How Customer Data Helps Reinvent Retail for Social Distancing
Out of the Covid-19 crisis, a new playbook is emerging for socially distanced shopping, one that may help retailers survive and eventually thrive again. But to have a chance at making it work, retailers need to understand their customers better and personalize their offerings more effectively than ever before. As a result, data-based decisions and processes will become even more central to creating a competitive retail experience.
The once aspirational goal of leveraging each shopper’s customer data is now a necessity as consumer behavior—influenced by harsh political, health, and economic realities—shifts rapidly. Brands and retailers using advanced martech such as customer data platforms (CDPs) are able to gauge willingness to buy and propensity to churn and adjust rapidly when necessary, both to capture new customers and to limit the loss of longtime loyal buyers.
The pandemic has shattered old assumptions and ways of doing business—forcing retailers of virtually all kinds to rethink the customer experiences they offer.
Rework the Customer Experience for BOPUS and MOPUS
With a dangerous pathogen on the loose, U.S. retailers are not only struggling to prioritize health and safety, but also rushing to find new ways of selling to customers who are worried about exposure. That requires fast, efficient shopping methods that allow for physical distancing, rather than encouraging customers to linger in stores or engage in unnecessary interactions with others.
What does this shift mean in practice?
- Ecommerce is ascending, as online ordering has become the primary option for millions of consumers during the pandemic. BOPUS (Buy Online, Pick Up in Store) and MOPUS (Mobile Order Pick Up in Store) surged in popularity: in-store and curbside pickup have provided a lifeline to retailers whose customers are wary of venturing into stores. Walmart, for instance, reported a 74 percent Q1 increase in online sales, largely driven by customers picking up orders at its retail locations.
- With states relaxing stay-at-home orders and lifting some restrictions on commerce, brick-and-mortar retailers are racing to implement measures that will ensure safety and make shoppers comfortable reentering stores again. These may include limiting the number of customers allowed in stores, offering free hand sanitizer, redesigning spaces to reduce crowding and suspending in-store services and amenities. And if retailers can only allow a fraction of their former customers back into the store at any given time, how can they attract and cater to the most valuable consumers?
As retailers revamp the customer experience, many are finding they need to retool their capabilities for a digital-first, safety-first retail landscape. Retailers are rushing to provide more robust online shopping experiences, while BOPUS and MOPUS curbside pickup may require improved inventory management and changes to store organization and operations.
For brick-and-mortar retailers, creativity may be required to provide an in-store experience that is safe yet appealing. For example, the men’s fashion retailer Suitsupply has devised a special plexiglass “safe shopping screen” to protect both shoppers and staff during tailoring sessions for suits. Such visible commitments to in-store health and safety may become vital tools for successful branding—and survival in the drastically altered environment of Covid-19.
Is the ‘Personal Touch’ History?
Perhaps most challenging of all, retail businesses will have to figure out how to delight customers in a post-Covid world. A safety-first approach to retail, with strictly regimented physical interactions, risks becoming sterile in more ways than one—impersonal and unsatisfying for shoppers, as well as less profitable for retailers who have more limited avenues for engaging customers and building loyalty. Meanwhile, customers are hungry for social connection and interactions that provide more stimulation than simply clicking on a “buy” button.
In response, new virtual and omnichannel experiences—especially those centered around social media—have the potential to fill the gap, enabling retailers to interact with their customers in a way that meets shoppers’ desire for personalized service, engaging activities, and interactions with actual people who understand their needs. If you can’t pack the stores, your best bet might be to create online buzz for products via Instagram, Twitter, or other social media channels.
Guided shopping: For many brands, personal interactions between shoppers and staff are a key means of engendering customer satisfaction and loyalty—yet this human touch is harder to supply in an era of socially distanced shopping. In response, retailers are devising new omnichannel experiences that enable customers to benefit from the human touch while limiting their physical exposure in stores.
Suitsupply, for instance, has complemented its in-store health measures with a new guided virtual shopping experience, in which salespeople help customers identify items they might like before they come to the store. When customers arrive, they find the clothes pressed, steamed, and ready to try on. This hybrid experience, integrating both online and offline service, keeps the in-person service integral to Suitsupply’s business model while providing a feeling of safety for the customer.
Similarly, wedding dress retailer David’s Bridal has responded to Covid-19 by introducing a Virtual Stylist program that connects shoppers remotely with its associates, rather than requiring them to come into the store. Shoppers can text with a stylist to receive advice or schedule a virtual appointment that provides personalized guidance based on the customer’s responses to a style quiz. As the company’s locations begin to reopen, shoppers will also be able to schedule a personal visit to a David’s Bridal store.
Live streaming: Live-streamed events have emerged as another avenue for retailers seeking to engage customers remotely in real time. In China, businesses such as the skincare product maker Forest Cabin and department store Intime turned to live streaming to maintain contact with their customers while their physical locations were closed during the country’s lockdown. Forest Cabin’s salespeople, for example, hosted live video streams that enabled customers to get skincare advice and buy products online. This initiative reportedly led to 20 percent higher sales in February 2020 than in February 2019, even though the chain’s 300 stores were closed for the month.
