The Unexpected Way Customer Loyalty is Saving Retail During The Pandemic

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The Coronavirus pandemic has already tested our patience, health and empathy and it’s now calling into question our loyalty. For better or worse, Covid-19 has redefined the brand-consumer relationship. National and regional lockdowns have forced physical stores to close, lending to the oversaturation and increasingly competitive online shopping space. Amidst these changes, consumers have been found to rethink their shopping habits.

Once the most compelling reasons behind customer loyalty were product design, competitive prices, customer service and nostalgia. Today, the loyalty consumers share with brands are heavily dependent on a new set of prerequisites. These include availability, convenience, safety, home delivery, and independence of the store. To be effective, businesses and brands will need to find new solutions to manage their operations.

Consumers began to explore new options once they came to terms with the closure of their favourite stores. The movement online provided consumers with ample opportunity to delve into new brands, retailers and stores. Conglomerate Amazon now faces competition from a host of new online stores who are competing on price, convenience, novelty and ethics.

National and local lockdowns have also played a notable role in the shift in the way consumers are loyal to brands. This is highlighted by the fact that in Japan, for example, where there were no formal orders to lock-down; only 33% of consumers changed their shopping habits.

Consumers exploring new options online

When asked whether they are trying new brands or different stores, consumers reported the following:

Online consumer behaviour in the UK and US during the pandemic October 2020: (GlobalWebIndex)

The last quarter of 2020 saw 26% of UK internet users turning to new brands and close to a fifth have been trying out different retailers. When we examine the behaviour of those actively looking for discounts, we notice that just under a quarter of consumers will look elsewhere in the pandemic’s climate if they are not supported financially by a brand or retailer.

This is only to be expected, by and large, the disposable income of most people has been slated since the pandemic began. In the U.S. the number of people who said they were struggling financially in July was 50% higher than that of the UK. This could be a result of the UK’s robust furlough scheme, which has now been extended to the end of March 2021.

Bargain hunting is only part of the story behind this wave of wavering customer loyalty. 27% and 35% of consumers in the UK and the U.S. respectively, have begun buying from independent businesses more often. Smaller, local stores have won over a sizable chunk of the established retailers’ customers. This is the loyal behaviour of customers that will in fact help to save retail during the pandemic.

Competitive prices versus Independent retailers

It’s clear that consumers are more than ever before, scouring for bargains, competitive prices and promotions. What’s also apparent, is the movement of loyalty towards independent retailers. Both trends represent ways in which the pandemic is helping to strengthen the retail scene.

Consider this, the fact that 31% of consumers have bought a product or service on credit over the last four months suggests consumers are in need of financial support. Whether this comes in the form of discounts, promos or rewards; retailers are faced with an opportunity to cater to these demands, increase sales and build loyalty.

Smaller businesses who are unable to afford these financial offerings are in no way left behind. As we now know, consumers are already supporting independent retailers. Particular loyalty is allocated to retailers and brands that are considered responsible. Most consumers are now actively supporting local independent stores to protect their neighbourhoods from decline during the crisis.

Change in consumer behaviour

Once again, the reasons behind consumers abandoning brands they were once loyal to aren’t limited to financial causes. Clothes, in particular, were amongst the first product groups consumers removed from their shopping lists – along with air travel. This has led to a substantial fall in the fashion industry’s sales, shown by the 20% decrease between February and July – along with the demise of some high street brands.

The message? Businesses in this sector will have to work hard to win back customer loyalty during the recovery period of the crisis. A seriously limited social scene, combined with spending most of our time at home has caused the demand for occasion clothing to fall dramatically.

As the lives and priorities of consumers continue to change, so too does demand. Brands in this space should adapt to these changes to take advantage of the new social scene and generate customer loyalty. By repositioning offerings, brands like ASOS have been able to retain its customers since it was quick to capitalise on the rising demand for casual loungewear. Not only did customers fulfil their loyalty to the brand, but it also resulted in a 329% rise in profits.

The pandemic has caused a major shift in customer loyalty towards the brands with the capacity to supply the right products rapidly, conveniently and competitively.

Saving retail during the pandemic

The survival of any retailer depends on its ability to attract and retain loyal customers. The pandemic has highlighted the ways in which customer loyalty has the potential to steer a brand into demise or elevate it to new heights. The support of independent retailers during the pandemic will no doubt enable these businesses to keep afloat in the recovery phase of the crisis.

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