CX and the next retail normal

By Nick Sellers

Fifty years ago, the distinguished economist Milton Friedman asked what the role of business in society was.

He answered the question by saying that “there is only one social responsibility of business – to use its resources and engage in activities designed to increase its profits.”

That analysis, conversely, isn’t simply about creating wealth but to act with corporate responsibility towards every stakeholder important to a business – including customers, employees, suppliers, communities, and shareholders.

Now, fifty years on, the COVID-19 pandemic has shone a new spotlight onto the balance between the profit motive and a company’s purpose.

I would argue that, while every stakeholder remains of absolute significance to every business, its purpose now is to recognise the elevated importance of customers and, in terms of how we address their needs, taking CX to a new level.

Of course, good customer relations have always been important and, with the hope of a vaccine on the horizon, it’s tempting to think that coronavirus is something temporary and that, sooner or later, everything will return to normal.

The trouble is that the ‘new’ normal we return to will look nothing like the old normal, and that’s particularly so for the retail sector which, along with travel and leisure, has been the worst affected by Europe-wide lockdowns.

In looking at the challenges ahead for the retail sector, the focus for this article, we first have to recognise that the balance between online and physical sales has changed massively – the steady drift online has become a tsunami.

The sheer size of the digital sales transformation is that online sales as a proportion of all UK retail sales hit a record high of more than 30% in May, before falling back slightly in July.  The latest retail sales figures showed that UK online sales in July were more than 50% higher than pre-pandemic levels in February.

Indeed, online shopping caused by the COVID-19 pandemic is expected to add £5.3bn to UK ecommerce sales this year to a total of £78.9 billion, according to a report from Edge Retail Insight.

According to new data from IBM’s U.S. Retail Index, the pandemic has accelerated the shift away from physical stores to digital shopping by roughly five years.  There’s no reason to doubt the same won’t be true in Europe, or elsewhere.

The report also suggests that physical retailers will need to quickly pivot to omnichannel fulfilment capabilities in order to remain competitive in the new environment.

So how has the shape of the retail sector changed in recent months, and how can companies address the changed realities of online customer experience?

The Europe 2020: Ecommerce Region Report shows that Western Europe is still the most developed ecommerce market in the region, accounting for 70% of total ecommerce value in Europe.  Another report suggests that European ecommerce is expected to be worth €717 billion by the end of 2020.

That huge rise in online sales has been good news for some, not least Amazon which has already employed an additional 3,000 roles in the UK so far this year and, by the end of 2020, will have created a total of 10,000 jobs – and that’s not including an additional 20,000 posts planned for the festive period.

Other big winners have been the large food retailers.  In the past few weeks, Tesco, one of the largest, announced it was creating 16,000 new permanent posts, reporting that online sales that had taken 20 years to reach 9% of total sales took just 20 weeks to nearly double to 16%.

While some retailers still hope that high street sales will return to something like pre-pandemic levels, a recent survey found that almost half of UK shoppers believe that the coronavirus pandemic will have a permanent impact on their buying habits.

The research by O2 Business and Retail Economics, published in Retail Gazette, found that 44% said there would be permanent changes to their shopping habits, including spending more online, and 47% said that the number of times they would shop online will also increase.

High street sales have also been affected by the impact of COVID-19 on disposable income.  Four in ten consumers in Europe have experienced a decrease in their household income, with 38% planning to reduce their spending over the next few months.

Research from PWC shows that it’s mostly consumers in countries that have been most affected by the pandemic who are determined to spend less. The share of people planning to reduce their spending is 56% in Spain, 43% in the United Kingdom and 42% in Italy.

In addition, the research found that over 80% of European consumers who started buying groceries online during the pandemic are planning to continue to do so.

All of that has had, and will have, a profound impact on CX and how we support customers, because there isn’t going to be a new normal that looks something like the old normal.  There will only now be a next normal.

That next normal can be glimpsed in a recent study among global business decision makers by Bloomreach and Forrester.  It found that pre-COVID-19 priorities were predominantly focused around improving the customer experience.

Back then, nearly 90% said customer experience was either a high or critical priority, alongside improving customer retention (88%) and improving products and services (85%).  Nothing surprising there.

But now the focus has shifted to enable workforces to deliver this change; improving team productivity (80%), accelerating response to business and market changes (80%) and improving the use of data insights in business decision making (80%).

There are three aspects to customer experience, says the report, that the last few months have made critically important as we look towards 2021.

First, to think again about the delivery of digital commerce experiences.  It’s about reimagining the customer journey in new ways that go beyond simply selling a product.

It’s about looking again at how customers are finding brands, what content they’re finding, and how helpful – or otherwise – they consider it.  It’s also about simplifying payment and delivery options.

Second, it’s about driving loyalty and that comes from making each customer feel appreciated – in the same way as they would at a shop checkout.  Monitor, listen and act on all feedback.  If that requires more product information on the website, just do it.

Third, in the new world of online dominance, find partners who understand the digital customer experience.  Get them to do the hard graft such as designing self-help automation or other AI solutions and task them with analysing data streams to drive consumer insight.

COVID-19 is forcing change at a faster and faster pace.  That means developing CX solutions that remain ahead of the curve.  With consumers purchasing in different ways, and with their expectations rapidly evolving, online CX has never been so important.

In conclusion, it’s about adding value, giving great service and turning customers into advocates.  In other words, exactly the same as it’s always been, only completely different.

For more information on how SYKES can help with your “next normal” CX strategy, please get in touch!


Posted on

October 20, 2020

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