Should retailers consider a direct to consumer approach during the recovery period?

After strict measures during the earlier Circuit Breaker in Singapore, retailers are starting to taste the light touch of the Recovery stage. They are not out of the woods yet. The economy does not look positive and customers have to be convinced to return. We share some thoughts about how retailers can use technology to speed up their recovery.

The retail scene continues to be challenging in Singapore.

Local newspaper TODAY spoke with experts in December 2019 who shared that the retail sector was already facing challenges with growth for at least three years. This was before the pandemic struck. According to the Department of Statistics (SingStat), Singapore retail sales had its largest historical drop in over 22 years by 13.3 per cent on a year-on-year basis in March this year due to the pandemic.

Last Friday (June 19), Singapore entered into the second stage of Recovery from COVID-19. Guidelines shared by the Government require retailers to consider queue and crowd management, safety and hygiene as well as discouraging the trying and sampling of products. Travel restrictions are still in place, meaning retailers that are dependent on Singapore as a tourist destination will continue to suffer.

Singaporeans are encouraged to continue staying at home, to continue working from home and to practice social distancing. This makes it difficult for retailers to gauge demand..

Retailers must ask themselves whether they can return to the ‘old normal’ way of operations

The reliance on mall management and the use of events to draw crowds at atriums and retail spaces will not work anymore as malls become responsible for occupancy limits.

Seasonal sales such as the Great Singapore Sale start to lose efficacy when there are no crowds. Brand principles and distributors might not see the benefits of sponsoring or subsidising costs at such sales events with no upside in terms of brand awareness or sell-out potential.

Retailers that used to rely on ‘store clustering’, where stores with similar attributes are bundled together in a mall, might find the tactic lacking as more of their fellow retailers drop out due to challenges in sustaining operations.

Retailers have to think of new approaches towards securing their customer’s purchase

Given the hard shift to online shopping due to stay-at-home measures, customers have adapted and become savvier about finding, researching and purchasing online.

Some retailers have started shifting resources and investments into digital assets such as online storefronts, and inventory management software. Others have adopted internet-friendly methods such as livestreaming sales, or using video conferencing tools.

This shift is encompassed by what we term, a direct-to-consumer approach in engaging customers to make purchases. This approach involves a retailer thinking through their customer’s journey towards buying their products – from an individual product perspective. The retailer (and the product brand) needs to be easy to discover online, both from a specification/SKU and a research angle. There needs to be the opportunity to browse both online, and possibly at the retail outlet. Convenience is provided through digital tools, such as the website, mobile app, consumable content in the form of articles, or pictures and video.

Retailers have to think about how their backend functions can be repositioned to support digital sales. This might cover areas such as inventory management or payments in order to provide customers with a smooth and seamless experience.

They also have to consider how their new ‘frontline’ retail experience will be. If there is no longer a well-informed retail assistant helping at the outlet, how can a retailer ensure that correct and ample information is conveyed through a screen to encourage a purchase online?

Retailers have to dig deeper to understand the smartphone-enabled customer

During the earlier days of physical retail experiences, retailers came to understand their customers and the triggers in-store that will convince them to buy items.

Now retailers have to do the same again. This time, they have to understand how the customer interacts with their smartphone, and how adding value – through access, convenience, community or customer service – can help clinch a deal.

Way back in 2017, Ikea used an augmented reality mobile application to help customers visualise how furniture might look in their homes before purchase.

Michael Valdsgaard, leader of digital transformation at Inter Ikea, the holding company for Ikea had said then: “Seeing lifelike versions of Ikea’s products in rooms lets shoppers make a “reliable buying” decision.”

Supermarket Lidl from Ireland has released a Whatsapp chatbot that tells customers about good times to do their shopping and avoid long queues. Customers can message the bot with information about day and time of the intended visit. The bot will access real-time data and transaction numbers to predict whether the store will be crowded during the time shared. As we avoid crowds over the foreseeable future, this is an interesting way to offer utility while encouraging customers to visit the store.

In this Recovery period, retailers have to be able to answer this question. How can you continue to remain relevant to your customers and capture their attention through their screens?

A David vs. Goliath affair all over again?

Bigger retail brands, and mall-linked anchor tenants might continue to hold the advantage in terms of scale, even when rolling out digital tools.

However, smaller brands have the ability to be nimble, and more customer service oriented. That’s an advantage when it comes to convincing customers to return. The resulting goodwill can help build community online, and to move customers into the loyalty and repeat purchase zone faster. What’s important, is an authentic brand story and messaging.

Smaller brands can also use technology to level the playing field and enable engagement. Being able to navigate around ERP and CRM software, using chatbots and digital payments coupled with pick-up-and-go arrangements might offer a balance for interactive-distancing.

While customers look to avoid crowds, many are also looking for a limited level of external interaction. Retailers are well-placed to provide that dose of social interaction and friendliness through their ‘human’ retail assistants.

Here’s a basic technology set-up for smaller retail brands to consider.

· Use a marketing and CRM tool such as Hubspot and MailChimp to capture online interactions with your website, and ensure that customers are kept up to date with newsletters, discounts information and operations updates.

· Set up chatbots on your website and social media channels to handle basic customer questions throughout the day

· Accept digital payments on your website, through vendors such as Stripe and Adyen.

· Run search and display ads with Google or awareness and discovery ads with social media platforms such as Facebook and Twitter.

· Ensure that you have your third party logistics options enabled through vendors such as Lalamove or Ninjavan

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We are Brand Utility offers a Post COVID-19 Transformation Programme that directly addresses the need for businesses to be both online and offline savvy, in order to cater to customers' changing expectations. WBU works with business to evaluate their business, develop core capabilities as well as planning, preparation and execution for revenue or growth recovery from the impact of COVID 19.

The Programme focuses on 3 core capabilities to help SMEs with business evaluation, customer research, frameworks, implementation guides, marketing and revenue generation. EDG grant is available for qualifying Singapore-based SMEs.​

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We are Brand Utility is a business consultancy.

We offer strategy and tactics to support growth outcomes - revenue, scale, regional expansion and market entry – for our clients.

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