How the Coronavirus Will Forever Reshape Retail
Retailers are being challenged by the global spread of the coronavirus. Many stores are closing their doors and facing a sharp decline in sales, while other retailers, like grocery stores and pharmacies, are seeing increases in sales and dwindling inventory. In this wide-ranging interview, former eBay and Walmart exec, and current head of retail partnerships at Cover Genius, Peter Paine, speaks to the industry trends emerging during the COVID-19 crisis and how the virus will forever reshape retail.
Total Retail: What are some retail trends that are emerging due to COVID-19?
Peter Paine: Here are some themes that retailers should be closely monitoring:
- Spikes in vertical retail: Though some brick-and-mortar retailers are seeing a decline in sales because of store closures or reduced hours, certain retail verticals, like grocery stores and pharmacies, are seeing an influx of sales due to high demands. As consumers set up home offices and spend more time at their homes, there has also been a spike in sales for at-home necessities, like computers, tablets, and home improvement materials. In fact, Lowe’s CEO Marvin Ellison has said that “customers are buying more appliances and doing home projects as they hunker down at home.” As the U.S. surpasses Italy and China with the most number of COVID-19 cases, retailers in verticals such as grocery, pharmacy, home improvement and home office supplies will continue to see revenue increases.
- Increase in employee benefits: As the world adjusts to this new reality, retailers — now more so than ever — are putting their employees first, increasing benefits to ensure staff is protected. Target and Amazon have both recently announced wage increases for hourly associates working during “shelter in place” orders. Additionally, brands are taking extra steps to ensure associates have all the supplies and gear they need in order to work safely. As communities continue to support each other, we will see retailers take extra precautions to keep their employees safe as they enter the “battlefield.” We can expect this trend to continue as businesses and employees will have a heightened awareness of the need to have employee benefits that protect them from unprecedented catastrophes, like COVID-19, as well as natural disasters such as hurricanes, earthquakes and floods. Recent global events have shed a new light on the importance and value of employee benefits and business protection plans to keep companies resilient.
- Building customer loyalty online with protection measures: In such an uncertain time, when consumers are extremely cautious of purchases, especially online as virtual sales have increased by 50 percent in the past two weeks, brands will start to look at policies that can be personalized and incorporated into the online buying journey, offering shoppers peace of mind in one aspect of their daily routine. Fully digital experiences will become the new normal and we will continue to see growth in online shopping as consumers, even those who up until now were reluctant to shop online, have no choice. Retailers will need to provide their customers with a safety net, assuring them that not only are their purchases protected, but also that they're covered in case they break. Adding warranty offerings to the purchase journey will guarantee exactly that and will increase customer trust and loyalty.
TR: How can retailers pivot their strategies to continue serving customers during this uncertain time?
PP: Retailers traditionally have a seasonal marketing calendar they follow, and during this time of the year it’s focused on Easter and spring messaging. However, no one is shopping for Easter dresses.Instead, e-commerce retailers have shifted their messaging to promote products that are related to indoor activities, including at-home workout and lounge gear, activities for kids (e.g., puzzles, games and movies), and home improvement projects.
TR: Why should retailers amp up their customer service and personalization right now?
PP: Consumers are stuck indoors with their families; the retailers that identify creative ways to ease their stress will be the ones consumers remember. For example, retailers have an opportunity to promote at-home workout gear for adults who can’t go to the gym. Similarly, retailers that sell children’s toys can offer indoor activities and games to make up for the fact that they can’t go to the playground or school.
Retailers are also promoting products that the whole family can do together while indoors, like cooking and baking, with those related products on sale next to recipe ideas.
TR: Are there any unique ways that you’ve seen retailers utilizing digital experiences as a result of COVID-19?
PP: Brick-and-mortar retailers have already seen the increasing necessity in taking their e-commerce presence seriously year-round. No one can anticipate a crisis, and we’re seeing regional retailers for products like furniture, jewelry, etc., come to a halt after closing stores, while they still have loyal customers that have time sitting at home to shop.
Now is the time for brick-and-mortar retailers to focus on building a solid online strategy and incorporating aspects like personalized insurance seamlessly into the buying cycle.
TR: During this time, why should retailers prioritize customer trust? How can they put trust at the forefront?
PP: In today’s chaotic atmosphere the only thing that's guaranteed is that things will continue to change, and quickly. Different times call for different measures, and retailers, like all other industries, need to act fast.
Prioritizing ways to better serve their customers during a crisis will deepen that customer relationship. Understanding what their customer’s priorities are and finding ways to cater to them will win customer loyalty and trust in the long run. Amazon changed its operations to prioritize necessities to make sure that sanitary wipe gets delivered in two days, but that base cap touted may take a month right now.
One way that a retailer can better serve customers, while also building customer loyalty, is by offering insurance for higher-priced items, like computers and TVs that are in high demand and constantly being used.
TR: What do you predict will change in the future of retail as a result of COVID-19?
PP: As part of getting back to "normalcy," retailers will have to discount products to trigger consumers to feel comfortable/safe enough to spend again. We're already seeing this trend happening in China as electronics stores and coffee chains are cutting prices. Even local authorities are trying to help fund discounts to kick-start the economy.
Protection will become more important than ever as many customers lose their jobs and worry that a recession is near. They will be more cautious with what they choose to buy and will seek to protect their valuable purchases, like home exercise equipment and home office equipment such as monitors and laptops that they need in order to keep working.
More than ever, retailers will see the benefits of offering add-on services like extended warranties for their customers' piece of mind, but also to allow those e-commerce brands an additional revenue source in these challenging times.
TR: What would be your main piece of advice for retailers looking to continue reaching customers during this pandemic?
PP: We're all experiencing this together — a 24/7 news crisis, homeschooling kids, grocery supply shortages, finding solutions for at-home workouts in light of gym closures, etc. — so take a look around and ask how can you, as a retailer, cater to and solve the problems that everyone is facing? At the end of the day, remember that this isn't the end. The retail marketplace will bounce back as it always does; the industry as a whole just has to make some changes in the interim.