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Blog: The Two Words You’ll Be Hearing More of in 2021 Retail

January 12, 2021  |  REINT JAN HOLTERMAN

The 2020 holiday shopping season was profoundly different from what we’ve seen in recent years. As people around the world were forced to shop online due to shutdowns, customers discovered new features such as click-and-collect, curbside pickup, home deliveries and ordering via a mobile app. These discoveries impacted consumer loyalty big time! 

While exploring new digital ways to conduct their shopping trips, many consumers tried out new brands, since they were only a click away. Research by McKinsey tells us that 40% of consumers tried new brands during the pandemic, and only a meager 12% (!) indicated that this holiday season they would stay true to the same retailers and brands they bought from the previous year. These numbers are unprecedented and show the huge impact of the pandemic, in particular on those retailers that have not yet invested in personalization and consumer engagement.

More advertising may not be the answer 
How can retailers cope with this situation? Traditionally, when confronted with declines in brand loyalty, retailers respond with increasing advertisement efforts to lure consumers back to their own brand. However, due to COVID-19, things are fundamentally different: it’s not just that consumer behavior has changed; end-to-end consumer journeys have completely evolved. Due to shutdowns and other restrictions, people have grown accustomed to shopping online, and the shopping experience behind a laptop in the kitchen is quite different from walking into the ambience of a physical store. And the experts agree that most consumers will continue to shop online more often, even after the pandemic is over.

Reduce friction in consumer journeys
Many retailers are already catering to this “new normal”. They have invested in supporting and streamlining new types of consumer journeys, in particular paying attention to reducing last-mile fulfillment frictions, which became a hot topic mainly in Grocery over the last few months, as evidenced by moves from Tesco, Amazon, Target, Walmart but also Myer Australia.

In situations where people do visit a store, they expect fewer interactions with staff and overall reduced time spent in-store. Streamlined journeys can be achieved in-store by digitizing the experience, enabling low-touch (or even no-touch) self-service journeys that optimize in-store shopping by removing friction as much as possible and, in the end, also lower TCO for retailers.

Focus on offers and engagement
According to Forbes, offering frictionless shopping journeys with extra attention for delivery and returns, while also keeping a keen eye on promotions, is the way forward for retailers as we embark on the new year. In addition to last-mile fulfillment, promotions deserve a fair amount of attention, since price comparisons can be made much more easily when shopping online. Consumers are more likely to do their research online to find the best products at the best prices. It is now, much more than ever, about pricing, rewards, consumer perks and so on—the tools that can help win over new shoppers, and ensure they come back again if the experience was great and the price was right. 

I found the ‘UK Grocery Promotional Report’ (September 2020, by Edge Ascential) to be an interesting read; it states that promotions are increasingly used more strategically by retailers to manage demand, drive value perceptions and foster consumer loyalty. The report found that during the month it studied, roughly one-third of the assortment in leading UK grocery stores was on promotion, up about 2% compared to the month before. This is likely caused by the COVID-19 disruptions in the first half of 2020, which in turn led to changing patterns of consumer demand.

Smarter ways to communicate with consumers going forward 
In the online shopping world (even more so then offline), spot-on engagements with consumers are of paramount importance: you only get one shot to get it right! Nonetheless, consumers are still looking for a personal touch—especially as they shop online or in a store with less staff interactions—that makes them feel welcome, understood and appreciated. According to the same McKinsey study, 31% of consumers said social media might trigger a gift purchase during the holiday season, and 25% indicated personalized campaigns could initiate a purchase. 

The road ahead
Personally, I’m convinced personalization is a term that you will come across much more often over the next few months. The same goes for consumer engagement, e.g. personalized interactions with consumers via social media but also via in-store kiosks, self-service devices, digital loyalty and reward programs, and so on.

More than ever before, it will be the consumer experience that ultimately sets one retailer apart from another. Modern loyalty programs will be a critical tool for retailers to gather the information that will enable them to create personalized journeys which go beyond the “earn and burn” discount programs of the past. The structure of loyalty programs allows marketers to collect a variety of rich data from consumers, including information about consumers’ personal situation, behavior and preferences. By combining this data into real-time, integrated consumer profiles, retailers can offer relevant interactions at every step of the consumer journey. By connecting the dots between consumers’ online and offline (O2O) interactions, retailers are able to serve up real-time targeted promotions and smart consumer rewards such as coupons and personal vouchers across all channels—online, mobile, in-store or at home.

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