Digital trends in a changing retail industry
By Simon Brosolo - October 1, 2020
It’s never been quite this complex for retailers battling it out in an already competitive market. And while it’s difficult to know what’s around the corner, the data has made one thing very clear: retailers have every chance of continued success if they remain agile to changing consumer needs, where digital is becoming more and more prominent.
In this piece, we’ll be diving into how COVID-19 is impacting retail and what your business can do to thrive during unprecedented times. We’ll cover:
COVID-19 has accelerated the shift to digital, and your business can be futureproofed by selecting and implementing the right digital tools. Our focus throughout the pandemic has been on providing our clients with data-backed strategies to adapt and overcome. So what exactly is going on in the digital world?
The growing trend of consumers turning to digital for their goods and services was expected to continue, but no one could have predicted what has occurred as a result of COVID-19. Consumer behaviour has been forced to immediately change, driving a decade’s worth of eCommerce growth in the space of a few months.
So the questions become: what can your retail business do to connect with consumers as the world continues to seemingly change overnight? How do you build a strategy that is agile and flexible? Based on the initial course of the pandemic and existing eCommerce trends, here’s what you need to focus on:
When business is bad and cost-cutting essential, sales and marketing are often the first to go. However, history tells us that this may not be the best strategy. Post the GFC, e-commerce rode a four-year boom. When things return to ‘normal’, it’s likely the brands that double-down on their marketing efforts to grow awareness will enjoy the greatest yield.
But the expectations on brands are changing. Now, more than ever, consumers expect brands to act responsibly and with integrity. Maintaining consumer trust in a time of crisis requires tailored messaging, as brands seen or felt to be opportunistic will not fare well. In times of turmoil, it’s the brands that connect with us that we become loyal to.
But it’s not as straightforward as throwing together a ‘COVID’ campaign and watching your engagement grow. It is, however, a perfect time for brands to highlight their values, and live them. It’s critical that you understand your customer and their needs during the crisis. Investing in your brand’s content strategy will ensure you’re delivering the right message to the right audience at the right time. Here’s what you need to focus on:
Your customers’ needs should guide your messaging as you adapt. As a result of decreased discretionary spending, targeting the right person at the right time is more important than ever.
Research has revealed that more than one in three has used a new brand because of the compassionate or innovative way they have responded to COVID-19.
Retailers need to ensure they have a deep understanding of their target market and what they are experiencing as a result of the pandemic. Brand building activity should boost morale with content that’s empathetic, relevant and authentic.
Consumer research has revealed:
Maintaining or building trust during this time is critical. Don’t take advantage of the crisis, and if you make a pledge during uncertain times, make sure you’re able to deliver on what you promise.
To build and maintain trust, brands should:
Bunnings offer a great example as a case study. In response to COVID, they swiftly updated content across their website with positive, COVID associated messaging. Bunnings managing director Mike Schneider said on eCommerce that “It's often said it takes three months to build a new habit, and this seems to have legs… our patterns of living are going to change, and if that changes then what you buy and how you buy it changes.”
While it’s inevitable that post-lockdown there will be a return to some bricks and mortar shopping, one thing which is certain is that eCommerce will have (and will continue to have) more value for businesses and consumer post-COVID than before.
Social proof has long been a powerful method of building brand credibility, but the data shows us that customer reviews are now even more important:
During the COVID-19 era, consumers are seeking greater validation for their purchases, most likely because the crisis has forced many to buy certain products online that they’ve never purchased before.
It’s not a coincidence that some of the world's biggest companies were founded during the GFC, including Uber, Airbnb, Dropbox and Slack. Through adversity, there is always opportunity. Expect to see the same in the years that follow the COVID-19 pandemic.
While the economy slows, retailers have the opportunity to evaluate how they manage and market their business. To adapt and overcome, the message is: change your approach, not your vision.
More people are shopping online than ever before. And while the uptick may be driven by COVID-19, the impact on consumer behaviour could be permanent, with many claiming they’ll continue to shop online for groceries, toiletries, clothes and furniture even after the outbreak is contained. Despite this, many businesses have cut what they deem discretionary spending, slashing online advertising budgets. The opportunity is clear: more customers, less competition. It’s also a great time for new players, with the chance to grow brand awareness and become established while the competition is quiet.
