As lockdown has been incrementally lifted and the good weather has rolled in, there’s been a return to some semblance of normality. Pubs are welcoming patrons, shoppers are back in stores and many businesses are returning to normal operations. During this period of forced contemplation, however, many retailers have begun to question what the real value is in going back to ‘normal’ — and whether their brick and mortar stores are really viable anymore.
As stores have been closed for so long, businesses everywhere have been relying solely on digital channels for income while still remaining anchored to their physical presence on the High Street. It’s also worth noting that even as they reopened, restrictions and reduced footfall have lessened the revenue that physical stores have been taking in during this critical period.
This has proven to be a challenge too great for even the largest High Street brands, with the likes of Victoria’s Secret, Debenhams and Laura Ashley all falling into administration.
Interestingly, you haven’t been hearing news of too many e-tailers suffering the same fate.
Many have at least remained buoyant in the choppy economic waters that the crisis has brought in, with some posting higher transaction levels than they were pre-COVID. This is because pure-play brands with limited or no physical presence can be more flexible, allowing them to adapt faster to customers’ changing needs. As digitally native businesses, they also do a better job of understanding the metrics behind their customer journey, optimising their sites and inventory to match changing consumer demands.
This need for agile, digital-first strategies can be seen in data from the retail industry itself. For nearly six months, Contentsquare has been monitoring the impact of Coronavirus on online consumer behaviours, analysing over 7 billion website visits via the COVID-19 eCommerce Impact Data Hub.
Globally, the trends are what you would expect. Traffic peaked at the height of the epidemic in May, where visits were 29 percent higher than our pre-Covid benchmark. Since then, they have steadily fallen to 7 percent below pre-Covid levels. Naturally, transactions followed a similar curve in May, reaching an impressive +48 percent increase against our benchmark, before falling to only +14% percent.
Taking those figures at face value, you’d be forgiven for thinking that all online shopping has been booming, rising to colossal highs and then simmering out to more ‘normal’ levels. But it’s when you take a deeper dive into specific industries that you get a better picture. What has been net gains for some has simply been recuperating losses for others.
Taking fashion retailers as a good example from the High Street, you see a much more volatile trend. Fashion stores bottomed out in online traffic back in March, falling to 27 percent below pre-Covid levels. Then, only a month later, they shot back up to 24 percent above pre-Covid levels with renewed customer engagement over massive sales and promotions. They have since evened out at pre-Covid levels with many more fluctuations in between. This was all while retail stores were closed, and leaning heavily on their online presences to recover from the shutdown of their physical locations.
In contrast, “pure players” in the market — who have little to no physical presence — are experiencing much greater stability with their digital activity. Like physical stores they’ve seen a decline in traffic and transactions, however, unlike physical stores they remain above their pre-COVID benchmarks in both. Unlike their brick and mortar counterparts, this translates to a much more stable business environment.
As of now it certainly looks like digital-only brands are emerging stronger from the Coronavirus crisis. For these digitally-native brands, extra traffic and transactions are a net gain, while for more traditional retailers the surge of online business has merely gone some way towards compensating for a drop in physical sales.
Based on this data, the key takeaway is the importance of not only providing a digital alternative to your physical storefront, but also making sure that your customer experience remains consistently strong. It shouldn’t matter whether your offering is focused online or in physical stores, a positive customer experience is just as vital.
In this regard pure-play brand’s customer intelligence is completely data-driven, they own the entire end-to-end journey and have the metrics available of what elements are working and where customer’s pain points lie. Traditional brands, however, have been playing catch up. Where they are used to splitting focus between optimising customer journeys in store and online, they’ve been suddenly thrust into an environment where customers experience their brand remotely.
Traditional brick and mortar brands were able to lure away customers with heavily discounted items in sales, but the stable growth of pure-play brands is a testament to the quality of the experience they provide. In short, if you’re going to go online, do it properly.