The Impact of the Coronavirus Crisis on Retail Loyalty

The Impact of the Coronavirus Crisis on Retail Loyalty
08.07.2020 research

By Inez Schmitz – Insights Manager at UNGA

 

The Coronavirus pandemic is an unprecedented global crisis, where prediction of the exact consequences and the long-term impact is difficult. However, it is safe to say that we will most probably not go back to life as we knew it. There will be a ‘new normal’ and we can only imagine what that will look like.

Did you know that according to research, it takes 66 days on average to form a new habit? (Source: Philippa Lally, European Journal of Social Psychology, 2009) This means that a lot of the things that we have been doing since lockdown started will actually stick with us in the long run. This is true for people as well as businesses.

As UNGA’s Insights Manager, I have been taking in all the developments across the globe. In this article, I look back at how retailers have been impacted by the Coronavirus crisis and I share my view on the challenges and opportunities that lie before us with regard to retail loyalty.

 

Retailers’ redefined priorities: Safety, supply and demand

 

Making sure shelves are stocked

Grocery retail has undeniably proven to be one of the most vital industries during this crisis. Grocery retailers had to pull out all the stops to meet increased demand, especially since a lot of the smaller shops and restaurants had to close down when the Coronavirus crisis started. Adding to this challenge, keeping supermarket staff and customers safe and healthy while meeting this demand has become a priority. A retail executive described the intensity of this period quite accurately: “It’s like Christmas, but then without the 6 months of planning and without an end date!” (Source: IGD)

Online spend in retail
Meeting the rising online demand

Along with increased in-store demand, grocery retailers across the globe have also seen a major increase in online demand. This is especially true for the elderly who have been willing to try online shopping for the first time because they felt it was unsafe to go outside.

Moreover, existing customers have been ordering in
bigger quantities. While food retailers could have only dreamt of such demand before the crisis—they had only hoped to have such turnovers 2 to 5 years from now—for many, it has become nothing less than a nightmare because they had to turn down many of the new customers.

What does it mean for the future?

Luckily, a lot of grocery retailers have been up for the challenge. Despite rocky starts, they have adapted quickly to the increased demand. They know that if you perform well during such a period of crisis, the public will be grateful and loyal in the long run, whereas if you fail, the public may hold that against you for years to come.

I really believe that the increase in online grocery shopping is here to stay and will shape the future of retail loyalty. Quite a lot of people have returned or will return to physical stores as soon as possible—for inspiration, for the personal service provided by supermarkets, and for the ability to pick the specific fresh produce they want. However, another big group of shoppers has now experienced the obvious advantages, such as the ease, of online shopping first-hand and is very likely to keep this new habit in the future.

Woolworths basics box

Giving back has never been so important for grocery retailers

 
While grocery retailers have mostly been focusing on the increased demand as well as the health and safety of both customers and workers during the Coronavirus crisis, we have also seen many of them take it as their responsibility to go beyond that. They were and still are giving back to their communities.

• They have been selling and distributing food boxes and food coupons to help the hungry and vulnerable, either impacted financially by the crisis, afraid to go out or unable to take a trip to physical stores.

• A lot of grocery retailers have been donating millions of dollars to good causes and funds that help the poor and vulnerable as well.

• And they have been pitching in by manufacturing face masks that they sell for low prices, making them available to the wider public after shortages at the beginning of the crisis.

Woolworths’ Basics Box program in Australia is one of many examples of retailers helping vulnerable customers, afraid or unable to leave their house.

Loyalty strategies were adapted to better fit the situation

Retail loyalty campaigns are marketing promotions that boost in-store traffic and nurture loyalty during a 6- to 8-week period. It is, therefore, no surprise that with all the stress that food retailers have been experiencing, loyalty campaigns have become of lesser priority to them and were often amended.

• Some planned campaigns have been canceled or postponed, mostly because retailers had to really focus on the increased demand and safety and also because they did not want to put business and profit over people in these difficult times.

• Other retailers, like Albert Heijn in the Netherlands, paused their loyalty campaigns but started again after a few weeks. We have seen a shift in collecting stamps digitally, which is both promoted by the retailer and demanded by the public to limit the amount of direct contact with the cashier. I believe this is something we will see a lot more in the future as well.

M&S Little Garden seedling pots for free

• On the other hand, some retailers decided to rely on their planned loyalty campaigns as an opportunity to support their shoppers.

As a matter of fact, we at UNGA had our Little Garden campaign running at Marks & Spencer in the UK and Ireland when the lockdown began.

M&S spun the campaign very nicely to support families at home. Instead of only handing the Little Garden seedling pots out with every £20 spent, M&S gave them away to anyone shopping at their stores, no matter how much or how little they would spend. The public perceived this as a very nice gesture.

Now that we have and are experiencing new challenges, we know the current priorities in grocery retail, and we know what they need to be in the future. Meeting customers’ online demand is one of them.

Additionally, sales promotions as we know them are a great way for grocery retailers to attract shoppers and boost in-store traffic. But the Coronavirus crisis also brought to light that their purpose can go beyond that. Retail loyalty campaigns can be meaningful and help retailers and shoppers connect on different levels.
 
Now the questions arise: how can loyalty campaigns integrate digital mechanics to better fit shoppers’ online behavior? What themes should retailers focus on so that their loyalty strategies really fit the consumers’ new normal? Feel free to contact us to discuss this further.

Let's discuss how loyalty campaigns can help you align with consumers in retail's new normal.

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