The Year of Retention

Retail customer retention

While in 2020 the biggest change in the retail industry was the Covid required pivot for businesses to a more online approach, the challenge for the sector in the year coming will be almost the opposite. How do retailers retain all their new online customers as more stores reopen to provide renewed and fresh competition? If they achieve that then how do they also continue growth in their online efforts?

A recent report from Brightpearl showed that 43% of Brits are buying more things online than normal. Moreover, results also found that 40% of consumers are less likely to shop in-store than they were before the coronavirus crisis – and 65% will be buying more online over the next year. In June 2021 research conducted by PwC saw that 50% of participants had used digital shopping more frequently than that of even 6 months prior. While this is a positive indication, it does mean that online retailers cannot risk becoming complacent as physical retail continues to reopen. 

The growth in e-commerce was happening at pace already but was hastened further by the pandemic, with worldwide lockdowns and public restrictions pushing consumers to online shopping. Delivery services had surged in popularity already in prior years, in many parts of the world. In the UK, there was an increase of online sales by about 35% between 2014 and 2019, and similar results were seen in the US and other European countries. 

If there is confidence among retailers that the demand for online sales and delivery will not slow the question then is about the pace of acceleration and how long that will continue for individual businesses as well as overall economies. It is expected that there are many consumers who will not want to return to the physical shopping experience, for health or convenience reasons. The challenge then is to be the online retailer those people want to use.

Look at what happened in the UK during the return of non-essential retail shopping in April 2021. Footfall soared by 200% – which seems very impressive – but the levels reached did not match the same week in pre-pandemic 2019. Maybe confidence about going out from home and into shops will return but there seems to have been a marked change in attitudes. How long this lasts may depend on the quality of the online service offered, and as a result will aid in how many online customers can be retained. 

The pandemic has forced retailers to try much harder in offering ease and convenience – and suitable price – to customers. Consumers in becoming more used to online sales and delivery are becoming more aware of choice – more than they have when shopping in a centre or on the high streets – may look where they haven’t previously. It is far easier to try something new. 

This makes customer service and delivery fulfilment crucial. Retailers can no longer rely on providing a product alone. The during and post-purchase service must be seamless in order to combat the risk of a customer switching loyalties. Retailers must look towards adapting and securing the supply chain to guarantee timely shipping and accurate delivery of customer orders. 

Scurri found that in peak shopping seasons, such as the holiday season, we were processing 64% more orders than the previous 2019 year. Black Friday and Cyber Monday provided even more growth, with a 91% and 84% YoY increase, respectively. These figures emphasise the improvements needed within the supply chain to manage this change for consumers and growth for businesses.

Retailers should be looking towards engaging in long-term partnerships to aid and continue this process. Forming partnerships with several delivery carriers can help ensure that orders are shipped and delivered in a timely manner. Customers want to be able to track deliveries transparently and so do the retailers, emphasising the importance of the relationship between retailer and delivery service. Everyone wants transparency in the delivery chain and any issues arising to be dealt with quickly. Both retailers and customers want to avoid the loss or misrouting of a product. If it happens the retailer runs the risk of losing a customer permanently. Brightpearl found that 35% of their research participants believed that unreliable delivery has lessened their trust in online shopping since the coronavirus crisis, with 25% having been let down by a delivery since the beginning of the pandemic. Any errors have to be rectified speedily and correctly to avoid customer loss.

This has created issues for retailers in the establishment and operation of fulfillment and warehousing centres for online orders. The creation and use of regional distribution and delivery hubs can allow for a more timely service, providing increased customer satisfaction and, in turn, retention. A well stocked warehouse can allow for more products to be available online, and less risk of customers feeling that the convenience of online shopping has been compromised. 

Additional methods of retaining customers include the availability of subscription services, online offerings that may not be available in physical stores and availability on all online platforms. Global e-commerce sales look to increase by 49% from 2020 to 2024, highlighting the continuation of online retail. 

The demand for physical retail is not expected to disappear. Too many people still like that shopping experience for that to happen. Many retailers have legal commitments to stores and rents too that they do not want to end as long as revenues more than cover the costs of having physical sales stores. 

But what worked in the past will not in the future. There is a new normal that involves selling across a larger number of platforms. Those who don’t do it, or who don’t do it well, will suffer by comparison with those who manage it. 

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