Augmented reality (AR): AR apps are also likely to grow in appeal for retailers, allowing them to simulate the kind of in-person interactions that are challenging to provide safely in stores at present. At the same time, businesses looking to go this route may have a wider array of options than they previously did. For instance, the AR app developer Perfect is providing beauty brands with free AR experiences, web subscriptions, and in-app product listings for its YouCam MakeUp app, which allows users to simulate trying on makeup and access one-on-one video chat sessions with a professional makeup artist. Other brands, such as L’Oréal, have created in-store VR experiences for limited audiences on an appointment basis, even before Covid.
Data-Driven Adaptation for a Socially Distanced World
By necessity, retailers are embracing a multi-pronged, omnichannel approach to survive Covid-19. But to deploy all these tools with maximum effectiveness, retail businesses of every size will have to make effective use of their customer data for personalized customer journeys that add back some of the one-on-one, human-relatable elements of in-store interactions.
First, customer data analytics are a vital tool for navigating rapidly changing consumer preferences in an unpredictable time. Pandemic-driven shifts in shopping patterns have made it more difficult to predict what customers will want to buy. In just weeks, consumers moved from stockpiling essentials to purchasing office supplies, pet food and sporting goods, and demand for apparel plummeted as consumers found themselves spending their days and nights at home. At the same time, a shift toward ecommerce and BOPUS/MOPUS makes it even more essential for retailers to have the right products in stock at the time customers are ordering.
For retailers, data analytics can respond to this challenge with more accurate segmentation and more detailed insights into customer behavior. By drilling down into customer data, businesses may be able to better predict which items to stock in stores, so that shoppers are more likely to find what they want (and less likely to have to wait for products to ship). Such data-driven insights may help retailers adapt quickly as consumers sidelined by government shutdowns return to stores or resume purchasing certain kinds of products: for example, an apparel company’s customers may have different buying behaviors now than they did before the pandemic.
As retailers adopt more omnichannel, digital-first strategies—which require messaging, content, and interactions tailored to customers as individuals—data-driven personalization becomes more vital. How can retailers put such personal outreach to good use during the pandemic? Let’s look at some of the possibilities.
Increasing sales from existing customers: For retailers who need an immediate boost in sales, the best option in the near term might be to engage existing customers via email and online campaigns rather than devote scarce resources to bringing new customers into brick-and-mortar stores. Such campaigns require fine-grained personalization to create messaging and targeted customer journeys specifically aimed at a company’s most valuable buyers.
Driving secondary purchases: Normally, one of the great benefits of BOPUS is its ability to increase secondary purchases, as customers often make unplanned additional purchases when they arrive to pick up their orders. With customers less willing to enter stores because of Covid-19, targeted digital interactions could help brick-and-mortar retailers close the gap. For example, a BOPUS or MOPUS customer might receive a timed, personalized offer for related products as her pickup time approaches, inviting her to place a secondary order before she heads to the store.
Enhancing customer engagement: Data personalization can add another dimension to the customer experience as retailers seek to engage customers online and bring them back into stores. Personalized recommendations and content could augment AR experiences or live-streamed events, and data-driven insights could enable a retailer’s associates to provide more effective advice for guided shopping. In addition, brick-and-mortar retailers may wish to target different customers with different messaging about Covid-related health and safety measures, depending on their demographics and other characteristics.
New ways to encourage impulse buys: A significant number of consumers have turned to shopping as a stress release, with the average American spending 18 percent more on impulse buys since the start of the pandemic, according to a survey from Slickdeals. A personalized campaign might aim at encouraging such spur-of-the-moment purchases with targeted offers based on customers’ personal histories and attributes, as well as data on which products shoppers with similar profiles are buying more frequently than usual.
Clienteling: With some states and localities allowing limited in-person contact, clienteling—making in-person appointments with high-value, high-end customers—is also a possibility now. But whom should retailers pursue about this possibility? CDPs are well-suited to understand which customers are good prospects for this option, as well. Not only can they look at buying histories and customer loyalty program data, but a CDP can be set up to detect even subtle changes that indicate a particular customer is ready to make a major purchase or defect to a competitor.
In short, omnichannel personalization offers a powerful tool for retail businesses at a time when they are reconsidering virtually every aspect of the customer experience. As retailers double down on such personalized interactions, they need solutions that can extract useful information from data and take exactly the right action at the right time, based on a holistic view of who the customer is.
What Lies Ahead for Retail? BOPUS, MOPUS & Social Distancing Forever?
Barring some unforeseen breakthrough, retailers will likely be dealing with the pandemic and its consequences for months or years to come. Anxious consumers may hesitate to enter physical stores for the foreseeable future, let alone engage freely in the intensive in-person interactions that many brick-and-mortar retailers rely on to drive sales. Customer preferences may continue to shift in unpredictable ways as the pandemic evolves, and perhaps goes through multiple waves. And this situation could last as long as it takes to deploy a vaccine or game-changing treatment for Covid-19.
When the pandemic finally recedes, will retailers return to business as usual? That seems unlikely.
Customers will become used to new ways of shopping, new business models will emerge from the crisis—and insights from customer data will gain importance as retailers adapt to these changing conditions. Even as retailers do whatever it takes to survive in the present, the future belongs to those who plan for a transformed world.