Covid and Brick-and-Mortar Retailers

 Vox recently released an article on the decline of department stores. It paints a grim picture and one we’re all too familiar with. Are department stores (and other brick-and mortar retail establishments) truly doomed to a slow and painful death, or is there a chance of rebirth? Brick-and-mortar business marketing experts Zenreach think so. 

Perhaps it’s time for department stores and other brick-and-mortar businesses to take a page out of the e-commerce marketing strategy playbook if they want to survive.

John Kelly, CEO of Zenreach says, “Certainly. New technologies have developed, like the one that Zenreach has built, to enable department stores to understand who is browsing in their locations—not just the demographics of who is in the store, but in many cases their identities. With that level of understanding, department stores can now do hyper-level targeting and retargeting of those visitors. We have seen that offline retargeting—that is, the retargeting of users who have been to a retail store (as opposed to a website)—can be enormously powerful for retailers.”  

I had a chance to do an interview to learn more.

How might Covid affect brick-and-mortar retailers long-term?

 

The coronavirus has been incredibly disruptive for retail. Following a steep drop in retail foot traffic beginning in early March and reaching its lowest point in April, we saw a slow but steady increase in walk-ins from the period of mid-April through June, and we climbed back up to 50% of last year's numbers. 

 

However, from July to mid-October, we saw a flattening of retail traffic, and in the past couple of months or so we’ve observed some downward movement in the trend lines. Now, with coronavirus cases spiking across the country, it's clear that Covid-19 is something that we will all have to live with for another several months at the very least. 

 

In the long term, successful brick-and-mortar retailers will have to be able to implement advanced health and safety measures to assuage their concerned customers, communicate these health and safety measures to their customers, use data to identify and connect with their most frequent and highest-spending consumers, and maintain (or even increase) their online marketing spend to take advantage of lower advertising costs and record-high engagement.

Why must brick-and-mortar retail stores be flexible if they want to survive?

 

Being able to respond and adapt to the circumstances presented is critical for any business to survive in times of economic uncertainty.

 

Our most successful clients are the ones who have been able to pivot their business models to accommodate the restrictions imposed by the pandemic—they leaned hard into things like online ordering, delivery, takeout, curbside pickup, and ghost kitchens/virtual concepts. 

 

For example, one of our clients had never done delivery prior to March, but they quickly pivoted to launch online ordering and delivery within three weeks. They then went a step further and aggressively promoted this new capability to their customer base through email and online advertising. The result was that while others were faced with revenue drops of over 60%, this client came close to maintaining their pre-Covid levels.    

 

 

Is it necessary for consumers that brick-and-mortar retailers still exist?

 

There are reasons for brick-and-mortar businesses to be optimistic. Studies have consistently shown that consumers still prefer to make most of their major purchases inside of a physical store, meaning that the tactile experience is still very important for shoppers. 

 

Our own data here at Zenreach shows that even during a global pandemic, half of all consumers are still shopping in stores. So while the pandemic has motivated shifts to online, it  will change, but not destroy, the offline retail experience.

What about restaurants? What will they need to do to survive the pandemic?

 

Here are a few things restaurants can do to pull in customers and get through the pandemic:

 

First, it is critical that restaurateurs take safety precautions to alleviate consumer health and safety concerns—doing things such as sanitizing surfaces, limiting dining room capacity to maintain social distancing, implementing mask policies, and adopting contactless payment options. But simply taking these precautions is not enough—it is imperative that business owners let their consumers know about these actions. Merchants must get the word out to their consumers about their safety precautions and how they are open for business.  

 

Second, now more than ever, it is vital that restaurant owners are able to identify and connect with their most valuable customers. If you have limited capacity in your store, you want to make sure that you focus on bringing in your loyal, high-value consumers, and not the low-ticket, one-and-done consumers. Because of our company's ability to determine the most frequent and high-value consumers, we have been instrumental in aiding our clients to bring those consumers back.

 

Third, as counterintuitive as it may seem, now is a great time to boost online advertising for new customers. Consumers are more likely to perceive brands who advertise during economic downturns as industry leaders who are more stable and reliable, which could translate to increased business both now and after the pandemic passes. 

 

Furthermore, with many competitors cutting back on ad spending, the cost of media has become quite inexpensive. The combination of lower online advertising costs and record-high online engagement rates have created a perfect storm for marketers looking to capitalize on a large captive audience.

How might Covid strengthen businesses that manage to survive?

 

With much of the country having spent a significant portion of the year in either total or partial lockdown—and with several new shutdowns either impending or already implemented—brick-and-mortar businesses are now facing more headwinds at the time of the year when they most need it at their backs. 

 

The difference, however, between this recent wave of closures and the ones which took place earlier in the year is that we now better understand the formula for getting through this challenging period. Those that can shift to online ordering or home delivery will fare much better; consumers have already shown a willingness to adapt to those channels.    

 

I think that the businesses that manage to survive through the pandemic will find strength in knowing that they have the ability to adapt to the circumstances and make the changes their business needs to get through difficult times.