By: John Crossan, VP & General Manager, Europe, Freshworks
While Amazon purchases continued to climb globally over the last year, many large retailers lost customers to nimbler, smaller competitors. According to Freshworks’ State of the Customer Research, 39% of consumers switched to local businesses during the pandemic – due in part to a government advice to remain local and a desire to avoid long queues outside many of the country’s supermarkets. However, by being more agile than their larger rivals, as well as implementing digital tools and a more personalised customer experience, small retailers built a local customer base over the last year that claims to want to stay loyal, too.
Small businesses fight back
When the pandemic took hold at the beginning of last year, much of the retail discussion centred around how smaller brands could survive, let alone compete with the behemoths that were already forcing them out of business. Consumer trends were already shifting towards buying goods from large supermarkets, online-only retailers, or other, digital-first companies. Many of these smaller retailers, without franchise-like scale and only accessible to local villages and towns, were digitally under-developed. They hadn’t needed to consider such upgrades, instead relying on customers coming through the door and buying their products in-person.
Since then, many of them have adapted. Being forced to close their physical presence provided a catalyst for many to invest in digital tools – and customers noticed. This doesn’t necessarily mean significant investment or wholesale changes – our research showed that 53% of consumers were impressed by improved online ordering capabilities, while 47% identified the increase in personalisation as a positive trend in customer service by smaller retailers. This has meant during the pandemic, they have been able to maintain the close relationships with their existing customer base, while broadening access to a new audience.
Meanwhile, larger, more established brands took longer to adapt to the new conditions. They may have had much of the digital infrastructure in place but did not always recognise that a personal touch goes a long way. In fact, 27% of global consumers became frustrated with brands using Covid-19 as an excuse for bad customer service, creating an opportunity for retailers able to address complaints promptly.
Complacency levels the playing field
This is not to say that shoppers immediately abandoned the market mainstays we all know. Consumers initially understood that their favourite brands, and everyone else in the world, needed time to adjust to the new conditions. But this empathy did not last long; with 35% of UK consumers feeling that large businesses got worse at customer service, there is clearly a sense of slipping service rather than an adjustment period. Often, this was down to brands not adapting their communications to meet their customers in the digital world, such as through social media or text messages, and relying on the excuse of the pandemic to protect themselves from criticism of bad customer service.
Clearly, some complacency played a part in these negative attitudes towards leading retailers, something that most of them failed to realise. This has had an impact on their customer base. For example, 31% of UK consumers said they would stop using a brand if they had a bad customer service experience. This proves that even the largest businesses need to keep adapting and taking advantage of new technology such as AI-powered chatbots, to offer greater personalisation and quick responses. Meanwhile, smaller retailers that did engage with customers across digital channels and deployed new technology have been able to solidify a loyal base. This is paying dividends – as many as 32% of global consumers plan to stay with a brand solely because of the good customer service during the pandemic.
Access to technology is no longer a big business advantage
While some retailers might believe that their former customer base will rush back to them in the post-pandemic world, they should not be so confident. Customers’ memory is longer than their patience; as we saw in our research, 94% of those who switched to support smaller, local retailers plan to continue shopping with them after the pandemic. By embracing technology, such as personalised customer service and improved online experiences, these businesses have levelled the playing field with their larger competitors. On top of this, they provide consumers with the additional altruistic benefit of supporting the local community directly.
Smaller, local businesses have managed to disrupt what seemed like an unstoppable rise of large retailers dominating the market. Confronted with adversity, these small business owners have seen the opportunity to connect with their customers on different channels – creating a loyal base that will continue to bring them benefit beyond the pandemic. This shows that if retailers, big or small, want to continue to grow, taking a customer-first approach will be crucial. This means putting personalised, responsive communication at the heart of their operations to delight customers wherever they are.