In the latest in a series of articles, designed to provide advice on data-driven marketing strategies in these turbulent times and beyond, we look into the issues facing the retail sector.
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Covid has proved something of a mixed bag for retailers. Some shops may have thrived but those deemed “non-essential” have been forced to shut their doors for three national lockdowns. Yet with restrictions easing, the market is getting set for the return of shoppers to the high street.
How do we make the most of upcoming opportunities, as shoppers return to stores?
Over the past year, all of the previously physical-based analysis of your stores (where they are, how they are behaving, the changing behaviour of the consumer) has all been driven online. But shoppers will want to return to physical stores, and chances are they will return to the stores they have been shopping online with during a year away from the high street and shopping centres.
And while consumers’ shopping habits have been driven online, so the way in which you communicate with them should change too. The best way to do this is through direct mail. One of our clients – an outdoor clothing and equipment retailer – experienced its best-performing catalogue during lockdown because it drove people to make a purchase online and saw an 86% uplift in sales as a result.
But conversely, retailers with good ecommerce sites weren’t making great sales because they weren’t driving people to their sites. Direct mail, when executed well as an integral component of your marketing activities, can be a fantastic tool for delivering value.
How will consumer behaviour change now that stores are open and what we should do to take advantage of it?
No one can know how consumers are going to behave now that stores are reopening. Prior to the pandemic, footfall in retail was already down – less people were hitting the high street and stores were closing. Lockdown has accelerated that trend.
What we have seen is huge growth in ecommerce: one of our clients has doubled their catalogue activity. The impact on stores is going to be huge, so retailers really need to be communicating with people in their homes, as this is the only way to reach them, other than through digital, which can be hit and miss.
We are seeing direct mail response rates increase across the board, and this is what retailers need to be doing. Mailings will encourage consumers to go online and make a purchase, and for some, it might encourage them into store.
Retailers can’t rely on email alone anymore – but it’s an approach a lot of brands take. Communication via mail broadens and deepens the communication with customers, especially when you haven’t been able to get them into a store and have the relationship with them that you used to have.
Direct mail has proven to be a highly trusted and resilient channel for marketers over this uncertain time; on its own and as part of a multichannel approach.
How has the way in which people spend changed and how should we take advantage of this?
Most brands acknowledge that online spend is greater in areas where there is a physical store – there’s a better brand presence, as well as practical consideration like easier returns etc. Since the pandemic, consumer spending is now much more localised due to changes in commuting and working behaviour.
People aren’t buying certain clothes for work, but for fashion. And those not spending their money in the cities during the week have a greater potential to spend in local stores over the weekend.
As consumers move to spending more locally, you should think about reaching current and potential customers who live near your physical stores as well as those you want to reach online. Again, direct mail is a great way to remind those consumers you exist and to take advantage of a little bit of that consumer spend.
How can insight help retailers maximise the value of their existing customers?
The more retailers know and understand about their customers, the more targeted, relevant and profitable their marketing communication will be. A well-executed segmentation and profiling project will provide invaluable insight to identify behaviours and distinct groups within a customer database, including high value customers, buying patterns, those most likely to re-order, appropriate upselling/cross selling opportunities.
Enriching the data held with credible and trusted third party data can also provide additional insights – such as household composition, property, lifestyle, interests, affluence, attitudes and more – to make more informed decisions to maximise response and ROI.
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