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Click & Collect is Just the Beginning: A New Retail Normal is Here

Author: Sean Keith, Business Development Director at Eagle Eye.

Is this what the new normal looks like?”

I had a virtual breakfast with several Canadian retailers late last month – we “met” for coffee online instead of the industry roundtable we’d scheduled before the crisis hit. Unsurprisingly, getting a handle on what the future of retail will look like dominated our discussion. While the “new normal” might feel an already overused expression, the reality is no one knows what the next six months will be like, except that it will be tough.
 
Throughout Canada, retailers of all sizes have faced reduced operating hours, or worse, closures. Some brick-and-mortar retailers, including Roots, are slowly reopening stores after permanently shuttering several locations during April. Others, such as footwear retailer Aldo, have filed for bankruptcy protection in response to a global crisis that has tipped their already troubled balance sheets over the edge.
 
Not all areas of the retail sector have been hit as hard. The Food and Drug, Grocery, and eCommerce sectors have all experienced spikes, according to Statistics Canada, as consumers change their shopping habits driven by health concerns and social-distancing restrictions.
 
It may feel like the worst of times, and for millions of businesses, it is. But amid the financial upheaval and unexpected change, opportunities to refocus priorities and reset business goals are presented. In the words of a Stanford economist, “a crisis is a terrible thing to waste”.

Business as unusual: adapting to new shopping reality
 
If they weren’t already experimenting with different fulfilment models before, many retailers have quickly rolled out ‘click & collect’ and curbside pickup options as safer and convenient ways for customers to buy. Although click & collect and ‘buy online, pick up instore’ (BOPIS) were becoming popular with Canadian consumers before the crisis, the pandemic has accelerated their utility. Shopify says customers in the US and Canada were behind a 443% jump in click & collect orders in March 2020, and a 96% week-on-week increase in retailers offering that service.
 
Even before the crisis, Loblaw was leading the click & collect retail shopping trend in Canada. Sarah Davis, Loblaw president, said: “We believe that the click & collect model will be strong going forward, and Canadians have adopted it readily.”
 
It makes sense. Connecting a loyalty program to that model adds value for the customer and retailers. Loblaw’s Optimum loyalty program, for example, rewards customers with instore with discounts on top brands and family essentials like diapers, formula, and organic products, if they shop online and pick up their purchases at specific locations or instore.
 
Even as some social-distancing and shopping restrictions ease, the popularity of click & collect, BOPIS and curbside pickup isn’t about to disappear. In the US, shopping via click & collect is expected to increase 60% by the end of 2020, as consumers grow used to the convenience of picking items up at a time and place that suits them.

Traditional retail won’t be the same… and that’s okay
 
This is just the start of what the “new normal” will look like in retail. Retailers can expect more significant changes in categories where consumers are spending the most, with greater scrutiny of products’ origin and increased demand for locally-sourced products. Over half (58%) of Canadians say they’re more likely to ‘buy local’ in the coming months.
 
Ongoing health and safety concerns will also accelerate consumer demand for contactless technologies, such as self-checkouts and scan-and-go options in physical stores.
 
These shifts signify the importance of knowing your customer and being able to anticipate and adapt to their needs quickly, as they evolve. Leaning into both click & collect and curbside pickup trends is a way to achieve that by keeping your offline locations relevant to customers and gaining valuable insights about them. What’s more, evidence from markets where click & collect can make up 70% of ecommerce, such as in the UK, retailers also report that shoppers spend up 14% more by adding items to their basket instore when they visit to collect the orders they make online.
 
As more consumers shop for groceries and other day-to-day items online, giving them the option to buy in-store or choose home delivery, you’re able to learn more about their preferences and behaviors.
 
Establishing and nurturing digital connections with your customers enables you to learn what products they’re interested in, which digital promotions they’re responding to (or not), and whether they’re abandoning a shopping basket because of out-of-stocks or higher prices. Moreover, each time they shop, you’re developing a detailed picture of their preferences that inform future promotions and – if they’re a member of one – loyalty program offers.
 
Knowing your customers’ needs today and tomorrow
 
Retailers can use these customer insights to manage engagement, strengthen relationships and reassure shoppers as a different retail reality emerges. With a focus on driving customer loyalty, digitally enabling your operations allows you to market around customers’ needs and reward them for ordering online but doing the legwork of picking up orders themselves.
 
This approach to being everywhere your customers expect you to be also aligns with the change in consumer shopping preferences since the start of the year.
 
Eagle Eye’s 2019 Connected Canadian Consumer report showed that, before the pandemic, nearly 90% of all purchases were completed in a retail store. But that was only after a consumer had interacted with three separate channels to browse, review, and compare. The pandemic has had a significant impact on these behaviors, with most of the country stuck indoors and online for extended periods. Some 22% of Canadians now say they’ll continue to buy food online post-Covid, compared to just 4% a year. Having the ability to connect digitally with customers on all the channels they rely on today, that is having an omnichannel retail strategy, will be critical for success in the months ahead.
 
What else is ahead? A  20% contraction in the economy for the second quarter, with non-essential retailers among the most vulnerable. But even in the most affected sectors, such as apparel, electronics and luxury, a slow return to ‘regular’ consumer spending is expected. Grocery purchases, which have been elevated by the pandemic, are even likely to hold onto a small lift, especially in the online channel.
 
I can’t predict what the “new normal” is going to look like next year, let alone three months from now. But what I can predict is that having a strong digital presence and investing in digital infrastructures that allow retailers to know who their customers are – and deliver on their needs in the most profitable ways possible – will play a big part in those retailer that not only survive, but win with consumers, in future.