February 2, 2021 — Published, Thoughts
Shoppers may be shifting away from cities, shopping centres and high streets, but here’s how big retailers are creatively coming up with new solutions to lure them in.
At the start of 2021, shopping is no longer the carefree pastime it once was.
A light, aspirational experience has grown heavy with tension as Covid outbreaks have resulted in masks and sudden lockdowns. Visiting stores has become less attractive.
As 2021 began and many settled into continuing to work from home, stocks soared for companies such as Sonos, Spotify and Peloton, as people looked to improve their work-from-home experience. Here in Australia, Bunnings and Officeworks saw sales climb by almost 25 per cent.
The only thing that’s certain in 2021 is that consumers are moving away from cities, as the need or desire to dwell in crowded offices and retail spaces has evaporated.
In the first weeks of January alone, it was reported that 170 retail stores in Australia were slated to close in 2021. In the USA, Macy’s confirmed the closure of 45 stores, in addition to the 125 already in line to be shuttered by 2023.
While traditional retailers faltered, Facebook and Google stepped up their retail offering. Amazon further innovated with the introduction of an in-garage delivery program across more than 4000 cities and the launch of its Luxury Stores offer, promising a curated shopping experience with luxury fashion and beauty brands — available by invitation only. Oscar de la Renta was one of the first to launch its Autumn/Winter 2020 collection on the platform, and many have followed, dispelling the myth that high-end fashion needs to be retailed face-to-face.
With dispersion from workplaces, high streets and malls, brands are being forced to reimagine their services and experiences. And the brands that rose to the challenge are applying a skill big tech has used for decades: human-centred design. This is the process of using design research to deeply understand drivers of value for customers. These insights showed where to apply finite resources to maximum effect.
This matters because the one advantage retailers have is their relationship with customers, knowing what their customers care about, they can design experiences that feel more considered and more human.
This focus allows brands to cut away the waste of outdated services and reduce, almost to zero, issues of failure demand, where damage is caused by the friction created by travelling to stores, delivery costs, returns and complaints.
Having accepted that the purchase transaction is the domain of Amazon, Catch or eBay, the brands that triumphed understood the need to design new shopping moments that were inspirational, aspirational and emotional.
These brands stopped fighting for the transaction space and focused on brand experience. They did this because they understood the value proposition so clearly. This allowed them to boldly experiment and explore partnerships with artists, in ways that almost guarantee success, because they’re grounded in fresh human insight.
Creatively re-connecting with customers
Take Honey Birdette, a brand that saw profits go up 200 per cent in 2020, despite lockdowns. Why? Because knowing its customers intimately, it offered private appointments. Customers had the shop to themselves, reducing the risk of infection while increasing privacy and making them feel special. Now it’s rolling this out in 20 new international stores.
This combination of deep insights and the rapid experiment mindset used by tech start-ups meant winning brands could test new ideas quickly, validating demand with customers before spending a cent on costly launches. This fresh value demand allowed them to be braver than the competition.
Leading cosmetic retailer Mecca adapted by offering a FaceTime Virtual consultation where different products were demonstrated, and customers could select and buy.
Similarly, Woolworths’ Basic Box combined customer insights with service design by partnering with DHL and Australia Post to bundle essential groceries, delivered to your door for an allinclusive cost. Based on standardisation of the box contents, it included only ambient products, shifting picking to a warehouse and delivery of boxes via postal service, easing the fleet burden. And real-time bundling of deliveries based on credit card data meant if you’d bought from brands such as Mecca that day, all of your purchases could be delivered at the same time.
Each of these examples demonstrates a reimagining of the relationship and the design of a focused palette of adaptable services. By demonstrating they’re in tune with customers, they increased spend and loyalty.
The combination of human-centric business, deep customer understanding, clear brand ethos and the skilled design of datainformed service initiatives means smart retailers don’t need to invest huge amounts to fight tech giants. They’re using creativity to emerge brighter and sharper.
With the great dispersion still unfolding across the globe as the pandemic rages on, we’re yet to realise the full impact on the retail landscape. Yet we can already see that the winning retailers will adapt to use their spaces to express unique and personalised offerings, short-run items and bundled services. In doing so, they’re creating elusive money-can’t-buy experiences.
This article was first published on Inside Retail.