In Australia, we are now just a little over two weeks into the far-reaching social, lifestyle, business and economic impacts of COVID-19. From a health standpoint, it is our society’s number one priority.
From a business perspective, it is too early to say precisely what the economic impacts will be. However, we can make some reasonably confident predictions on areas of business that will be permanently changed by our forced isolation. One of these is retail.
Over the past decade, there has been a steady but unspectacular rise in the e-commerce share of retail sales.
So, only around 11 percent of retail sales are now online even though about three-quarters of us shop online. A better leading indicator though is the e-commerce growth rate of 20% in 2018, along with an accelerating trend line.
There are several good reasons for the sustained domination of bricks and mortar retail in Australia. First is that most Australians enjoy the shopping experience. That has not yet been mastered through pure-play online retail, and multi-channel retail in Australia is still immature.
The second is the logistical challenges of Australia’s wide-open spaces with low population density, make us a harder nut to crack.
The third, and perhaps greatest reason is behavioural adaptation. There hasn’t been, up until now, a compelling reason to change our shopping behaviour dramatically. However, that has just changed - big time.
The extended period of isolation that we have just begun will almost certainly result in long-term changes to the way we shop.
It is reasonable to assert that the online play from established Australian retailers has been mostly defensive. That is, to limit the erosion of share by pure-play online retailers.
Post COVID-19 will be the time for mature multi-channel retailers to promote the combined benefits of their offer. For the multi-channel retailer, the role of bricks and mortar will increasingly be about the shopping experience. While the role of e-commerce will be the transaction and fulfilment. When viewed in this way, online is not merely a choice, it increases the combined value of the retail experience.
Short-term needs are clear.
The mid-term needs run deeper into the sophistication of customer experience management over time. The questions include:
But there is some good news! There are mature and very affordable technology solutions available today that answer these challenges. Cloud-based CRMs and integrated CRM and marketing platforms such as Hubspot provide the means to identify customer behaviour and create automated workflows. These can in turn deliver tailored messaging and online content to individuals and customer segments.
Furthermore, a critical point is to decide what role stores play within the multi-channel retail mix as conditions return to a new form of normal. Remembering that the new normal will be different from 2019. How can a new view of multi-channel retail be created to provide an irresistible consumer experience?
For better and for worse, Amazon has defined the way we shop online today. When it comes to competitive convenience, Amazon is a natural choice for those who want that. However, is Amazon really an outstanding shopping experience? Does it inspire us as shoppers? Of course not. It’s just simple, and often but not always, sharply priced.
Therefore, done the right way, the Amazon shopping experience is genuinely beatable.
What we can really learn from Amazon though, is in the technology that drives smart communication and site content delivery. Both are tailored to individual shopping preferences. Online shoppers can be pretty confident that when they open an Amazon email, it will be relevant to them. Very few offer the same quality of customer-relevant experience.
Amazon A/B test everything. They automate everything. They understand what every millisecond of site-speed does for their sales. They always learn and improve.
Likewise, Woolworths have built a customer insight driven process for optimising and promoting their promotions and online store offer.
Again, all of this is possible for every retailer today.
More difficult to determine will be how customer tastes and preferences change through this time. What we can learn from past recessions and the global financial crisis are trend changes in customer psychology.
Retail in Australia is a broad church. For some there are untold current opportunities that arise from adversity. We are already seeing an uprising of innovation stemming from the present necessity. Things like adapting manufacturing to the need for facemasks and hand sanitiser. And, the rapid change made by some restaurants to offer a variety of home delivery services.
There has never been a better time for creativity to be celebrated and supported by Australian retail businesses.
Some industries will thrive within this landscape of hyper-disruption. For others, the end will come and that is very sad. But for the majority of Australian retailers, getting ready to create competitive advantage within the post-COVID-19 landscape must be the next priority beyond survival.
It’s time to prepare.