By Elissa Quinby, Senior Director, Retail Marketing, Quantum Metric
With inflation rising to the highest rate in 42 years (10.1%), consumers are becoming increasingly cautious about how they spend their money. Many are opting to only buy necessities where possible, leaving inessential items on the rack. Unfortunately, for many retailers, this means that an inevitable fall in sales is on the horizon, which may leave some brands struggling to stay profitable. Retail sales dropped by 1.4% in September 2022, 1.3% lower than pre-Covid levels.
With the festive season looming, merchants are busy focusing their efforts on cutting costs to remain afloat. However, if implemented correctly, there are techniques that can not only help retailers survive during this challenging time, but also increase their brand value.
Improving the customer experience (CX)
A recent Quantum Metric report found that, unsurprisingly, price is a key factor determining shoppers’ Christmas spending habits this year, with 61% estimating their total budget will be under £500. However, finding the best-value products isn’t the only factor cost-conscious customers are considering. 27% of consumers revealed they also seek a high-quality digital experience, meaning shoppers can still be encouraged to make purchases if they are presented with an outstanding online customer experience.
While outstanding online CX is crucial, businesses that want to gain a competitive edge and truly increase brand value should strive to ensure CX is consistent and coordinated across desktop, mobile and physically in-store. As consumers often switch back and forth between channels when shopping, retailers should present a full, omnichannel approach that seamlessly caters to all combinations of consumer purchasing preferences. To achieve this, all channels need to work in tandem to understand what individuals want and need – ideally before they’re aware of it themselves.
Building customer loyalty
According to Swapi, nearly half of Brits (42%) are now using loyalty schemes to save money. As such, many retailers, particularly supermarkets, are now competing to revise their existing loyalty schemes in a bid to attract and retain customers.
As a result, loyalty schemes are becoming more about actually building customer loyalty, rather than simply being used as a tool to gather data for marketing purposes. This means it’s more important than ever for brands to understand exactly what influences purchase decision-making and recognise how they can utilise customer preferences to create a give and take situation, where customers are offered a high-quality loyalty scheme in return for providing their information.
In addition to good value and great CX, another key factor that has an impact on consumer spending is personalisation. Customer lifetime value (CLV) is the holy grail of customer loyalty; personalising loyalty schemes and offers can help to raise CLV which, in turn, increases brand value.
Personalisation is easier to provide to customers via digital-first apps as data can be automatically stored for each shopper and used to make suggestions based on their unique buying history. However, digital-first schemes won’t fit every customer, for example, those who don’t own a smartphone and who may therefore prefer printed vouchers. Retailers must consider the preferences of their target audiences; the key, again, is to ensure brick-and-mortar stores and online operations work closely together.
In addition to the cost-of-living crisis, challenges such as disruptive carrier strikes and supply chain interruptions over the past few years have highlighted the importance for brands to be able to adapt quickly when faced with difficult situations that threaten sales. Retailers must be agile and quick to put strategies in place when these issues arise. Resilience can be built by ensuring brands truly understand their customer, to the point that they can predict how their shopping habits will change in line with different world events.
By taking a flexible approach, brands can help to ensure they retain customer loyalty even when certain items are unavailable. They can offer recommendations for alternative products, provide regular updates on stock availability, or promise first access to new products, re-stocked products or promotions.
Brand value is hard to improve when financial concerns are so central to purchase patterns. This means it’s essential for retailers to be one step ahead of the game. A Continuous Product Design (CPD) workflow, whereby retailers continuously iterate and improve their product and CX in line with customer needs, can also help retailers to remain competitive, compelling and relevant, ensuring consumers aren’t given any excuse to go elsewhere.
Through times of economic uncertainty, maintaining customer loyalty and brand resilience is more important than ever. Merchants that focus on this will be the ones that succeed.