As countries across the globe take steps to lift restrictions on business operations, the real financial impact of the global lockdown is now being felt.
We’re only in the early stages of a recession that will be deeper than any we’ve lived through, and already the shock to legacy business models is seismic.
Analysis by the Centre for Retail Research found that 2,123 UK stores, employing 49,200 staff, from 38 large and medium-sized retailers, fell into administration in the first half of this year, accelerating the trend that saw over 2,000 similar stores enter administration in 2019.
Retail icons like Clark’s Shoes, Harrod’s & Debenhams have all announced significant redundancies, while Ritazza and Upper Crust Owner, SSP, announced this week that it would cut 5,000 of 9,000 jobs.
The case of SSP is interesting. The baguettes to baristas group is intrinsically reliant on travel to drive revenue, but with Ryanair reporting a 97% year-on-year drop in traveller numbers for June and Whiz Air reporting a similarly dreadful 86% slump, travel’s one of the few sectors to suffer more from the Covid crisis than retail. With nobody flying, the market for pre-flight coffee simply evaporated leaving SSP nowhere to go.
This isn’t necessarily the case in many retail sub-sectors, where consumers continue to spend, as long as retailers can offer them a customer experience that meets their fast-evolving preferences. According to an Alvarez & Marsal study released this week, over 17-million British shoppers intend to switch permanently from in-store to online shopping, largely in response to perceived fear of infection at physical outlets.
Erin Brookes, Managing Director and Head of Retail, Europe, A&M, said: “Retailers are facing a make or break moment. The race is on to transform operating models, product proposition and channel mix to ensure these meet the demands of a new type of shopper”
Within this context of massively increased jeopardy and consumer behaviours changing at warp-speed, how should retailers approach customer service and the broader customer experience, to emerge from this recession, as Brookes says “stronger and more adaptable”?
The first thing to accept is that it’s no longer a case of deciding whether to increase focus on digital consumers. Unless they can create a digital customer experience that makes it easy for consumers to find, assess, buy and if necessary, return and replace their products or services online, they’re likely to fail. The question for most retailers should be “how fast and how far do you need to pivot to digital to remain relevant”? The associated question for Customer Service leaders, and the BPOs like SYKES who supply them, is how fast can we reinvent legacy operations and Customer Service models, to support the customer experience with a greatly reduced agent headcount and at materially lower cost?
The good news for business leaders who can think their way through this “Who Moved My Cheese” moment, is that for every Oasis, Debenhams or Go Outdoors there’s an Amazon or The Hut Group achieving results that buck the gloomy trend, largely through digital-first playbooks that rely on online channels of distribution and customer support. The current winners are almost exclusively brands that were born online or adopted an online approach early in their consumer growth. From a Customer Experience perspective, they are not operating large numbers of stores or rushing to support their growth by opening contact centre sheds and hiring thousands of people to staff their telephone lines.
The survivors in 2020 will be businesses that can most rapidly apply SEO to their digital customer service journey as readily as their marketing, that use AI to maximise upsell and cross-sell, that digitise direct channels to allow forensic analysis of customer interactions going through their contact centres, that move from in-centre to Work At Home CS resources to increase agility and avoid paralysis when the next shock hits. The blueprint has been established by digitally native retailers and it’s easily applicable to those of us playing catch-up.
When SYKES overhauled the online CX for a retail client with 60 years of experience in the home furniture market, introducing Artificial Intelligence and Virtual Assistants to their Chat and Voice channels, as well as real-time, online, content optimization to their website, our client enjoyed an 81% increase in online sales and a 62% uplift in warranty upsales, at the same time as seeing CSAT rise to over 80%. This kind of transformative impact is readily available and quick to deploy for retailers who accept the urgent need for change and the dire consequences of inaction.
To give themselves the best chance of surviving the financial impact of Coronavirus, businesses need to throw out old playbooks on consumer buying behaviour and customer service journeys, and embrace Service Automation, Digital Operations and Work At Home support models.
This recession is eroding cash, and quickly. Businesses need to start prioritising digital initiatives and make the change now to avoid business failure.
To find out more about how SYKES can support your future CX programmes, please get in touch