Opportunities in paid advertising
Businesses have reduced online advertising budgets by ~20% YoY and most eCommerce sectors have seen a drop in average cost per click (CPC). While the natural inclination is to cut back on marketing and media spend during a recession, brands that maintain their ad spend will reap the rewards of more demand, at a lower acquisition cost.
Given the move to digital is likely to continue even after the COVID era, it’s worth reactivating any ads that you may have switched off and ensuring you have a paid media strategy in place to make the most of this opportunity.
Opportunities in eCommerce
Year on year, the Australian eCommerce industry saw a 31% increase in online shopping and a 68% increase in conversion rates. And the change is likely to be permanent, as many who were forced into shopping online as a result of the pandemic (possibly for the first time) have realised how convenient and simple it really is.
Retailers who invested in their digital infrastructure before COVID-19 hit have been able to better navigate the challenges that the global pandemic has posed. Sadly, many of those who didn’t have this capability or lacked the means to rapidly transition online have been left behind.
On the other hand, Shopify’s impressive growth is evidence of brands that have been forced to invest in digital commerce, with new online stores created on the platform increasing by 71% YoY. The relatively inexpensive transition to digital is keeping so many small businesses alive and optimistic about the future.
Retailers are in a position to capitalise on the huge growth in online shopping, but it’s important to be responsive to the changing needs of consumers. As a result of government-imposed restrictions, consumers want to engage with brands in different ways, including:
In fact, 86% of consumers will spend more if a purchase entails a more engaging experience. What is perhaps most exciting for retailers is that a Walker study found customer experience will overtake product and price as the key brand differentiator by the end of 2020.
If you’re looking two ways to improve the customer experience, here are some other strategies you might consider:
Augmented reality (AR) for eCommerce
Augmented Reality (AR) has a reputation for being clunky and often doing more harm to the customer experience than good. But things have changed with innovations from the likes of Plattar and others. 33% of consumers are more likely to make a purchase from AR-enabled product pages than those without.
AR empowers the consumer, and offers an experience that can’t be achieved through a regular store visit. Take for example the purchase of a coffee machine. With a few taps, the consumer can see how the machine looks on their countertop and they can flick through different colours so they feel confident in their final decision. Not only does this empower the consumer, but it also reduces costs and inefficiencies for you as a retailer. It’s truly a win-win.
Nobody likes sitting on hold. The shift from call centres to software-based customer service has been building for some time. Consumers want to use SMS, Messenger and chatbots to get in touch with your business when it suits them best.
Chatbots offer the consumer convenience and immediacy. On the retailer’s side, they also provide an opportunity to automate some of your more routine customer service activities, freeing up your people for higher value work.
With so many forced to transact online during the crisis, organic search data provides an interesting insight into consumer behaviour.
In early 2020, as more and more industries were affected by the restrictions, we saw reactive spikes in search, as more people switched to online sources for information and transactions they might normally seek offline. For example, a huge uptick in search for fitness equipment was reported across February-April as a result of gyms closing.
Yet trends that saw huge peaks also saw sharp declines as consumers became accustomed to ‘the new normal’. It’s more important than ever for marketers and business owners to identify which trends are here to stay, and which are simply a short-term blip.
Changing your content strategy in response to COVID
Not only are we seeing changes in the volume of search, but we’re also seeing changes in the types of content that results in clicks. Diversify your content strategy and ensure you’re producing content in formats that users find most engaging.
Video and image content continues to be in high demand. By 2021, the average consumer will watch 100 minutes of video per day. Type ‘exercise at home’ into Google and you’ll get a number of video tutorials, all before the first text-only result. You need to ensure you shape your content and format to match. For certain categories, like health & fitness, if you’re not using video to target your keywords, you’re basically invisible.
While not as strong as the trends in search, the pandemic has also driven an uplift in social media, especially in the e-learning and web conferencing categories.
And while it was always on the cards, the pandemic has accelerated the shift to social media as a genuine selling platform for retailers:
We’re in unprecedented times, but retailers have every chance of continued success if they remain agile to changing consumer behaviour. While the world has seemingly changed overnight, the impact of the pandemic will be long-lasting, and it’s those businesses that pivot their strategies and seize on opportunities that will fare best both now, and into the future.
If you’re looking for advice on the best strategies to help your business thrive during this time, please get in touch. We’d love to chat.
BlueRock Digital is part of the entrepreneurial advisory firm, BlueRock, a community of professional services businesses working together to find new opportunities to help businesses grow.
© Copyright 2019
All Rights Reserved. BlueRock Digital