What’s in a year?
For millions of people around the world, 2020 was a defining 12 months – marked by the rapid spread of a potentially deadly virus and the many ripple effects.
For retail, the global health crisis dubbed COVID-19 has mainly served to accelerate changes – such as the digital rise and comfort trends – which were already happening. But in doing so, the pandemic has created permanent and dramatic changes in the retail landscape.
Bold, bankrupt names like JCPenney and Neiman Marcus – who notably left their sprawling space in the once up-and-coming development of Hudson Yards in New York City – have dramatically changed their store’s footprint. And malls, with once-major flagship stores abandoning their leases, have been forced to get creative. fill holes the size of Macy’s and JCP.
Indeed, these trends are not entirely new – but COVID’s role in forcing retail to evolve frantically is undeniably an important part of the pandemic’s legacy.
In fact, study after study has already shown that most consumers have no intention of giving up their pandemic-induced habits.
“The behavioral changes triggered by the COVID-19 epidemic and social distancing have lastingly altered the very fabric of retail,” said Stacy DeBroff is the CEO of Influence Central, a digital marketing company and social media. “We have already seen a dramatic increase in dependence on online services, social media activity and online shopping. Psychologists have found that it takes 66 days for a habit to take hold, and changes in buyer behavior during COVID have been etched into a new normal. “
Baptism by fire
When the health crisis began to take hold in the United States last March and government mandates forced the shutdown of non-essential retail businesses, many fashion companies went into crisis mode.
A year later, what many now see as a rapid digital switchover, was actually preceded by a sudden realization on the part of many retailers that they had not communicated effectively with their customers for years.
“The big challenge most of these businesses had when COVID first took off is that they realized they didn’t know who their consumers were,” said James Thomson, former Amazon executive and partner. from the Buy Box marketing agency. Experts. “Some of them had a loyalty program, but they weren’t necessarily actively managing it. Some of them didn’t even have mailing lists or contact information for their clients. If you go all the way down to one location store owners, they probably had no way of contacting their customers because they didn’t know who their customers were.
The result, said Thomson, has been that many brands and retailers have been “excluded” from the ability to contact their customers. As retailers scrambled to find ways to serve consumers who literally couldn’t walk into a physical store, they also scrambled to communicate these new plans and services.
In the meantime, a cash shortage resulting from the temporary closure of their physical spaces and a lag in the shift of resources to digital has pushed a number of department stores (and other brands and retailers) to the brink. from the Cliff of Chapter 11. – JCPenney, Neiman Marcus, J.Crew and New York & Co parent RTW Retailwinds among them.
Elsewhere, social media – where consumers with cubicle fever were spinning at a rate that easily eclipsed screen time before the pandemic – was naturally becoming an essential tool for retailers looking to move forward.
According to DeBroff, the pandemic led to an increase in direct social media purchases that persisted until 2021, with Facebook and Instagram leading the way.
“54% of consumers in 2020 purchased products directly from the shopping features of a social media platform, ”she explained. “Expect to see these numbers skyrocket in 2021.”
In fact, in a recent Influence Central consumer survey of over 700 consumers, 69% of consumers said they currently shop directly through Facebook posts; 34% indicated that they made their purchases through purchase links on Instagram; and 33% use scan links to buy.
Convenience on demand
Three to five years ago, retailers that offered services such as in-store online shopping (think retail service pioneer Nordstrom) weren’t just considered to be ahead of the curb, they were supposed to offer a premium offer that set them apart from the competition.
A year after COVID-19 and BNPL, contactless payment, curbside pickup and flexible payment options are table stakes.
“I call it ‘retail my way’,” said Beth Goldstein, executive director and industry analyst for accessories and footwear at The NPD Group. “This is [how I describe] these changing expectations [among consumers of] who are now able to get whatever they want, how they want it. “
At first, Goldstein noted, it was tough on both sides. Retailers rushed to increase the focus on digital and convenience, and consumers were crippled in their ability to acquire basic items like toilet paper – let alone a pair of running shoes.
“But once the retailers sort out the problems, these [services] became the [norm]: Do you want to go to a store and pick up your order or take it to the curb? Do you want to order online and have it delivered the next day? You can have all of these things, ”Goldstein added.
But even as consumer needs change rapidly – perhaps a sort of moving target for retailers – experts say the pandemic has also created fertile ground for new innovations to emerge.
“Companies that have quickly adapted to new consumer expectations for digital commerce and safe in-store experiences are the primary beneficiaries of the pandemic,” said Kim DeCarlis, CMO of PerimeterX, a provider of consumer security programs. applications. “They took advantage of the situation to push forward new approaches that could have stayed on the shelves for years, whether it was an integrated omnichannel approach to reach more customers or a new store design. with contactless interfaces that serve the consumer in a safe way. “
Consumers, meanwhile, have benefited from the increased convenience that “digitally accessible channels have brought them,” she added.
Additionally, shoppers – especially those who have been hit hard by the economic fallout from the virus – have become the beneficiaries of fashion companies’ rush to embrace flexible payment services such as those offered by Klarna and AfterPay. (Consumers may wish to remain cautious ability to get into debt using these services though.)
In fact, companies like these, Goldstein noted, have seen such momentum that they are starting to function as retailers themselves – launching large-scale shopping apps where consumers can purchase products from. their partner brands.
Meanwhile, as effective and creative communication of new products and services becomes essential, Goldstein predicts that tools like live streaming will become a long-term staple in the retail arsenal.
Likewise, Kristen Gall, president of Japanese e-commerce and online retailing company Rakuten, said there was increased pressure for physical players to be adept at harnessing technological tools to create a new kind of offering. experiential.
“Personalization will be more important than ever: Artificial intelligence, machine learning and algorithm-based content generation, as well as product merchandising will be the new surprise and delight for stores,” she said. declared. “It’s critical for retailers to refine this quickly to create a truly personalized experience for their customers, as they no longer benefit from human interaction to sell merchandise. “
“Today’s times are not about adaptation – rather [they’re] to start with a new slate and re-imagine what it means to serve customers, ”said Sharon Whiteley, CEO of sustainable footwear brand Harmony783. “People are more particular [about] what they spend and why. They are drawn to brands that resonate with them beyond the physical appeal or fashion value of a product.
Indeed, the fact that the global health crisis – which has had a disproportionate impact on minorities physically, emotionally and economically – has been juxtaposed with a national calculation on racial injustice is no accident. Corporate social responsibility and issues such as sustainability, diversity and inclusion have rightly been brought to the fore.
Brands and retailers have had to become more transparent about their efforts to drive meaningful change both inside and outside their businesses.
In other words: “The hype is out, the authenticity is in,” as Whiteley put it.
It will likely take some time for consumers to assess how effective corporate giving and messaging is and how well those efforts align with a genuine desire to support and uplift under-represented groups.
But, suffice it to say that a pandemic legacy is undoubtedly an increase in corporate social responsibility. Retailers are expected to continue to revise company policies related to how they deal working parents and minorities and will need to convey outward-facing messages that show where they stand on key issues as already seen in the multitude of Black History Month projects from businesses that were previously silent on social issues. (Forever 21 and Neiman Marcus are among the retailers this year to launch their first large-scale BHM campaigns.)