences as entirely different channels. Different P&L’s, separate operational teams, and different priorities. However, offline and online customer journeys have been melding together for some time now.
The average consumer couldn’t care less about online vs. offline. They care about getting the items they want as fast as possible, with as little fuss as possible. Many major retailers have picked up on this, have discovered how stores and online retail support each other, and have responded by changing their business approach. For example, curbside pickup, in-car delivery, and utilizing brick and mortar stores as distribution/fulfilment centres has become increasingly common.
The key to a successful holiday season, despite the pandemic, lies in the synergy that offline and online can unlock.
Brick and mortar reimagined
As mentioned above, retailers have begun to reimagine the role of brick and mortar stores in their strategy. Stores will remain critical to the success of holiday season sales, be it in a different capacity than in previous years. Turning them into make-shift or even full-fledged fulfilment centres allows these locations to play a vital role in enabling contactless fulfilment (i.e a convenient pickup location), and reduce the stress on last-mile delivery services. Salesforce even predicts that businesses offering store pickup -curbside, inside, drive-through- can expect a 90% increase in online sales as opposed to the previous holiday season.
The rise of BOPIS options (buy online, pick up in-store) such as those listed above is an important part of the contactless fulfilment story. These options had already been enjoying increased consumer support, but the pandemic has served to speed up the rate at which consumers are making use of them. When executed correctly, BOPIS options reduce health risks by decreasing exposure, while bypassing pesky shipping delays by allowing for same day pickup. They also provide the (near-)immediate gratification shoppers love about in-store shopping, while providing the convenience and efficiency associated with pure online shopping.
Brands and retailers have a lot to gain as well, mainly through improved margins. Reducing fulfilment time from a couple of days to a few hours allows merchandise to turn faster, and enables more accurate demand forecasting. The latter is critical in the current economic climate, as many retailers have had their inventory locked up for the better part of two business quarters.
Fulfilling the potential of your physical locations
So, turning physical locations into fulfilment centres and embracing BOPIS options is (probably) the way to go for retailers preparing for the holiday season. However, just knowing what to do will not result in happy holidays. The secret to success lies in the execution: how can you best prepare for fulfilment at the store level? Well, these pointers will go a long way to help you transform your stores (courtesy of Salesforce):
- Provide store-level inventory visibility via digital channels in real time.
- Establish flexible and agile fulfilment options, and move inventory closer to the source of demand (i.e. transform your stores into fulfilment centres).
- If possible, segment your customers based on their proximity to your stores. Encourage your customers that live closest to your store to make use of BOPIS.
- Incentivize customers to use these fulfilment options rather than opting for shipping. Early and frequent communication about fulfilment options is paramount. Additionally, you should definitely pass on the cost savings to your customers.
- Provide multiple options and provide clear instructions. Some customers may want to come into the store to pick up their order; some don’t mind waiting outside for you to bring their goods, and some may prefer you delivering it to their car via curbside (if your location and business model allows it).
- Consider implementing intelligent localized marketing. After all, customers living 3-5 kilometres from one of your stores should be approached differently than those over 50 kilometres away.
While these tips are certainly useful for getting customers to engage in BOPIS options, they don’t tell you how to improve the BOPIS experience. And improving this experience is what will ultimately increase the chance that customers will keep returning. So, what can you do? Well, it all starts with your physical store.
How can retailers improve the BOPIS experience?
In order to improve the BOPIS experience for your customers three things are crucial. The first is educating(local) staff and preparing them for their new role in BOPIS. It cannot be overstated how important this is, as the BOPIS experience begins and ends with them. Investing in extra training, explaining new procedures and guidelines is not a luxury. The second important way to improve the BOPIS is adjusting the layout of the store. As previously mentioned, customers that come to pick up orders are more likely to make in store purchases. With foot traffic expected to go down substantially, every customer that enters the store is extra valuable. So, adjusting the store layout (if possible) to create more space for customers while guiding them past other items is likely the way to go.
A sign of the times
The final element that plays an important role in improving the customer BOPIS experience is the presence of signage. Effective and well-thought-out signage both in and around the store makes a huge difference. Outside the store it helps keep curbside and in-car pickup orderly, and shows that your business is doing everything in its power to reduce the spread of the virus. Inside the store, it helps customers safely navigate the store, alert customers to the presence of your hygienic facilities (such as your hand sanitizer stands), and inform them about any stock issues that might have occurred due to volatile supply and demand.
A big issue for many retailers is keeping in-store signage on-brand, especially if your business has many stores, in various locations. Plain, no-frills signage is great for construction sites, but for a retail store where experience is everything this doesn’t cut it. Besides looking unprofessional, customers are less likely to take safety warnings seriously if they are unbranded and look like someone jotted down a few sentences in a Word document. Additionally, adding a little personality is bound to help shoppers feel more relaxed in what might be a stressful, anxious environment for some of them.
And as the pandemic (hopefully) resides and the world adjusts to the ‘new’ normal, branded signage can be used to promote products in a more classy way, as you would in pre-pandemic years. You could even consider some form of signage to show your appreciation to shoppers for sticking with you.
There’s no doubt that your business has had to deal with a variety of unexpected challenges this year. It’s also near impossible to anticipate the challenges that are yet to come in a post-pandemic world. The holiday period for your retail business will surely be very different this year. To get the most out of it, your preparations need to align with the way your business has to now operate. Creating compelling visuals, tailoring to the apprehension of your customers, and infusing a human element into your image (while removing the human contact) are certainly steps in the right direction!
Looking for a partner to tackle the new challenges your business is facing?
Here at 2imagine we specialize in marketing automation solutions that allow retailers to create their own, brand-protected and localized POS material and signage- and keep it updated. We’d love to help you prepare your stores for any challenges that are yet to come! Don’t hesitate to request a free consultation with our experts to see what our solutions could mean for you and your business!