As a data-driven company, and one that helps our clients be more data-centric, we prefer to learn and make decisions by looking at historical information and trends. Even now, as we find ourselves in new, unprecedented, and quite frankly, scary times, we find that by looking to the past we can find glimmers of hope. Because although the world has not dealt with COVID-19 before, we have experienced economic downturns and recessions. And we’ve emerged.
We know that retailers of all sizes and types are worried right now about paying employees, keeping them safe and engaged, maintaining sales despite widespread store closures, supply chain disruptions and much more. These are important, if not vital, to stay afloat right now. However, we also know that we will emerge from this world of social distancing. It may take some time, but retail leaders need to continue to put one foot in front of the other in order to weather this storm and come out the other side.
Preparing Retailers for a Post-Coronavirus World
In order to best guide you, we’ve done what QuickPivot does best – look to past data and historical trends. What has worked in the past? What have retailers done during previous challenging times?
We came across research from McKinsey that examined the most resilient retailers from the Great Recession, and identified the six common actions that these retailers took.
Actions Resilient Retailers Took During the Great Recession:
- Built cash reserves: The resilient brands increased cash reserves by 18 percent between 2007 and 2009. They also divested more aggressively.
- Created margin headroom: Selling, general and administrative expenses for resilient retailers fell from 13 percent to 11 percent.
- Went on the offensive: Using their cash reserves, resilient retailers increased their marketing and operating costs by 2.2 percentage points from 2009 to 2011. Revenues actually rose ten percentage points for the resilient retailers during the downturn.
- Moved into new markets: Whether it was opening new stores, developing premium experiences or finding new geographical markets – the resilient retailers diversified the markets they went after.
- Reshaped the value proposition: Rather than offering broad sweeping discounts, resilient retailers analyzed the trends in order to reposition assortment, merchandising and pricing. While some less popular categories were reduced in priced, other recession-proof items were actually increased.
- Maintain customer service: The resilient brands tended not to make mass layoffs, and some even invested in additional training.
Moving Forward Together
Make no mistake about it, the next few months are going to be hard. According to Sucharita Kondali, Vice President and Principal Analyst at Forrester, “Consumer confidence in the U.S. economy for the next 12 months is bleak, causing many consumers to buy less overall – both in-store and online.”
Unfortunately, as marketers we cannot change the economy or the way our customers manage their personal finances. However, what we do specialize in is understanding consumer behavior, motivating factors and their needs. Take this time to learn about your customers, how they’re feeling and how they’re behaving these days. Maybe you offer a discount or free shipping while they’re homebound. Or maybe you just provide an opportunity to escape reality and daydream of the day when our lives go “back to normal.”
Whatever it is, do not neglect your customers. Stay true to your brand and take this time to truly understand your customers. We may not be McKinsey, but here’s something I know for sure – the retailers who continue to show-up for their customers and provide relevant, empathetic offers will be the ones that are remembered.
How Can We Help?
We will continue to share resources and news around the impact of COVID-19 on the retail industry. We encourage you subscribe to our blog to stay up-to-date and to follow us on Twitter and LinkedIn. Please do not hesitate to reach out if there’s anything we can to do help you navigate these unprecedented times.