It’s been an unusual year to say the least, particularly in the retail sector. Some retailers have struggled as a result of the pandemic, but many have thrived as digital transformation becomes a habit and now preferable choice for consumers.
Fast-growing digital marketing agency Modo25 hosted an online discussion with a stellar line up of expert panellists to analyse the past year, with the spotlight on Black Friday and Christmas spending and how retailers can plan for the year ahead.
Diane Young, co-founder of The Drum hosted the session with panellists Don Williams, partner in the retail sector at KPMG; Andy Mulcahy, strategy and insight director at IMRG and John Readman, CEO at Modo25.
How did the retail sector perform in 2020?
As we’ve weaved in and out of lockdowns and tiered systems since March, there’s been an unmistakable change to the way we shop and how we behave as consumers. The closure of physical stores has meant that the population have been forced to become more comfortable with online and digital shopping.
According to Andy Mulcahy, beauty products, home and garden and electronics were the winners of 2020, with clothing and footwear experiencing an unfortunate decline.
In early reports at KPMG, Don Williams observed that no retailers were performing between -5 or +5; they were either underperforming or thriving.
As a result of the pandemic, we’ve seen an increase in localised shopping. Williams believes this is down to personal preference to support local businesses and to guarantee their shopping, particularly as supermarkets lacked stock after panic buying during the first lockdown.
From an agency perspective, Readman highlighted that some product searches such as cycling, which were popular at the start of the pandemic and were expected to tail off, have continued to grow, noting that November was a well-performing month as people seek to purchase additional winter gear.
What happened on Black Friday?
Despite the initial uncertainty, Mulcahy felt that Black Friday went well for retailers. The problems with stock and demand meant consumers were encouraged to shop early to avoid disappointment with extended delivery times. This was only pushed along further by the second national lockdown in the UK.
We all recall the footage of packed storefronts with consumers fighting over television sets and DVD players; Williams says that this is done, and Black Friday is primarily an online event. Although figures appeared to be positive, Williams believes that this came at a cost to retailers and margins were lost.
In terms of digital marketing performance, Readman said that there was an increase in costs per click (CPC) on all media platforms due to competition in the run-up to cyber week, especially as it started much earlier this year.
Williams builds on Readman’s comments and says that it’s now important to cherish your customers as they are getting more expensive to acquire. This means focusing on the customer experience and making sure the process is seamless; from landing on a site to receiving the delivery.
How can retailers plan for the future?
Following on from his previous comments, Williams believes that the key to success is personalisation and working closely with a smaller number of loyal customers at an individual level.
Results from a KPMG survey found that ease of service is an important factor in purchasing decisions. Making the process easy for the consumer; for example, answering enquiries in real-time. During the pandemic, we saw larger retailers struggling with demand, which helped smaller businesses come into the spotlight.
Meeting your customer’s high expectations is vital, Williams states. Agility and flexibility are top priorities when it comes to marketing and working this into a business plan. Williams thinks it could be worth re-engineering your plan and investing in digitisation, so you are more responsive to consumers needs.
Williams forecasts a national lockdown and the challenges that businesses will face, particularly as we begin to leave the EU. This means further delays, supply chain issues and potential price increases. According to Williams, a third of businesses have plans in place for this.
Media spend and online planning 2021
Readman argues that businesses need to seriously consider using Amazon. He cites that 40% of product searches start on Amazon and this is a huge missed opportunity for retailers who aren’t on the platform.
The online space is now hugely competitive, and last click costs are high. Readman says that if people bought into your brand during the pandemic, focus on those people and they will continue to be a lifetime customer. With over 800 million worldwide active users, Readman cites the growth of video-sharing app TikTok and encourages retailers to explore new opportunities in video and creative.
Both Mulcahy and Williams agree that sustainability should be a top priority for retail in 2021. With the acceleration of online shopping and delivery, consumers are becoming aware of companies who don’t package in an environmentally friendly way and that is now influencing consumer purchasing.
Modo25 is a global digital marketing and technology provider, who can be contacted at firstname.lastname@example.org