Yesterday, March 23 marked one year since our UK Prime Minister, Boris Johnson, declared the first UK-wide lockdown to control the rapid spread of Covid-19. As we speak, we remain in our third lockdown. Only “essential” retailers’ doors are open. This changes in 19 days time when the High Street should come back to life with the reopening of all, even “non-essential” retailers.
According to research from PwC and the Local Data Company, 17,532 chain stores closed down over the last 12 months, while only 7655 opened up – equating to 48 stores closing every day. We’ve lost TopShop, Miss Selfridge, Debenhams, Laura Ashley, Cath Kidston and now Paperchase looks like following them.
According to the ONS, total UK retail sales volumes in 2020 fell by 1.9 per cent compared with the previous year.
Thriving, surviving and hanging on by the skin of their teeth
The above figures hide a mixed bag of performances. Essential retailers such as grocers, with the advantage of being open throughout the pandemic, both online and physically, have witnessed a huge rise in demand.
Retailers who already had a strong digital proposition in place when Covid first hit such as Asos.com, have thrived. They added 3 million new customers in 2020 and grew their sales by 19% worldwide (and pre-tax profits by a staggering 329%). Not only was Asos geared up to operate solely online, but it quickly pivoted its offer towards more activewear to meet the demands of people ‘locked down’ at home.
Other retailers had the foresight and flexibility to quickly shift elements of their more traditional operating models online and have survived well over the last year. John Lewis have introduced video chats with customers, mini stores within Waitrose stores and other ways to remain engaged with their customer base.
For the remainder, who have little or no ecommerce channel, like Primark (reported to have lost out on £1.1 billion sales over the last 6 months), April 12th can’t come soon enough.
On-line won 2020; should retailers still have a bricks-and-mortar presence?
According to IBM the pandemic has accelerated e-commerce adoption by up to 5 years. Evidence from the ONS confirms that online sales soared in the UK by 46% year on year to represent 33.9% as a share of all retail spending. Some sectors have seen huge swings from offline to online sales, including fashion and consumer electronics.
Last week we heard how Thorntons, a business that was founded 110 years ago in 1911, has seen a 71% rise in online sales over the last year and now plans to permanently close all of its 61 UK stores with the loss of 603 jobs.
In recent times, Thorntons has arguably focused on the product or the chocolate, rather than the experience, be that online or traditional bricks-and-mortar stores. Certainly, its focus on the overall customer experience has been less intense than newer competitors like Hotel Chocolat. Hotel Chocolat has built a model that doesn’t depend solely on the store, which itself has become more of a place to show case its products than to transact. It has partnerships in place, a subscription service, a more diverse product range, clearer, more premium positioning – its sales grew by 11% in 2020.
Online or offline, retailers need to focus on delivering the best customer experience aligned to the most relevant brand proposition.
What prevents retailers from thriving?
In our work, we see four things lacking in those retailers who are fighting for survival vs. those who are thriving:
- They think that the retail customer journey begins later than it actually does – online research increased in 2020, with 84% of shoppers using online sources to support their purchases, vs. 76% in 2019. Customer journeys happen before, during and after the experience of the product or service, not just when the customer gets to the point of purchase in store (physical or digital).
- They don’t know what their customer’s triggers or the catalyst for the start of their journey, are – linked to the above point, many retailers don’t fully understand their customer’s triggers. If they did, they would be able to engage earlier and in a more relevant way with prospects and customers.
- They don’t appreciate the nature of their customers’ journeys and have little focus on their customer’s outcome or objectives – this is a really important point. We often see that organisations don’t have insight into what their customer outcomes are i.e., what is the customer trying to achieve or their ‘lifestyle’ objective in engaging with a brand or service. If the organisation doesn’t understand this, how can it hope to align and improve its customer experience to achieve better customer outcomes?
- They believe that channels define the customer journey and focus too much on individual touch points – with all the talk of digital acceleration and the ‘death’ of the High Street, companies rush to build digital solutions as if the channel or touch point were the actual experience; it isn’t. The customer journey is defined by what the customer needs and expects in their interactions with the brand. The channel is the enabler. The choice of enabler; offline, online, and how the proposition is delivered needs to begin with the customer rather than the (technology) solution. Those who don’t then align the in-store and online experience, will struggle – particularly in current times.
How do organisations build greater resilience in their customer experience (for tough times and good times alike)?
Survival tactics need to begin with the customer and build the solution and strategy around them:
- Review and redefine engagement (and start early): around 70% of consumers globally say they get their shopping ideas from social channels, while 56% in the UK agree they have become as important as other media channels, according to recent research. Brand ‘discoverability’ is becoming ever more crucial and again – it doesn’t matter whether the customer journey is totally online, all physical or a hybrid of both. Brands need to make it easier for customer to discover them.
- Remove unnecessary friction and pain; this is not a new theme, but it’s more important than ever to ensure a consistent customer experience both online and in-store to keep the customer engaged.
- Humanize the online experience; the online experience has always been more transactional in nature. Some retailers are getting smart at finding ways to move beyond this and bring some of the best elements of the physical experience to the customer, for example interaction with staff, browsing aisles and getting advice.
For example, Mac launched virtual appointments with customers (akin to the instore ones) in September 2020 and have seen that 70% of the customers who received advice remotely then moved on to a physical store, proving that real, remote personalised service can channel traffic for brands when stores reopen.
Another example is Dixons Carphone with its ShopLive service launched in April 2020, connecting customers to technical experts located in stores to provide access to personalised shopping advice from their homes.
- Elevate the physical experience into an ‘experience’. Customers look for different things in the physical experience. It’s more personal, social and interactive. Retailers need to give customers a real reason to come into store now that they’ve had a year of getting used to shopping almost solely online.
- Focus on what your customers value most – their needs and expectations: I sound like a broken record but don’t listen to what you hear most about but focus on what matters most to customers. These are often different. Importance outranks frequency.
- Focus on mapping, diagnosing and improving your top 5 journeys: the customer journey is a window on the relationship that a customer has with the brand. There’s an 80:20 so establish and prioritise the top journeys (and the touchpoints and channels that they transverse) and deliver those brilliantly.
- Use this journey mapping to unite the organisation: silos are still going strong, but the time is right to chip away at them. Ironically, being remote and physically disconnected from one another, has appeared to bring departments closer through the use of Zoom and Microsoft Teams. To some degree there’s a greater visibility and appreciation of the imperatives and issues that other people have within the business. Use the rich, deep customer insight that the journey maps contain to tell the customer story across the organisation. Educate and engage so that everyone can see that they have a role to play in delivering the customer experience and what that experience might be.
Across England we’re all ready for April 12th , when we feel like we’re being let loose. Some citizens will be more cautious than others, some will retain the newly established shopping habits from the last year. When we reopened after the first two lockdowns, people’s desire to visit their favourite stores was undiminished, even heightened.
Retailers need to integrate their customer experiences around their customer’s journey and keep up and in tune with these journeys as they inevitably and continuously evolve. If they do this proactively, they will build more resilience and become one of the thrivers, not just a survivor of this dreadful pandemic. When the next ‘normal’ comes, journey focused companies are more likely to be those that we can label – ‘Smiling Companies, Happy Customers’.