When the pandemic began in 2020, the retail industry was forced to quickly pivot and adapt on, what was often, a day-to-day basis. Now, as we begin to see indicators of life slowly returning to (a new) normal, it’s imperative that retailers take time to understand any possible long-term effects in the way consumers spend.
In a recent presentation at NRF 2021: Retail’s Big Show — Chapter One, and subsequent blog, Andrea Bell, WGSN’s Director of Insight, addressed how consumers have responded to uncertainty and the possible long-standing ramifications of the past year. Bell posits that the shared experience of the pandemic has created two specific social shifts surrounding time perception and numbness, thus creating two new consumer identities:
- The Predictors: a consumer group defined by their approach of using all available information and making educated decisions
- The New Romantics: consumers who seek products and shopping experiences that will help them reconnect with their emotions, community, and regular daily rituals
While the events of the past year have certainly quickened the identification of these behaviors, they have been developing for a while. We’ve seen the behaviors that define The Predictors emerge throughout the years as information has become more accessible and subscription-based ordering more common. In fact, the ability to lease a Volvo completely online highlights the convergence of these two trends.
The behaviors that characterize The New Romantics are the same ones that sparked the eco-friendly movement within the fashion industry, the shift towards shopping at purpose-driven brands, and the rise of brands within the self-care space. It’s clear that one of the biggest lessons retailers can take away is that times of uncertainty will often accelerate underlying shifts in behavior rather than trigger all-new, long-lasting change.
It is essential that, during times of uncertainty, retailers develop a strategy that accounts for the difference between temporal consumer adaptation and a permanent shift in behavior. When consumers adapt to certain situations, this is most often a short-term change due to external circumstances. In contrast, a shift in behavior is driven by something internal and denotes a more long-term change. Due to the longevity of the current social and economic situation, it is likely that many of these adaptations do turn into long-lasting behavior changes. In a recent survey from McKinsey & Company, “three out of four American consumers have tried a new shopping behavior, and most intend to continue the new shopping behavior even after COVID-19 subsides.”
Furthermore, as we look to the year ahead, it’s crucial retailers prepare for reduced but continued consumer uncertainty. Increased consumer spending during the 2020 holiday season when compared to 2019 may offer an initial glimmer of hope, but consumer sentiment continues to point to on-going caution. Many Americans report they feel finances will not return to normal until the second half of 2021 or 2022. Ongoing financial concerns for many means that retailers need to account for two distinct buying groups—those who feel financially secure, displaying long-term behavior change; and those who continue to shop, adapting to their current financial situation.
For many shoppers, value will still be a top driver for product and brand selection. It’s important to note that value does not always mean offering sales focused around discounts; it can also include value-add promotions. In a time when consumers feel like things continue to be taken away from them, brands have a unique opportunity to create loyalty and emotional connection by offering more. Additionally, tying these value-add promotions to a loyalty program further nurtures the development of brand affinity and provides retailers with additional consumer data and insights.
Along with value, developing a true digital strategy and omnichannel experience is important for shoppers who are simply adapting to the current situation and those who have developed new behaviors. It’s important to note that an omnichannel experience does not mean simply having a website, even if you have a brick and mortar location. Omnichannel strategy means taking advantage of every communication and touch-point available in a way that makes sense for your brand and audience. Not only does omnichannel include brand-owned touchpoints such as email marketing, SMS, and social media, but it also means partnering with other sales channels so your brand can be found wherever consumers are.
So how do you craft a consistent and engaging omnichannel experience that will create loyal customers through all that 2021 is sure to throw our way? Tie your marketing efforts to a gift card. The gift card is your most versatile tool as a retailer—allowing you to create marketing strategies that support brand loyalty, added value, and an easier way for customers to say yes to your brand. It has increasingly been used to help families allocate budget for specific items, while still delivering your branding in a way that you, the brand, control. When you partner with platforms like Prizeout your consumers are even able to give themselves a little extra to spend when you add bonus value to your gift card. Studies show that consumers spend anywhere from $35-$56 extra dollars with gift cards; it’s a win-win.
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