Tick, Tick, BOOM

COVID-19 has accelerated the shift to e-commerce by four to six years, boosting some businesses while bankrupting others. Many industries, like food service and fitness, figured out workarounds to the new safety measures such as takeout food and outdoor exercise classes. But even with eventual solutions, the food industry lost $130 billion in revenue between March and October 2020 while fitness goliaths Gold’s Gym and 24 Hour Fitness both filed for bankruptcy in 2020. Others had no alternative to their in person transactions, including airlines and movie theaters, and were required to sit and wait, crossing their fingers that the pandemic will pass. With stay at home and social distancing orders in place, the airline industry lost $35 billion in 2020 while AMC movie theaters saw an 85% decline to 2019, despite reopening 83% of theaters by the end of 2020. By comparison, those who already had a strong online presence were able to maintain if not expand on their sales and profitability with the pandemic.

Highs and Lows

While the convenience of online shopping is well known in normal life, let alone during a pandemic, online shopping does have its downfalls. Most are comfortable buying routine items ex. toothpaste, chips and laundry detergent through an online platform but there are many items that we want to experience in person before purchasing. A new desk to work remotely is better seen in person to determine size and dimensions, loungewear is more likely bought if the texture is able to be felt, and food is more likely to be added to a cart as one wanders through the aisles of the grocery. As the world weighed the risks of going in stores vs the convenience of ordering online, online purchases won out for most causing e-commerce sales to jump nearly 32% in 2020. But, a higher demand requires a higher supply…easier said than done. The supply chain took a major toll, causing 28% of all businesses to experience shortages and out-of-stocks. It hit small businesses even harder with 39% experiencing delays. This led to higher rates of missing delivery items, long wait times, higher risk of fraud and lower customer satisfaction. Stuck at home with a desire for immediate gratification, customers were not pleased.

Case and Point

Burberry, who was one of the first luxury brands to test Instagram and in-store iPads, successfully tested a shoppertainment experience during covid with their WeChat partnership. WeChat, a Chinese multipurpose, instant messaging, social media and mobile payment app is the country’s “super app” that is used for most everything. At their first “social retail” store in China’s tech capital Shenzhen, Burberry launched a 5,800 square foot store that relied on the WeChat mini-program to reward consumers for engaging with the brand, both online and in store.

Burberry acted on the discovery that while customers’ journeys start on social media, they still want an in-store, experiential element before they purchase. WeChat’s mini-program allowed Burberry customers to multitask shopping while promoting their own social media. Online, they were able to book in-store appointments, items to try on, contact customer service, learn about new products and exclusive content, and share their own content. In store, customers can scan product tag QR codes to view additional content like “product storytelling” and models wearing the brand. They can book preferred fitting rooms with specific playlists curated by Burberry and even adjust the lighting. With every interaction, customers are rewarded with social currency that “evolves” their animal character and unlock new characters and outfits the more they use the app. Even further, customers can receive exclusive cafe menus and access to the “Trench Experience,” a digitally enhanced room designed to help customers create and share on social media.

In the future, if a customer contacts customer service through the mini-program, Burberry will be able to access their information and create a more personal experience. And it worked. While overall Burberry sales fell 45% in the first quarter of 2020, mainland China’s sales grew 30% the month of the launch, higher than the growth before the pandemic. Customers can be convinced to come to a store in person if the in store experience adds value to their online life, a shift that many retailers need to make.

Vaccines Enter Stage Left

Trapped inside and in close quarters for two years, people are ready to OUT. With vaccinations and boosters easing everyone’s nerves, people are going to rush out of isolation, eager to re-engage with everything they’ve missed out on. They’re ready to go to movies, sporting events, restaurants and dare they shake someone’s hand at a dinner party?? They’ll take the risk. And for many, they miss shopping. Cruising through the mall looking at window displays and sorting through trinkets and a local mom and pop shop. This is a unique moment sometimes called the “welcome back opportunity” that stores must capitalize on. But…their customer is different now.

The Roaring 2020s

Online retail is here to stay, but that does not mean that brick and mortar stores are going to disappear. Nor does it mean that online and in person stores need to battle against each other. Making shopping an experience, both in person and online, gives a way for them to compliment each other so that profits are the same if not higher than before the pandemic. If stores are able to focus on the experience rather than selling the product, it does not matter if the transaction is completed online or offline. Some brands may even consider downsizing their brick and mortar stores and putting all funds into a handful of locations that can invest in a more grandeur shoppertainment experience. As customers have a positive experience at these few locations, they will become destination locations where highly desired items are able to be purchased. Again, it would not matter as much if the purchases are made online or in person if the in person experience is of higher quality.