How Retailers Can Help Reduce Consumer Anxiety
While COVID-19 has been the primary concern for brands around the world over the past few months, the recent killing of George Floyd and subsequent protests in both America and abroad have changed the focus for many brands. Over the weekend it became common to see companies voice their support for racial equality and the Black Lives Matter movement, but combined with the current pandemic, record levels of unemployment, income inequality, a deepening political divide, climate change and deliberate misinformation, it is clear that the high level of civic unrest and consumer anxiety is not going away anytime soon.
Why Does this Matter to Retail Brands?
Historian Walter Scheidel wrote that there are only four major forces that can have a profound effect on inequality: war, revolution, state failure or a pandemic. A big cultural shift could very well be coming and retailers need to consider what that means.
The pandemic has accelerated the trajectory of many trends that were already underway. It has forged new rituals that will live well past the current crisis, from online shopping and banking to eating more home-cooked meals. To gain a better understanding of the pandemic’s impact, we conducted four consecutive studies over three months in North America. The numbers indicated an erosion of hope, with more than 54 percent of consumers having a pessimistic view of the future due to the pandemic.
Our most recent study identified that although businesses are opening doors, 74 percent of Americans believe that the government bailouts will lead to higher taxes. 70 percent indicated they do not believe the market will return to a pre-pandemic “normal,” and believe that the way we shop in retail stores will change forever while costs go up. More unsettling is that 63 percent of consumers believe the economic instability created by the pandemic will lead to massive social unrest. Given today’s headlines, the potential for a second wave of COVID and an upcoming election period, they are almost certainly right.
A Glimmer of Hope
As retail brands rethink their strategy, they need to consider consumers’ emotional needs more seriously than ever before. The degree of hopefulness versus pessimism and the resulting change in consumer behavior is a new factor that can help determine which strategies will be more valuable. We have outlined several strategies for retailers planning for a post-coronavirus channel strategy, namely:
Segment beyond demographics to an attitude-based model: When planning ideal locations and formats, retailers need to consider the community’s mood. Our studies across banking, foodservice, consumer packaged goods and retail sectors indicate there are common behaviors depending on a customers’ optimistic versus pessimistic attitudes. Pessimistic consumers are more likely to be lower income, older and female. For example, 32.34 percent of women view the current situation as an extreme crisis versus 21 percent of men. Areas hit hard by the pandemic naturally have a more sober outlook, while those that have been somewhat sheltered from its effects have an expectation that things will return to “normal.” Stores and branches in different areas need to address these differing emotional needs through a tiered response. These shifts may deepen over time if unemployment and the health impact of the virus continues.
Watch for value shifts: There is a reason Walmart has done so well during the pandemic: not only did they invest heavily in e-commerce, allowing them to deliver essentials including groceries, but they did so with low prices on these items. The economic outlook is not rosy. Even if 90 percent of the jobs lost during the pandemic are recovered quickly, that still leaves an extraordinary number of people out of work. Those who are not facing immediate economic hardship may begin to tighten their spending if they feel there is a future threat to their financial security. Brands need to anticipate a period during which people will be leaning towards little luxuries, looking for value and an increased preference for supporting local businesses. People will increasingly scrutinize their purchases, scanning for not only the dollar value of a given item, but for the reflection of their values in the brand. This trend will not only accelerate, but may create divides as some values clash with others.
Bigger shift to digital, alternative shopping habits: As COVID forced those unfamiliar to finally move towards digital transactions, retailers can and should adopt a strong customer training program towards migration to digital channels and mobile wallets. Making touch-less, cash-less payment easier and ensuring that your brand has a plan for potential future periods of social isolation is an obvious must-have. New habits, such as the use of curb-side pick-ups or drive through windows for everything from running shoes to pizza, may become permanent in some areas. As more companies make working from home a permanent solution, retail brands will need to meet consumers in different locations, including online.
Shifting to social purposes: The pandemic drastically altered America’s economic situation with the highest number of unemployed since the Great Depression. Large brands must shift their role to become grounding, stable forces in the lives of consumers. Banks can shift the role of branches to offer financial counselling. Foodservice brands can support lunch programs. Telcos can help those out of work access the internet. In the days of social media, ignoring social strife is not an option. Certain store locations may become less valuable in terms of profit, but shifting the purpose of some key locations to a social cause may be more valuable to the community (and thus to the brand over time) than shuttering them entirely.
Giving Hope to a New Role
The current situation will test retailers’ resolve and ability to ensure a healthy bottom-line. Existing store networks are a place brands will look to trim and gain efficiencies. However, as retailers consider the where, how and what of their channel strategy, it is vital to realize the “new normal” brings with it a different perspective on what makes an ideal location or format. Thinking about consumers’ shifting values and what will help them feel secure is where brands will find a new view to allow them to innovate and get through this time to the other side.