The COVID-19 pandemic has caused an unprecedented disruption to commerce and the retail industry. Retail sales dropped a record 16.4% in April according to the U.S. Census Bureau. Thousands of stores have been temporarily closed since March, and it looks like some may never open again. Consumer demand has fallen overall, and at the same time it has shifted toward staples (groceries and household goods), home entertainment, and home improvement items and away from fashion, luxury goods, dining out, and travel.
Interestingly, mega-retailers Target, Walmart, Home Depot, and Lowe's recently reported significantly higher digital sales -- to record levels, in fact -- yet saw hits to profits because of higher labor and operational costs. Kohl's, which has a smaller online presence and had to temporarily close its stores, reported a sales decline of 43%. There are, however, bright spots in the retail industry that indicate the news isn't all doom and gloom.
Innovative retailers -- both big box stores as well as small businesses -- have recently found clever ways to comply with drastically changed consumer demand and new government health regulations. In fact, there are many examples of retailers quickly adapting to this new normal and crafting proactive data segmentation strategies, expanding their digital offerings, and adjusting their processes in an effort to remain relevant and retain customers.
Here's a look at what some retailers have done recently to adjust their businesses to the changing needs of their customers during the time of COVID-19.
They've expanded digital offerings
Responding to the shift in demand toward comfy, stay-at-home attire, Off the Hook, a Montreal apparel and sneaker boutique, released a new, limited-edition collection titled “Stay Home: 2020” featuring new sweats and T-shirts branded with the collection’s name. Similarly, when online shapeware brand Shapermint noticed users searching its website for more ‘casual’ shapewear to wear at home, they introduced a selection of loungewear more suited to online meetings rather than in-person work events.
They've met customers where they are
Since shoppers are not coming into stores, some retailers have found ways to shift in-person interactions and services online with a focus on providing extra value. Sarah Akram Skincare is offering 20-minute virtual skincare consultations for free, or more in-depth 30-minute virtual skincare consultations for $50, both as a lead to online product purchases. Similarly, home furnishings retailer West Elm is offering interior design consults by video, phone, or email as a way to stay connected to its customers. Nike stopped charging subscription fees for its Nike Training Club that gives users workout videos, training programs, and expert tips from trainers in an effort to retain customers loyal to the brand.
They've put customer relationships before the sale
Now more than ever, customers are looking for retailers that are doing good and are buying from brands that are sensitive to the COVID-19 crisis and actively supporting their communities. Adobe is giving higher-ed and K-12 customers of their Creative Cloud apps free “at-home” access for students and educators. Clothing retailer Zara is producing thousands of surgical masks for hospitals in Spain, where the brand is based. And men’s activewear brand Rhone is donating 10% of its proceeds to Direct Relief, a non-profit providing personal protective equipment to healthcare workers.
They've adjusted their processes to new regulations
Retail curbside pickup -- to socially distance and reduce virus transmission -- is now the “new normal.” Ironically, Best Buy had begun testing curbside pickup at select stores last Fall, but the pandemic accelerated the company's plans. What was supposed to take months took just 48 hours with Best Buy rolling out curbside pickup at nearly all of its locations in March. Another more familiar example to many of us is grocery store brands that have adjusted their hours to allow senior shoppers who are more susceptible to virus transmission to come into the store before the general population.
How can your business quickly adapt to meet customer needs?
It’s important to note what’s behind the ability of innovative retailers to pivot in a crisis: customer data segmentation. Customer data collected during purchase transactions, website clicks, email responses, etc., combined with demographic data like age, income, and location, gives you the ability to group your customers into hyper-focused segments. This provides invaluable business intelligence on your customer base, and these smaller, more-strategic customer segments help you produce more relevant and personalized messaging that truly connects with them and keeps them coming back to you for future purchases.
Peter Paine, head of retail partnerships at Cover Genius, put it best in a recent Q&A session with the Interactive Customer Experience Association:
"A retailer with a loyal customer base will find that their customers are reliant on them for their goods and services and continue to spend even in a downturn. These are difficult times though, so an extra layer of sensitivity is needed when marketing to your customers. Understanding what problems your customers are faced with now and tailoring the right messaging and offerings around exactly that will help them understand what their favorite brands stand for and build deeper, stronger relationships."
Customer data segmentation is important during ordinary times, but even more so during challenging times like the one faced by retailers today. Now more than ever, it's critical that brands possess a firm knowledge of the shopping preferences and behaviors of their customers at a micro-level and identify inflection points where you can change the trajectory of a shopping journey, resulting in a more relevant customer experience.
