Faced with the crisis, trade places proximity at the heart of customer relations
For almost four months now, the world has been living with the Covid-19 pandemic. More than 4 billion people, more than half of the world’s population, are being called upon or forced to remain confined. This situation, unprecedented in human history, has obviously transformed consumer habits. Entire sectors have seen their turnover reduced to almost nothing overnight. The German department store chain Galeria Karstadt Kaufhof, for example, filed for bankruptcy protection in April. 28,000 employees are affected. Neiman Marcus, Macy’s or JC Penney in the United States, Debenhams in the United Kingdom… department stores are in turmoil!
Forced to travel, the consumer has logically refocused on local shops, particularly food shops. The use of Drive, Click & Collect or home delivery has taken off, causing an unprecedented lengthening of delivery times. As Amazon comes to the rescue of Deliveroo in the United Kingdom, the government has sent a list of vulnerable consumers to retailers so that they can be given priority and benefit from dedicated delivery slots. Faced with the closure of physical outlets, omnicanity is the law.
Moreover, the big winners of the “confinement” period are the e-merchants and especially the e-commerce giants, Amazon in the lead. The Seattle-based firm has just published its results for the first quarter of 2020. Its turnover increases by +26% compared to the same period last year to reach 75.5 billion dollars! In Asia, JD.com and Alibaba are also experiencing rapid growth in turnover. The number of sellers subscribing to the Taobao Live platform jumped by +719% last March!
Let us remember that the emergence of e-commerce is the consequence of a health crisis, that of SARS in China in 2003. Perhaps in ten years’ time, the world will remember the year 2020, which was the starting point for a new form of commerce – Live Commerce – at the crossroads of e-commerce and social commerce. Thus, a social network like Douyin allows Chinese people to buy from the application. There is no doubt that the explosion of live streaming in China since the beginning of the pandemic will give ideas to Western retailers at a time when the deconfinement poses major problems in terms of welcoming the public in stores.
Faced with these trends observed since the beginning of the crisis, observers are wondering. Will these behaviours continue or will a return to normal take place? Understandable, the question seems to be wrong. Omnicanality, e-commerce, home delivery, convenience stores… all these trends were already present before the crisis. The pandemic does not create trends, it accelerates them.
While countries have decided to relax the containment rules at the beginning of May, it is clear that if the Hermès store in Shanghai, which was robbed on the day it reopened, is removed, consumers will remain cautious. In Germany, the reopening of “non-essential” stores did not see customers rushing to the points of sale. Rather, the health measures put in place to welcome them in-store made it impossible to do so.
In fact, the question of customer flow is becoming crucial. While internet sales have brought a welcome turnover, retailers must quickly recreate a sufficient flow of customers to sustain themselves over the long term. To do this, they will be able to rely on a transversal trend at the beginning of this year: proximity. The latter has never been so present as it has been since the beginning of the crisis!
First of all, we need to talk about relational proximity. In recent years, the consumer has favoured the easy way out. Instead of moving around, they are buying downstairs, whether in physical stores (proximity, Drive, Click & Collect) or market places like Amazon. Why take his car to go to the mall located 45 minutes away by car if I can order on Internet and be delivered the next day. In fact, the pre-crisis trend was to change the format of the store. No more imposing flagships waiting for customers to arrive. Ikea Planning Studio in London, Nespresso Marais in Paris, Create by Obi! in Cologne… the year 2019 saw the opening of small, inspiring, human-sized points of sale located where customers live.
Faced with inevitable cash flow difficulties, shop-in-shops and brand corners should therefore flourish in 2020.
In France, the sports equipment brand Décathlon is currently opening corners in Auchan hypermarkets and Franprix supermarkets. The principle: if I can’t generate a sufficient flow of customers alone, I might as well do it together!
Strangely enough, we also find this need for physical proximity in the Live Stream phenomenon. The tool eliminates distances and opens up new sales channels to all sectors. Today, for example, more than 50,000 farmers sell their products directly to consumers from the Taobao Rural platform. Why is this? To sell their production to consumers looking for reinsurance and premises. We can therefore imagine that the crisis will make it possible to organize even more short and local circuits.
Current studies show that consumers will change their consumption, making it fairer and more responsible. Proximity is also psychological. How, in these difficult times, can we create a positive relationship with the consumer? Of course, brands and retailers are investing in the face of the pandemic, making a commitment to medical personnel and vulnerable people. At the reprieve, there is no doubt that consumers will judge and sort between those who have played the game and those who have not.
This commitment, which is sometimes self-serving, is reflected in the brands’ initiatives in the face of the risk of closure of many cafés, bars and restaurants. After Budweiser in the UK, Carlsberg is launching its #AdoptAKeg operation in Denmark to support coffee makers. From their homes and thanks to their purchases in supermarkets, beer consumers fill the kegs of beer in their favorite bars. In two days, more than 2,200 free kegs were offered to establishments across the country.
With the lifting of containment in countries, queues are appearing outside of stores. Videos of endless queues of cars waiting in front of McDonald’s drives flourish on YouTube in Belgium and the UK. Retailers will undoubtedly deploy virtual queuing applications. But how do you make customers wait before they enter the store?
The supermarket chain Monoprix has just launched a paper newspaper. Confronted with this problem on its return to France in 2014, Burger King had launched a game on its mobile application to help customers wait at the entrance to its restaurants.
Support can also be financial. Many retailers are currently using collaborative C2C delivery. The choice is above all rational. Confronted with saturation of their delivery capacities, French retailers are signing up with startups such as Yper or Shopopop. A solution that will last over time. It offers additional income for households affected by unemployment today and tomorrow.
Because make no mistake about it… the coming economic crisis will have a lasting impact on many households. By reaching out more and more to them, brands and retailers can try to minimize the impact on themselves. Physical and relational proximity are more than ever at the heart of Commerce!