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COVID-19: How retailers can reach new customers even during a crisis

The worldwide humanitarian and economic crisis of the COVID-19 virus has not only forced individuals to radically change their way of life – companies and many elements of the economy and work are also strongly influenced by the novel coronavirus.

 

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The pandemic has had a particularly strong impact on the retail sector: In Germany, as in many other countries, physical stores were forced to close, which in some cases led to a massive slump in sales and even insolvency. Those retailers who operate physical stores as their sole sales channel have been particularly hit hard by the crisis.

According to a recent study by McKinsey, consumer behavior has changed across countries: In China, for example, the number of transactions in food retailing fell by 30 percent during the pandemic, while the average value per transaction rose by 69 percent. In the U.S., many customers have tried new omnichannel models: buy online, pick up in-store (BOPIS), which grew 28 percent year-on-year in February compared to 18 percent in January. Food deliveries increased by 57 percent. In Germany it is similar: according to the Trade Association of Saxony, customers have become much more reserved in their purchasing behavior. Even now that most stores have reopened, only the bare essentials are usually bought. This means that especially those retailers who do not sell food will be more threatened by the crisis in their existence.

But there is hope: Those who succeed in adapting to the new requirements and purchasing behavior can win new customers even in times of crisis.

The following five ways are key factors in reaching and winning new customers in times of crisis, because new requirements create new decision-making paths as well as new challenges and opportunities for retailers.

1. Place greater emphasis on the online store

Many consumers stay at home as much as possible to protect themselves and others. E-Commerce sales have risen sharply since the crisis: a study by the Illinois Technology Association has shown strong sales increases in various retail industries. In March and April of this year alone, for example, the household sector, the food industry and the dietary supplement industry in the United States saw an increase in turnover through online sales.

A recent study by Criteo also highlights the importance of an online store: one in four respondents stated that they had ordered non-food products online for the first time since the beginning of the corona crisis. One in ten respondents also ordered food online for the first time, while almost one in three even discovered a new online retailer and ordered products from them.

This makes one thing clear: operating an online store as a sales channel is becoming more and more important right now and in most cases it is becoming an indispensable tool for acquiring new customers. As a result, it is naturally also important to offer fast delivery times and to communicate clear exchange and return policies.

2. Place more emphasis on online advertising

This goes hand in hand with a stronger focus on the online store. Consumers spend more time at home and therefore more time on the Internet, making it easier to reach potential customers through online advertising rather than offline channels.

This has several advantages. Anyone who is already suffering from shrinking budgets as a result of the crisis can make better use of them for digital advertising. One example of this would be to identify segments of your own target group that should be excluded. Especially in times of crisis, these could be customers who are less willing to make purchases, as well as low-income consumers. At the same time, online advertising makes it much easier to identify and segment out the “most valuable customer” as a profile, whereupon lookalike audiences can be created.

In addition, a stroger focus on email marketing and a higher social media presence can be used to stay in touch with customers and draw their attention to special offers, for example. Especially search engine marketing can become important here, as many consumers now search for products and stores from home via search engines like Google instead of simply visiting a shopping mall spontaneously.

3. Create trust in the company and its products

The Corona crisis has changed customers and their behavior to the extent that, among other things, purchasing decisions are being made more cautiously. It is therefore particularly important to ensure that potential customers are offered additional information, help and support to give them a feeling of security.

This can be achieved by providing additional information on the online presence, for example about hygiene regulations, the origin of the products and protection of employees, as well as improved customer support.

4. Creating incentives to bring customers back into the physical store

The major lockdown has ended in most countries, at least for the time being, and thus most physical stores have reopened. The shopping miles of German and international cities are slowly filling up again – but normality looks different. The requirement of wearing a mask  makes light-hearted shopping too exhausting for many consumers and therefore many consumers simply decide to not buy or even visit stores.

Here it becomes particularly important to create incentives that drive the customer back to the physical stores. Of course, the first important thing is to convey a feeling of security. Hygiene regulations must be observed and openly communicated. Providing hand sanitizer and ensuring sufficient distance between customers within the store are essential here. It is also important to offer cashless payment.

Creativity is the key to success: the customer must be given a reason why it is advantageous for him to go to the retailer’s physical store instead of simply ordering online. Special in-store discounts would be an idea here, such as through coupons.

5. Adapting product catalogs to times of crisis

Zalando has shown the way: Since the beginning of Corona, the online fashion retailer has actually managed to win new customers and increase its sales by adapting and marketing certain products. According to tv channel ntv and CEO Rubin Ritter, the number of new customers in April had risen by almost 40 percent and thus more significantly than ever before in that month.

The reason for this is the change in the consumer’s lifestyle. Instead of ordering clothing for events such as parties and weddings (which aren’t very common in 2020), purchasing is shifting to products such as sportswear and cosmetics. It therefore makes a lot of sense to adapt the product range to current living conditions, if possible. This requires creativity, which can pay off in the end.

Conclusion

The “new normality” has created new requirements and challenges that have not gone unnoticed in the retail sector. It is now important to understand exactly what this means for one’s own company and products and a strategy must be developed to adapt to these challenges.

In doing so, questions have to be answered regarding customer segments, buying behavior, marketing channels and budgets, for example. New opportunities must be identified and used, such as winning new customers through online channels. Only in this way is it possible to emerge from the crisis profitably.

 

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