Here is the new normal of retail in the age of social distancing. Small business owners like Howard are scrambling to adjust their operations to meet customers’ delivery demands, while larger chains are closing stores to limit the virus’ spread and begging shoppers to buy online.
At the same time, consumers, reeling from the shocks and difficulties of self-quarantine, working from home and potentially home schooling, are more reluctant than ever to spend on anything other than food and household essentials. Large chains including already struggling department stores such as Macy’s and JC Penney are closed at least through the end of the month, as are bigger specialty brands like Nike and Apple. Taking a less optimistic route, fast-fashion player Uniqlo recently informed customers that its stores would be shuttered “until further notice.”
“Retailers will take a permanent hit these next three months—these sales are not going to be recouped,” says Larry Chiagouris, professor of marketing at Pace University’s Lubin School of Business. Last week, several industry associations including the Council of Fashion Designers of America, Footwear Distributors and Retailers of America and American Apparel and Footwear Association asked the U.S. government for help with the financial repercussions of store closures, according to a report in Footwear News. Many brands have stopped paying rent and halted shipment orders. Predictions from industry experts appear grim: Deborah Weinswig, CEO and founder of Coresight Research, a global advisory and research firm specializing in retail and technology, says she now expects some 15,000 permanent store closures in the U.S. this year—as of January 1, that projection was only 8,000.
“These specialty retailers that were already teetering and tottering—this might just be the totter,” she says.
Not all brands will collapse
Yet not all retailers are poised for collapse. Experts say those marketers that already have strong customer relationship management in place, the flexibility to adapt their supply chain, as well as a robust digital operation and the willingness to offer more services, will survive the pandemic and be better positioned on the other side. The current crisis will also change how stores think about customer connections and their store layouts—both in the e-commerce and brick-and-mortar formats—in the future.
“All retailers need to be looking at their operating model and what are the changes that need to be made to set the business up for future success,” says Michael Brown, a partner in the consumer practice of global strategy and management consultant Kearney.
Nearly all stores have slashed their marketing budgets to zero or nearly that, Weinswig says, as they try to cut back on costs. But brands are still trying—even harder than usual—to connect with customers through their own social channels and email. Of course, some messages are better than others at a tricky time during which brands can come off as self-serving, tone-deaf and too promotional.
There’s also a danger of appearing too desperate for dollars. Some apparel brands, like Brooklyn-based Ace & Jig, that have a big community following are trying to tap into those loyalists. An email from the brand, which also sells fabric squares for patchwork projects, last week read, “We are here for you,” and encouraged customers to share their patchwork creations on social media. An email from women’s clothier Madewell spelled things out bluntly before offering some hope: “Things are weird. But we’ll figure them out together.”
“Anything that smacks of looking like you’re exploiting the situation—talking about a great sale right now— is a bit over the top,” says Chiagouris. “The ones that will be most effective are the ones that recognize that tone matters and take a moment to customize the message.”
Experts also suggest brands try their hand at content marketing by adding more resources to their websites and offerings for consumers who are struggling. A former educator, Penny & Ting’s Howard, for example, is thinking of adding some home schooling suggestions to her website for those at home with kids.
“Brands and stores should be putting out content relating to their industry—tips for how people are now facing different challenges they’ve never had before,” says Juozas Kaziukenas, founder of e-commerce intelligence firm Marketing Pulse.
Stores should be using their websites as a content delivery platform—providing classes or video feeds as well as sales drivers, says Derek Fridman, associate partner of design at Work & Co, a digital-focused agency based in Brooklyn.
“Using a closed store as a content platform is something interesting to explore,” he says.
Customer connection is key
Customer retention will be easier for those brands that have already developed strong customer relations management and have a good handle on who their best shoppers are and what those customers like to purchase. Such brands should be checking their databases and reaching out via email, text or phone call to offer special services in a personalized way, experts say. Tea Collection, a children’s clothing company, sent out personalized emails last week that included a message signed by a store associate—such missives stand out amid the clutter of hundreds of sales from other brands.
“If you don’t have a good database of who your customers are, then you’re at an enormous disadvantage. There’s no way to reach them,” says Chiagouris.
The coronavirus pandemic will also change the way retailers handle their supply chain moving forward. Right now, most brands are canceling incoming orders if possible, though most spring and summer merchandise is already in stores or on the way. Shoppers, when they are ready to shop, should expect less stock in general in the future as retailers buy closer to season and keep less inventory on hand. Experts say that brands should also expect changes in consumer behavior as a result of such a lengthy home stay. Shoppers may be more focused on sustainability than before, with the idea of reuse, reduce, recycle and repurpose, says Coresight’s Weinswig.
In the meantime, marketers should be looking at what they can provide in the short-term to make customers comfortable purchasing.
“Foot traffic is going to be down considerably, and yet digital traffic is going to be up considerably, so the question is, ‘How can stores get in on that?’” says Kaziukenas. He notes that stores—beyond independents like Penny & Ting—that aren’t already set up for delivery and curbside services should not try to implement them at scale now, as it would be too difficult and expensive. Walmart, he notes, took years to develop its curbside pickup option. Kaziukenas instead suggests stores plug into existing platforms like Amazon Marketplace or Google Shopping to expand their digital offerings, or try Instacart for delivery.
“The short-term solution is what could be a way to plug into existing user traffic, and that’s basically all these platforms,” he says.
Retailers should be looking at what shoppers need most right now—ease of order—and adjusting their operations to answer that. Work & Co’s Fridman suggests brands think about things like pre-filled and packaged carts, both online and in person, particularly if a company can anticipate a customer’s product needs ahead of time. It’s about being “proactive” versus “reactive,” he says.
“These small gestures that are taking place will have larger ramifications around how we design commerce in the future, both digitally and physically,” Fridman adds, noting that things like brick-and-mortar store layouts and “open” and “closed” signs are “old-school.”
“This scenario, we will have to account for it in every new product we build,” he says. “Any retailer that is going to go through a redesign, a re-platform, or thinking about a digital strategy will need to think in a way that’s much more modular, flexible and scalable so they can adapt to these new models that we’re already pushing retailers to adapt to.”
