Leaders across the retail industry are certain about one thing: The longer this crisis goes on, the more challenges and greater impact it will have on retailers of all sizes, in every subcategory. More than a third of financial leaders from consumer markets are saying it will take six to twelve months or longer for business to return to normal, and some believe it may take several years to get back to business as usual. While many have speculated about what the new normal is — because COVID has certainly changed the world — no one is sure. But there are a few things we can expect.
COVID-19 has acted as an accelerant to shifting consumer preferences and business models. People are using social media even more, shopping online in unprecedented numbers and seeking out purpose in their purchases. Retailers are responding with alternative delivery methods and more digital touchpoints across the shopping experience. In many ways the future of retail is arriving sooner than we thought — so what can we expect and what matters most?
What to expect now
Consumer markets leaders are faced with short-term financial decisions surrounding cost containment and liquidity. Consumers can expect to see a lot more promotions over the year, and unfortunately the industry will likely see more permanent store closures and bankruptcies. We also anticipate there may be more challenges in the supply chain as companies reassess operational resiliency — we’re seeing this for several major brands now.
The big question for retailers, particularly large ones, is what to do about Holiday 2020 when sales are typically the highest and more importantly, when most retailers earn the majority of their operating profits for the year. In a pre-COVID world, now is the time retailers would plan and buy for Holiday, and many retailers will have to make those buying decisions within the month to be prepared. This means retailers will make decisions without a lot of clarity on the future.
Where are the opportunities? Brands, now is the time to act
Brands have so many human connection opportunities and places to pivot that they could actually come out of the COVID fight swinging. To be clear, closures and layoffs are not good news — there’s no way to spin that. But it is time for brands to look at areas of the business that need improvement — marketing strategies, supply chain diversification and planning for the moment stores do open. For those businesses that were wavering on making difficult decisions, this crisis leaves them with no choice but to act. If ever there was a time to move with urgency, it’s now. There is no time to waste.
From a consumer perspective, there is also a marked uptick in time spent online and social media use — brands can engage with consumers in effective storytelling strategies, building and maintaining affinity even when consumers’ buying habits change. Our research shows that consumers are 50 percent more willing to try new brands at this time.
This is also the time for brands to show consumers who they are. Brand personality matters more now than ever. If the virtual happy hours and surge of live streaming videos on social media means anything, it’s that people are craving and will find human connection. Brands can help meet that need by showing their human side and the people surrounding the business. Also, consumers are likely to come out of the cloud of COVID expecting more from brands and people — the rise in kindness and empathy has been nothing short of inspirational.
There’s no doubt these are uncertain — and for many — challenging times. But if retailers can react with focus and purpose, some may return with stronger operating models and a more personal relationship with their customers.