Richard Hale, General Manager of Media at Dentsu, discusses the impact of COVID-19 on the future of retail marketing.

As news about COVID-19 infection numbers in foreign countries began to take over our airwaves, screens, and newspapers - I’m sure that like most New Zealanders you were guilty of adopting a ‘she’ll be right’ attitude.   

I know I was.  

Fast forward a few weeks and around 1,400 local COVID-19 cases later, it has become apparent that ‘she’ won’t be alright (for now). 

Jacinda Ardern’s approach to eliminate (rather than contain) the spread of the virus has protected the health of most Kiwis.  Our COVID-19 infection growth curve was one of the quickest in the world to flatten.  

Unfortunately, this approach (which I do agree with by the way) has had the same effect on our economy. It is flat. It’s not predicted to recover quickly. And it's unlikely to ever look the same. To quote the New Zealand Herald, and finance minister Grant Robertson, the Government is preparing for an economic "reset" after the lockdown is over1. In other words, we will be operating in a fundamentally different economy. 

There will be very few sectors that escape this pandemic unscathed, but if we take Grant Robertson’s view on the economy to heart, there is hope. 

Reset doesn’t mean an end of anything; it indicates a new beginning.  To quote Chinese author Sun Tzu (the author of The Art of War) “In the midst of chaos, there is also opportunity”.   

We just need to find our opportunity.   

Perhaps ironically, the first place we should look for it is in the same place that Sun Tzu was born, and where COVID-19 was reported to have originated. The second place we should look is the retail sector.   

In 2003, SARS ripped through mainland China. It made international headlines. Just over 8,000 people were infected and nearly 800 died. Schools, factories, and shops were closed, and China’s cities quickly became ghost towns.  

Sound familiar? 

Faced with the same situation that we all face now, Richard Liu the owner of a small bricks and mortar electronics retail business, saw opportunity amid the chaos. To support his business, he began selling products online, and long story short, (currently China’s largest online retailer with almost $100b USD in annual revenue) was born. 

17 years later, we can expect eCommerce to increase considerably again as it becomes the focus of consumer spending (both essential and discretionary) as a result of its inherent advantages:   

  • It is easier to compare and find the lowest price online 
  • Online stores don’t shut, you can shop anytime & anywhere 
  • Online shopping means you don’t have to find a carpark  
  • Online shopping allows to you avoid crowds. 

The last point is particularly important.   

This new reality is already driving never seen before retail behaviour here in New Zealand. COVID-19 has forced people online, with physical shopping either becoming impossible (due to lockdown protocol) or undesirable (due to risk of infection). I can now order a loaf of bread from my local bakery online! I can’t speak for everyone, but I would never have considered doing that 6 weeks ago. Now? Well I haven’t done it yet, but the thought has crossed my mind.  

Let that sink in for a minute.   

This is the reset I was talking about; the different economy we will have to operate in. One where we won’t think twice about jumping online to order a $4 loaf of bread delivered to the door. