With the latest government restrictions forcing retail businesses to close their doors once again, the retail sector faces immediate challenges as we move towards a potential major economic downturn.
But with news just in that the UK economy has returned to growth, as well as signs that markets are surging around the announcement of a possible vaccine, there may well be opportunities for retailers to capitalise in the coming months.
In the second episode of our Change is Now series, we talk to industry experts about what they have done to adapt throughout the pandemic, as well as what they are doing to future-proof their sales plans.
With another stellar line up, our Product Strategy Director, Darren Wright was joined by Amit Agnihotri, Head of UK Analytics at eBay, Phil Twigg, Head of Acquisition at M&M Direct and Andrew Stoodley, Group Finance Director at Clarks.
Predictions versus real data
Kicking off the session with the results from Summit’s latest survey, Darren took us through three of his hypotheses and went on to show how the real data matches up.
Darren’s three hypotheses were:
- Customers are too concerned with short-term impact of lockdown restrictions to worry about longer-term economic concerns
- There is polarisation in the impact on different customer groups and retail verticals
- The recession presents an opportunity for growth to those that are brave (and cash-rich!) enough
So, looking at whether consumers are more concerned with lockdown restrictions than with the economy, it turns out that the hypothesis was wrong, as you can see from the graph below – with 71% of consumers having growing concerns about the future of the economy.
Why is this important? Darren explains that this should be a key consideration for your marketing activity and messaging. Don’t use generic ‘We’re here for you’ type messaging, but make sure you’re taking this consumer sentiment into account when you’re speaking to your audience. But above all, stay true and relevant to your brand.
On to the next hypothesis around polarisation, and Darren shared results that showed this was partly true. Although the data shows some level of polarisation, 70% of consumers not impacted by Covid are still looking to save money on their shopping.
Finally, looking at whether the recession might present opportunities for the retail sector, Darren referred to concepts made famous by seminal marketing effectiveness paper, The Long and Short of It, by Les Binet & Peter Field, most notably the idea the sustained Excess Share of Voice (ESOV: where Share of Voice > Share of Market) leads to long-term profit growth. More recently published research suggests that this concept holds true during a recession and can be achieved purely by maintaining previous levels of advertising spend whilst those around you decrease theirs.
Admitting that this recession takes a much different form than the 2008 financial crisis, Darren pulled data comparing ad spend from Unilver and P&G in women’s beauty care category in 2020 which confirmed that maintaining investment through a crisis can drive long-term profit.
In summary, Darren provided us with 4 key takeaways:
- Don’t panic
- Advertising needs to be considerate of customers long-term economic concerns
- Continue to invest if you can, in both brand and performance marketing
- Beware of articles making unsubstantiated predictions!
Sustaining and building on short-term growth
Joining the discussion, Amit Agnihotri, Head of UK Analytics at eBay, started by explaining – like a number of other online retailers – eBay has been blessed with huge customer and business growth in 2020. The challenge they now face is implementing the right strategy to sustain that growth.
Not hiding the fact that eBay faced huge problems when the pandemic first hit – particularly around delivery times – Amit said a big focus for them was to solve immediate problems and then look to increase their share of voice.
Supporting small business and forming new partnerships
Three initiatives that eBay launched early on in the crisis were firstly, to support small businesses by providing them with a platform to keep selling – stopping all fees and creating an accelerator programme. Secondly, they offered training and financial support for charity shops in order to help them boost their online presence. Thirdly, they partnered with the NHS to create a new platform to supply PPE – boasting over 40 million orders using this platform.
All of this activity provided great PR for eBay and allowed them to increase their share of voice. And eBay continue to support local businesses with various initiatives they are continuing to roll out to support them during the pandemic.
Problem solving with data and machine learning
Alongside increasing their share of voice, Amit explained how eBay has continued to solve customer problems with data, machine learning and analytics. Using data to understand more about what the customer wants and hedging off potential issues with listings, they continue to improve the user experience on their platform.
Success through adversity
Next to join Darren was Phil Twigg, Head of Acquisition at M&M Direct. Phil started by sharing one of M&M Direct’s biggest challenges of 2020, which surprisingly wasn’t Covid-19 related. With their head office and warehouse being based in Herefordshire, they were hit by heavy rain in February that caused a major amount of flooding. This resulted in their site being non-operational and they were not transactional for a 7-day period.
While the site was effectively switched off, Phil said that the strategy to keep customers engaged was to provide regular updates on social channels with very honest and open messaging. And this really paid off, as Phil explains, it really helped to reinforce the brand and galvanise the community.
Building a foundation for engagement
By switching their content from their BAU type output – focussed more on offers and promotions – to more engaging content, M&M Direct were able to build a strong foundation that set them up for success through the pandemic. Phil notes that now, months into the pandemic, that engagement and community is stronger than ever.
Another factor that aided M&M Direct’s success was their ability to react fast and work in an agile way. Phil admits their huge supply of loungewear and a captive audience that were all confined to their homes certainly played its part, but it was a strong and reactive marketing effort that helped to capitalise on this opportunity.
In a similar way to eBay, Phil explained that M&M Direct’s challenge for the next 12 months is to retain the customer base that they have grown through this period. However, they will also be looking to invest and look for opportunities beyond the UK.
A focus on the financials
Finally, Darren handed over to Ryan Thomas, Managing Director at Summit, to speak with Andrew Stoodley, Group Finance Director at Clarks. Clarks, a traditional retailer that was founded in 1825, has disproportionally suffered due to their large physical store base.
Starting by outlining the financial strategy when faced with the pandemic, Andrew said their main focus – beyond customer and colleague protection – was to get a grip on costs, and more importantly cash.
Having already started a transformation journey, Andrew highlighted how this process, with an aim of putting the customer first, streamlining processes and reducing business costs, stood them in good stead. He believes that without this, they could be in a very different place now.
Getting to market through the right channels
Being forced to close 400 stores, including franchise stores in the UK, US and Asia, their first port of call was to get hold of inventory. Actively working to make the Spring/Summer products work, they then focussed on Autumn/Winter.
There was an initial pause on marketing, with Clarks initiating a refinancing exercise, but there were a number of things Clarks implemented to help drive sales – appointments and virtual appointments, promotions and making the most of their online channel were key to riding the storm.
Growing Ecommerce for future success
Andrew’s final key takeaway was how performance marketing has been central to their spend and strategy, driving the brand through various online channels. This is something he believes Clarks will continue, in combination with a focus on channel mix and messaging around added value.
Listening to our speakers, it seems that businesses who are investing, forming strong partnerships and increasing their share of voice are all succeeding through the pandemic. The focus for brands that have managed to grow their audience and bolster their online presence will now be retention- something we’ll be picking up on at our next webinar where we focus on how technology is shaping the future of retail – make sure to sign up for it now.
Summit would like to once again thank all those who attended the event, with special thanks to the guest speakers who all shared their invaluable insights.