The Post-ish Covid Consumer: Keep Pandemic Era Conveniences to Acquire, Retain Customers
“We know that some of our customers’ behaviors will shift back to pre-pandemic, and we know that some will never be the same. The issue is, we have no idea which is which.”
In a recent discussion with a Fortune 500 CEO, he articulated to me what so many retail, CPG and commerce executives are struggling with this summer as they head into the ever-critical holiday shopping season. Consumer behavior is shifting faster than ever as mask mandates lift, travel plans resume, and offices begin to reopen. What was true about how consumers shopped in 2020, from stockpiling cleaning supplies to purchasing yoga pants from their phones and keyboards, has fundamentally shifted by the summer of 2021.
As they venture back to the store, and to the beach, what do consumers truly expect? It's clear that convenience is driving both when and how they purchase, and retailers now require the organizational agility to keep pace with consumers’ changing mindsets and needs on a week-by-week basis.
We joined with the industry experts at Coresight Research to co-author a custom study of consumer behavior and retail priorities entitled, A Year of Agility — What Post-ish Covid-19 Consumer Behavior Looks Like Right Now. Consumers surveyed were quite clear about what will lead their purchasing decisions in the months ahead. In their own words:
“Why would I drive to the store for something you’ve been delivering free to my house?”
As the world comes out of the pandemic, 50 percent of U.S. consumers surveyed indicated that they consider fast, free delivery “very important” when they choose the retailers and brands with which they will shop.
For example, online grocery — the poster child for pandemic spending shifts — has remained steady, and continues to be as relevant as it was during the pandemic ... with no sign of slowing down. In a webinar discussing this research and key consumer shopping behavior, Caroline Massullo, vice president, head of e-commerce marketing at Peapod Digital Labs, indicated that the “nice to have” of next-day delivery in late 2019 has evolved into an expectation of two- or even one-hour delivery window services in metropolitan areas.
Let me be clear, this research doesn't indicate that consumers are unwilling to shop in stores. In fact, The Wall Street Journal reports that apparel retail foot traffic has now rebounded almost to the point of pre-pandemic levels. It does, however, make clear that consumers expect the convenience and ease that retailers rushed to provide during the pandemic to continue in the months to come.
“Returns should be easy and free, as they have been the past year.”
Nearly half of U.S. consumers say that easy, free product returns for online orders are “very important” to their shopping decisions. Yet, with the NRF estimating that total returns accounted for $428 billion in lost sales last year for U.S. retailers (nearly an 11 percent return rate), the hit to retailers’ bottom lines continues to rise. Shoppers rapidly shifted to spend online in the past year, thus retailers rushed to strengthen their e-commerce infrastructures. However, the increase in online returns many times results in products coming back damaged, soiled or otherwise unable to be restocked, deeply impacting warehouse operations, as well as margin.
As brands work to provide free and easy returns, physical stores can be leveraged as a convenient point of return where the potential for upsale and more hands-on services is possible.
Last month, at the Future of Everything Festival, Erik Nordstrom, CEO at Nordstrom, said, “Having interconnected and synergistic capabilities are growing in importance. Returns are a great example of this synergy. Returns aren't something to manage down to zero, so we look at how we can make the return experience where it is a synergistic part of our ecosystem. Over 60 percent of our Nordstrom.com returns come back to our stores. Over 80 percent of our Nordstrom Rack returns come back to stores, which is good for us and efficient — it's another connection point.”
“I expect one brand experience and the same products wherever I want to shop.”
Consumers want the same brand experience and single, accurate view of product availability regardless of whether they're shopping on mobile or in-store. More than a third of U.S. consumers find the ability to view and purchase the same products across online and offline channels “very important” when determining with whom and where to shop, with another 17.4 percent saying that it's “somewhat important” to them.
“After a 2020 riddled with inventory challenges and missed customer expectations, shoppers are demanding a better ability to understand product availability before they buy, including size availability, price matching, and a far more joined up experience between site and store,” said John Squire, president of market and merchandise intelligence platform Edited, in our discussion about the need for inventory flexibility in 2021. “The common focus across brand leaders is being able to nimbly keep pace with changing customer behavior while keeping ahead of the relentless push from competition.”
It's also important to note that when the features were broken down further by age demographic, more than 34 percent of U.S. consumers under the age of 45 ranked buy online, pick up in-store (BOPIS) and curbside options as “very important” over the ability to view and purchase the same products in-store and online. Therefore, the retailer service offerings and customer adoption of those conveniences spurred further along during COVID will continue to be the expectation moving forward.
You can’t be all things to all people, invest in every service offering at once, and expect to remain profitable. So, what's a retailer to do without a crystal ball? In three words: Ask your customers. There has never been a more direct relationship between brands and their customers. If you’ve been paying attention to customers’ needs for the past year and a half, then you have the relationship and the data to understand them now, as they consistently shift their mindsets and shopping behaviors in the months ahead. Whether it's by way of their survey responses, their data, or their actions, your customers will guide the way.
In order to maximize the appropriate breadth of features offered and continue to be profitable, retailers have to place the customer at the heart of their decision making. Harnessing the power of your valuable first-party data allows you to assess your core (and most profitable) customers’ mindsets. It will guide you to know what truly moves the needle for your business and help in creating agile infrastructures to support it. Retailers need to be armed with multiple (data-backed) plans for success to not only overcome the unforeseen challenges, but also provide the surprise, delight and convenience consumers have grown accustomed to and deserve.
Sarah Engel is the chief marketing officer and chief people officer at January Digital, a digital leadership company that solves business challenges through media, analytics, and strategic consulting.
Related story: The Year of Agility: No New Normal
Sarah Engel serves as the chief marketing officer and chief people officer for the digital leadership company, January Digital, a company reimagining how brands and retailers rapidly grow and adapt to evolving consumer shifts and changing market conditions. The strategic consultancy and full funnel digital agency identifies and solves the most difficult marketing challenges with connected data, technology, digital strategy and award-winning media execution. With more than 20 years of marketing, communications and human resource management experience, Engel came to January Digital from fashion brand Lilly Pulitzer, where she served as the vice president of marketing and creative communications. She has held executive roles at consumer brands, media agency and retail technology companies, and serves on the advisory board of Shoptalk and advisory committee for NRF Next.