There is no doubt that the pandemic has caused disruption in business as a whole, no matter the industry. But the retail industry was clearly hit harder than most and is likely to have a much harder time attracting customers back once we return to normal.
Not only have overall sales dropped across the board - from $5.47 trillion USD in 2019 to less than $5 trillion USD in 2020 and just over $5 trillion USD in 2021 - but on an individual basis, 60% of consumers are spending less on retail due to the pandemic, according to a recent survey of the retail industry and its consumers.
So how can retailers bring customers back once the pandemic recedes? More importantly, how can they bring back the loyal customers that are so important to steady revenue?
While many are turning to simply slash prices across the board, without a proper strategy, this will result in your margins being reduced to practically nothing and, if you do not keep those prices low, the customers you initially attracted likely won’t come back.
For retailers, it is a race to the bottom, and unfortunately, you might win.
Consumer Expectations Have Never Been Higher
If retailers are looking to bring back customer loyalty rather than just bringing back customers in the short term, they need to take a look at what consumers truly desire from their retail options.
A recent study from XCCommerce shows that:
- 77% want coupons and vouchers provided by retailers
- 72% of consumers want more offers from retailers
- 69% make promotions the reason they bought from a retailer
- 62% are loyal to retailers who offer promotions
- 62% want targeted offers
More specifically, when it comes to what those consumers are looking for in offers from retailers, it is clear that expectations have risen and will continue to rise post-pandemic. Today’s consumers want promotions that are exciting and unique, something that stands out from the numerous options available. Access to VIP events, new product launches, support for local charities, or the opportunity to meet brand designers are all examples that create a ‘wow’ experience for your customers and make them want to return. In addition, they also expect promotions to be changed regularly, personalized, and appear across a vast range of channels.
This is especially true of the younger generation of consumers, who are now seeking discounts in many different formats than before, such as through push notifications from a retailer’s app (24%), through SMS messages from retailers (20%), and via TV advertisements (21%).
Not only do they desire a variety of channels to make their purchase, but they expect to be able to use more than one channel for a single purchase, as 73% of consumers are using multiple channels to shop in a single purchase in 2021.
This increased desire for promotions has led consumers to spend more time researching offers and promotions than ever before. 32% of those surveyed in the recent study from XCCommerce indicated that they now spend more time researching offers and promotions than they did a year ago, compared to only 8% who say they now do less research.
This pace of change is unlikely to stop or slow down any time soon, and therefore, retailers need the technology they use to be adaptable to account for any further changes in consumer behaviors and still be capable of delivering what they need to have a competitive edge in today’s market.
Technology Has Never Been More Varied
Another major area of change in recent years within the retail industry has been the technological changes, as retailers are finding new solutions available to them every day. As a result of this technological innovation, business is being done on more channels and through a wider range of access points (traditional shopping, e-commerce, using an in-store terminal, etc.) than at any other point in history.
One instance of this has been the surge in e-commerce in recent years, which has been accelerated by the pandemic. But we have also seen a surge in m-commerce (purchases made on mobile devices) as it soared from under $1 trillion USD in global m-commerce sales in 2016 all the way up to $3.56 trillion USD in 2021.
Retailers need to account for this by finding a promotion management solution that is agile and flexible; which will allow them to adapt to the numerous changes we’re experiencing in the market, such as the swath of channels it needs to account for.
Tackling The Added Complexity In The Retail Industry
As retailers continue to watch change unfolding before them every day, and they continue to plan their retail strategy within this added complexity, it all adds up to promotion management complexity that is far beyond the current capabilities of standard processes and systems.
Failing to properly manage or automate these processes through a complex promotion management solution will result in serious effects on your ROI, as it adds costs to your designs and builds, inhibits the creation of promotions for new and emerging channels, and damages your ability to bring back the customers you need.
But by automating the core elements of a promotions system, you will require fewer resources and free up people to deliver more value to your organization and ultimately customers. Not only this, but your ROI will be sustainable because it is driven by cost reductions and the ability to grab market opportunities at greater speed.
With better insight into key data and the effectiveness of promotion campaigns, retailers can reduce promotions dependency over time, allowing them to develop new programs to drive long-term customer loyalty and sales by giving customers what they want.