As I write this, retail sales for April plummeted and while there is a sliver of hope as the lockdown restrictions loosened in Level 3 it hasn’t improved the outlook much. If like me, you have eaten some takeaways and headed to your local café for a contactless takeaway coffee, often for smaller retailers, those dollars are barely keeping the doors open due to mounting costs.
Retail NZ says online retail sales are up 350 per cent under Alert Level 3, but overall sales are down by about 80 per cent on average.
This follows sales in Level 4 lockdown which were also down 80 per cent.
Greg Harford, chief executive of Retail NZ, said: "Sales across the sector have collapsed and, even online trading, which has been permitted since last Monday, is not delivering sales that will allow retailers to recover from the economic carnage of the last few weeks.”
It's incredibly tough out there, but Kiwis are fighters and they will make it back.
However, if we look at history and customer behaviour, we can make some educated predictions that can help you plan to accommodate changing shopping patterns.
It's incredibly tough out there, but Kiwis are fighters and they will make it back.
The madness so far and what it tells us
Never have I ever seen the centre of the supermarket (and frozen department) so invigorated. From flour and yeast to chickpeas and tinned spaghetti, frozen pastry and frozen veggies, shoppers stockpiled and hunkered down (yes I deliberately avoided toilet paper references).
Consumers have proven to be extraordinarily resilient, changing and adapting their behaviour in time of crisis.
We have seen recessions before and for many, the GFC is not that distance a memory. In Christchurch, the impact of the earthquakes also demonstrated changes in how people shopped.
Right now what we are seeing demonstrated is shoppers controlling what they can, because so many other choices have been taken out of their hands.
Shoppers are avoiding websites that might tempt them into unnecessary purchases.
Shoppers are already asking themselves before making a purchase, "Is this a smart use of my money?
Shoppers are cutting back altogether, uncertain of what their future holds.
Sure, shopper caution is high. There is a whole lot of other emotions going on as well that are impacting how they think, feel, say and do.
It’s going to be a tough balance. Some retailers are going to start dropping their pants with discounts to try to incentivise shoppers back. From trying to generate cash flow, to moving seasonal stock, the retailer has tough decisions to make.
Whilst there might be a quick release of money from pent up frustration at being homebound for so long, this will be short-lived. As with the GFC, we don’t want a repeat of “spiralling out of control” heroin of discounting, which is short-lived but changes customers value expectations.
Six motivations that will impact retail purchase decision-making from a crisis
1. Fear – The unknown: How long will we be stuck like this? Are we safe? I need stuff to make me feel safe.
2. Financial insecurity - Will I still have a job? I’ve taken an 80% pay-cut will it be more? I need to be making budget choices now before it’s too late.
3. Health and wellbeing – I’m worried about my health/safety, I won’t go out as much. I’ll buy products that protect me.
4. JOMO (Joy of missing out) – the recognition that I can live a more simple life. I’m doing it and it’s okay. I’ve saved so much money by not going out to restaurants/drinking at a pub/having 2 coffees a day – I am so proud. There is a lot to say for this lifestyle.
5. Cocooning and a rise of in-home consumption – getting comfort from products or activities that make me feel comfortable. Often linked to in-home consumption – eating nana’s apple pie recipe, eating hot popcorn with the family watching Netflix at home. Having an at home beauty spa. Recreating out of home habits at home – better coffee at home rather than the café.
6. Endurance – it’s been a long haul. The isolation was like a holiday to start with but the novelty has worn off. This situation is taking its toll. I need to focus on having a healthy mind, body and spirit. I might get more serious about cycling, yoga at home, meditation, eating clean, not consuming so much stuff.
Responding with the right retail solutions to meet these new needs
Every crisis in recent history has taught retailers an important lesson. To survive retailers need to attitudinally change as fast as their customers do. Acknowledge the situation and be there for the marathon, not the sprint.
1. Help your shoppers be responsible
This relies on you really empathising and understanding your customer vs. being driven by shareholder value. Sounds bizarre but it does work. Retailers should help their customers by demonstrating their understanding of what the shopper is going through. Staying in touch with them and supporting them with what the shopper “needs” at that point in time. Helping customers feel good about how they are spending and how that choice, right now is a great choice.
2. Make shoppers feel safe
A retail relationship should be for life (well in a perfect world). Giving customers (and your staff) care for their health and wellbeing is critical. This includes:
Making your retail environment convenient and safe (contactless and online shopping).
Reducing barriers for shoppers such as prepacking, allowing pre-ordering and prepaying seamlessly.
Establish clear guidelines for what constitutes a safe environment and deliver it every time. No excuses. And be in it for the long-run.
Be human and kind. This is still a highly emotionally charged time for customers and it will continue to be. They have a whole world of stress.
3. Lead your unique community
Many retailers are pulling back and going dark. Now is the time to invest in a consistent strategy for brand longevity and fostering on building your community.
Shoppers largely will be loyal, talk about and buy from those who care about their community. That means they don't want to only hear from you when you are pedalling stuff to buy.
That means sharing your Kiwi story about what you believe in, your products, philosophies and how to give back to your community. Celebrating who they are, their uniqueness and what they mean to you.
Practical stuff is also needed for your community of shoppers:
If you aren't there yet, this means developing and gearing up e-Commerce and Click & Collect ongoing, allowing you to be nimble and responsive.
Supporting and collaborating with other Kiwi retailers and businesses to create better solutions for customers (who would have thought of HyperMeat an awesome collab)
Develop product solutions that make the most of these new times; new home meal occasions, alone time, spoiling yourself at home, family fun, delivering good products for everyday lives.
Adapt your messages and offers to new need states and be flexible - this relies on you not being tone-deaf.
Creating shopping environments that amplify you and provide context so shoppers feel incredible that their purchase helped not only solve their own problem but helped a Kiwi business get back on its feet.
Kiwis are also incredibly proud of their country and their community. They are resilient but they are also human and their shopping behaviour will change – this will be the new normal. Buying local, staying local and celebrating local retail will be a key theme. To be part of that conversation you need to be on the customer radar and the timing might just be perfect for when big multinational brands get kicked to the kerb as other local retails can fill the void with incredible products and solutions that support our people and fine nation.