3 Things Brands and Retailers Need to Know About the Post-COVID-19 World
As 2020 unfolds and economies across the country reopen, two new constituencies will meet each other: the post-COVID brand and the post-COVID consumer.
Coronavirus has changed what we buy and how we buy it, and for as much as a third of consumers that disruption will last for the foreseeable future. IAB analysis reveals a historic retail reset: 25 percent to 33 percent of all consumers intend to reduce major out-of-home activities when the coronavirus crisis ends. Consumers plan to cocoon through a deep recession — and beyond. Here are three trends that will be the "new normal" post-COVID-19.
Incumbent Brands Will Face an Alien Landscape. This Means Smaller, D-to-C Brands Have an Opportunity to Be Discovered.
How brands are discovered, how loyalty is built, and more is changing. The spike in digital shopping is driving consumer trial of new brands — and many will stick with the new brands they’re trying.
This is a big threat to incumbent brands, which have invested for decades to build world-class capabilities for a world of physical retail that may be permanently changed. Without those advantages to protect incumbent brands, upstart direct-to-consumer (D-to-C) brands can target their customers and win. Protecting brands will be harder than ever during what's expected to be a prolonged recession.
Physical Retail Will Be All But Unrecognizable
Retailers have spent the past century and beyond finding new ways to inspire consumers to buy more than what was on their original shopping list. As the economy opens up, they face radically reduced store traffic, shoppers with far tighter budgets, and sharply limited cross-selling opportunities.
All of this at the same time store owners face steep investments to build the infrastructure necessary to execute buy online, pick up in-store (BOPIS) services, which include — among other things — additional space, staffing, training and safety protocols. This was a trend that started to emerge in 2019 by big-box retailers, and today companies like Tiffany & Co. are offering BOPIS. This is a major shift.
Digital Stores Will Be Challenged to Become Multiactivity Centers That Don’t Just Collect Orders, But Drive Engagement
Since their inception, there has been no more important part of the online process than the “buy now” button. In fact, online retailers have invested millions in trying to reduce the number of clicks necessary to make a purchase. Now, with brick-and-mortar store engagement unlikely to be as robust as it once was and e-commerce accelerating faster than expected, all the excitement and engagement that happened in the physical world must somehow be reimagined online. Online stores now face the significant challenge to become multiactivity centers, accelerating the adoption of augmented reality, virtual reality, and other virtual shopping tools, as well as concierge services, learning, and entertainment functions. Additionally, brands will have to digitally reconfigure shopping experiences that traditionally required in-person test runs, try-ons and samples.
One example that brands might want to emulate is the success Nike has had in China. When 70 percent of Nike stores closed in China, the brand kept its customers engaged by offering other services that it knew would be of interest to them, inspiring Chinese customers to buy online. In fact, Nike managed to see increases in online sales even after stores opened. This a re-entry blueprint Nike can leverage as other countries reopen their economies.
Whether incumbent or disruptor, brick-and-mortar or e-commerce, all brands will need to rethink and realign every aspect of their business due to the disruption cause by the coronavirus. This includes everything from realigning their supply chains for new delivery models and enabling new product discovery mechanisms to leveraging online shopper data for omnichannel marketing and syncing all of this with more targeted advertising messaging.
Overall, all brands will need to develop successful strategies to overcome multifaceted disruption, find new ways to reach consumers, sell products, and put products in shoppers’ hands.
Chris Bruderle is senior director, research and analytics at IAB. The Interactive Advertising Bureau (IAB) empowers the media and marketing industries to thrive in the digital economy.