Four trends that will shape post-lockdown retail

It seems like a lifetime ago that we hit ‘publish’ on our Retail Marketing Trends 2020 report, in which marketers shared their predictions about the year to come. Little did we know back in December that a global pandemic would come along and turn everything we thought we knew on its head. 

COVID-19 has forced us all to stop in our tracks and question our vision of the future; not least retail – an industry that has certainly faced unique and diverse challenges at this time. 

This blog post explores four of the trends that will emerge from this period of uncertainty. 

1) Increased adoption of ecommerce

Government-imposed lockdowns have dramatically accelerated existing trends towards shopping online. 

“More than three quarters (77%) of consumers say that they expect they will continue to purchase online more once the lockdown is over.” – Internet Retailing, April 2020

The result has been an abrupt change in consumer shopping behaviour that’s likely to be irreversible. Ecommerce adoption has increased worldwide, and not just amongst those who shopped online before the crisis – lockdown has introduced new demographics to the convenience of buying online.

“The proportion spent online soared to the highest on record in April 2020 at 30.7%, which compares with the 19.1% reported in April 2019.” – Office for National Statistics (ONS), April 2020

What this means for retailers:

COVID-19 has opened retailers’ eyes to the risks of relying too heavily on bricks-and-mortar retail, and has encouraged shifts in consumer behaviour. In the coming months and years, expect to see: 

• A shift towards direct-to-consumer (D2C) models: retailers choosing to maintain a direct relationship with online shoppers, as well as selling via online marketplaces (e.g., Amazon), as opposed to wholesale routes.
• A larger number of omnichannel and online-only shoppers: online buying becoming a more prominent part of the retailer/consumer relationship, with a decrease in offline-only shoppers. 
• Greater emphasis on reducing friction in shopping online: from payments to delivery; augmented reality (AR) fitting room apps that help shoppers to visualise purchases in the real world; and personalised product recommendations or digital styling sessions that emulate in-store activities and services.

2) A changing role for physical retail

The troubles of the high street were well-documented before COVID-19 appeared on the scene, and the closure of all non-essential physical retail has only served to exacerbate this, with post-lockdown footfall unlikely to return to previous levels anytime soon.

That said, physical retail won’t disappear from our lives completely – and pre-COVID-19 trends, such as the rise of ‘experiential’ retail, point towards a changing role for physical stores. 

What this means for retailers:

• Brands having to reimagine old competitive advantages: retailers will have to look carefully at how they might provide unique value to shoppers in a world where bricks-and-mortar advantages – store location, customer service, key footfall drivers – will be less relevant (spoiler: digital transformation – which we cover in the next section – will be crucial). 
• A closing of the ‘customer experience gap’ between physical and online retail: brands are likely to see a decrease in ‘offline-only’ customers, and omnichannel shoppers increase in number. This will make it even more important to offer consistent experiences between the real and digital worlds – such as recognising and rewarding loyalty and incorporating offline shopping behaviour into the single customer view.
• The rise of experiential stores: The role of the physical store will shift to customer engagement and brand experience rather than pure footfall and sales. Expect to see greater use of in-store tech, and engaging, installation-based displays replacing shelves and clothes rails.

3) A rush towards digital transformation

As retailers indundate the online space, digital commerce will become an increasingly competitive and ‘noisy’ place to be – and brands that rapidly upgrade their digital capabilities will come out the winners.

“The strongest players will quickly scale up and strengthen their digital capabilities, which will allow them to capitalise on future opportunities and protect their businesses from risks. Investing more in existing digital capabilities — such as improving the customer journey and the broader customer experience — should happen alongside pioneering new ways of engaging with consumers online.” – BoF and McKinsey & Company, April 2020

For retailers, this will mean:

• A spotlight on the digital customer experience: In order to thrive online, retailers will have to offer exceptional customer experiences that set them apart from their competition – from the digital channels they employ, to their use of customer data and personalisation, to their adoption of innovative technologies like AR and VR and beyond.
• Greater focus on customer retention and loyalty: As increasing competition drives up the cost of acquisition channels, retailers will be well-placed to shift their attention to more sustainable channels, and drive repeat purchases that increase customer lifetime value.
• More digital touchpoints to contend with: Greater innovation in the space will drive a proliferation of digital channels and touchpoints. In turn, this will produce larger customer datasets for retailers to make sense of. Those that most effectively leverage this breadth of customer data will be able to create the most sophisticated customer experiences. 

4) Increase in contextually relevant marketing

COVID-19 has forced retailers to completely rethink the way that they communicate with their customers. Many have had to adapt to focus on products and categories that make sense in the current situation, as well as navigate the need for sensitive communication in a crisis; both of which have encouraged retailers to take a softer, more content-focused approach that prioritises serving their customers with valuable information and entertainment over directly selling products. 

Returning to batching and blasting customers, whose expectations have been raised, with irrelevant messaging now won’t be an option.

For retailers, this will mean:

• An irreversible shift towards creative, thoughtful marketing: the focus will shift to building long-term brand relationships rather than solely pushing sales and products. Though a more direct approach may return when the crisis is over, this period has demonstrated the importance in providing value for customers, and has increased customer expectations of brand engagement. 
• Personalisation and contextual marketing: customers will have less tolerance for bad marketing practices that fail to provide them with value and don’t reflect their tastes, communication preferences, or loyalty. 
• Humanity as a competitive advantage: the brands that personify authentic humanitarian and environmental credentials will be remembered and rewarded with stronger emotional connections and increased brand loyalty amongst existing customers, and will attract new shoppers through improved brand reputation. 

Watch our webinar with Ryman to discover how the brand has weathered the COVID-19 storm using creative marketing

Towards a new normality

Although COVID-19 has presented retail marketers with challenges that they’ve never encountered before, it’s interesting that many of the trends outlined above were in motion long before the pandemic struck. In this respect, COVID-19 has served as an accelerator, transforming ‘nice-to-haves’ into ‘must-haves’ and forcing retailers to embrace change.