Will Covid-19 Be the Death or
Rebirth of Brick-And-Mortar Stores?
By
John Kelly
To say that 2020 has been a difficult year for brick-and-mortar retailers would be like saying the Tour de France is a casual bike ride. With the spread of the coronavirus, the business lockdowns, and the more than 50% decline in foot traffic, this year has certainly been challenging for offline retailers.
And now with the number of COVID-19 cases skyrocketing and the return of more business restrictions, we will not be out of the woods for a bit.
With much of the country having spent a significant portion of the year in either total or partial lockdown, merchants which have been able to shift all or a majority of their offerings to ecommerce platforms are faring better during the pandemic than those which rely exclusively on in-store foot traffic.
There are, however, reasons for brick-and-mortar businesses to be optimistic. Studies have consistently shown that consumers still prefer to make most of their major purchases inside of a physical store—i.e. the tactile experience is still very important for shoppers.
So, while the pandemic has motivated shifts to online, it most certainly will not destroy the offline retail experience entirely. (I’m certain this will come as relieving news to brick-and-mortar merchants everywhere.)
Our own data here at Zenreach shows that even during a global pandemic, half of all consumers are still shopping in stores. So, while the pandemic has motivated shifts to online, it most certainly will not destroy the offline retail experience entirely.
But in order to survive, offline retailers have to be very strategic with their marketing and communications.
Perhaps most of all, it is critical that merchants take safety measures to alleviate consumers’ ongoing health and safety concerns—doing things such as sanitizing surfaces, limiting store capacity to maintain social distancing, implementing mask policies, and adopting contactless payment options.
But simply taking these precautions is not enough—it is imperative that retailers let their consumers know about these actions. Merchants must get the word out to their consumers about their safety precautions and how they are open for business.
Second, now more than ever, it is vital that retailers are able to identify and connect with their most valuable consumers. If you have limited capacity in your store, you want to make sure that you focus on bringing in your loyal, high-value consumers, and not the low-ticket, one-and-done consumers.
If your doors are closed for in-store dining or shopping, then you can still target those valuable customers for online purchases or delivery. Because of our company’s ability to determine the most frequent and high-value consumers, we have been instrumental in aiding our clients to bring those consumers back.
A little background on how our product works: Zenreach provides its clients with a software layer that sits on top of an existing WiFi network which enables merchants to offer shoppers a “guest WiFi” experience. On the backend, we collect the customer contact information which enables us to do a number of things for the merchants:
- The merchants have a new email address that they can market to in their database.
- We match publicly available data to those contacts in order to create a rich profile of their in-store shoppers.
- We leverage this understanding of their in-store shoppers to provide hyper-targeted marketing of their customer base and to show when those targeted shoppers walk back into the store again.
One example that encapsulates some of the recent successes we have been seeing among our own clients: a national retailer of women’s apparel and accessories was looking to increase their share of wallet in the ever-challenging brick-and-mortar environment. Given that 85% of their sales come from traditional in-store shopping, they had been greatly impacted by the stay-at-home orders and the shift to online purchasing.
This merchant came to us with two challenges: 1) determine the overlap between their offline customers and their online customers, and 2) see if they could effectively drive more foot traffic through online advertising.
Using our technology and an overlap analysis, we were able to show them that the customers in their online CRM had very little overlap with their offline customer base—in fact, less than 10%. This was quite an eye-opener for them, since there was a strong assumption that most of the online customers were actually in-store visitors.
We also put together an aggressive offline retargeting program for them—aimed at customers who had been to their physical store—and we saw excellent results. We were able to drive traffic to their physical stores at a cost which was extremely efficient for them.
Lastly, as counterintuitive as it may seem, now is a great time to boost online advertising for new customers. Consumers are more likely to perceive brands who advertise during economic downturns as industry leaders who are more stable and reliable, which could translate to increased business both now and after the pandemic passes.
Furthermore, with many competitors cutting back on ad spending, the cost of media has become quite inexpensive. The combination of lower online advertising costs and record-high online engagement rates have created a perfect storm for marketers looking to capitalize on a large captive audience.
If you can create a safe shopping environment, effectively target your best customers, and maintain (or even boost) your marketing spend, the more likely you are to successfully drive customers into your locations and sustain your business during this challenging time.
John Kelly is Zenreach’s CEO. He has extensive experience in both ecommerce and ad tech. Prior to joining Zenreach, he was Head of Seller Growth at eBay and VP of sales at Criteo, a company that pioneered retargeting technology. John has a B.A. from Brown University, a J.D. from Georgetown University, and is a Fulbright Scholar.
