How COVID-19 is Changing the Retail Experience and What You Should Do Next

By Jeremy Johnson
VP of Customer Experience
projekt202

Arguably nothing since the rise of social and mobile has changed shopping like our current challenges around COVID-19.

I recently wrote about brands thinking through worst-case-scenarios. I can imagine anyone on a product team trying to prioritize their backlog based on a trend of 100% of their customers shifting to online (let alone a 20%+ unemployment rate) not getting very far until last month.

Currently, we’re seeing a 40% jump in e-commerce with a 108% YoY growth, but much of this is due to the “essentials” categories, where they’re seeing sales drop by 40% — 60% for “non-essential.” It’s the triple hit of behavior change, consumer confidence, and in-store traffic.

  • Online-only companies like Away are getting hit with a 90% drop in sales because no one is traveling. So, while they’re positioned well from a channel perspective (mostly online), the change in behavior has devastated anything having to do with travel. Same for Rent-the-Runway, when no one needs to look that good going from the bedroom to the kitchen. Contrast that with Nike, who embraced the new love of the outdoors (get me out of the house!) and saw a 30% increase in their digital business in China during COVID-19.
  • Everlane could be a good example of a mostly online retailer that is arguably positioned well for this new COVID-19 world. The CEO wrote that a recent campaign had a +4% sales vs. the pre-COVID expected +32% — not as good as expected, but in the black. The problem is, consumer spending is down and, looking to China, it’s hard to tell when it could be back. Everlane has its challenges, but they have a strong following and a strong online channel.
  • Traditional retailers have a daunting task here. Some have been investing for years. Target, which in 2017 announced a $7 billion investment to adapt to evolving guest preferences and included “enhancing digital experiences,” has seen record-breaking app downloads, with daily downloads doubling to 50,000 per day (assuming Target — with the combination of good digital channels; its partnership with Shipt, who is also doing well; and essential products — is one of the retailers seeing that 40% jump in e-commerce sales). Now, think about the retailers that were not investing in digital channels: Yes, it sounds sacrilegious in this day and age, but there are a number of retailers that don’t have their digital channels in order. Obviously, that needs to change if you’re looking to survive.

Forbes writes how the 2003 SARS epidemic in China spurred the move to online, and the resulting success of Jing Dong Trading and Alibaba. Innovation happens quickly during adversity.

So what’s a retailer to do?

While I don’t have a crystal ball, this is what I’d consider:

  • Find where you fit within this new behavior change.
    TechCrunch has an article titled, “Even in the age of COVID-19, you need to stay focused on the customer” — I couldn’t say it better myself. There are numerous ways to create a more holistic view of your customers and their changing behaviors. You need to answer the question “Where does my brand/product/service fit within my customer’s life?”
  • Watch for permanent shifts in channels.
    Once people get accustomed to using something new, like the doubling of downloads for the Target app, there is a good chance they may stay. I’ve personally upped my usage of Amazon Fresh, even with my local Target being a bike ride away, and I can see myself using it more after COVID-19.
  • Omnichannel, however passé, matters.
    Think about a transparent, experience-driven brand experience that blends loyalty, service, products, and lifestyle. Customers should be able to interact with you everywhere at anytime — and customers shouldn’t notice all the behind-the-scenes technology challenges. The experience is the only thing that matters to them.

Last, should you be investing now?

Harvard Business Review studied a number of large organizations during a downturn and 14% of them actually accelerated growth and increased profitability. The three things that stood out were companies that:

  • Looked for opportunity
  • Acted strategically in how they could better serve their customers
  • Invested in products and services that helped their best customers when they needed help the most

Sounds like solid advice to me.

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projekt202 is the leader in applying experience strategy and observational insights to the design and development of mobile, cloud, web and workplace software.

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projekt202

projekt202

projekt202 is the leader in applying experience strategy and observational insights to the design and development of mobile, cloud, web and workplace software.

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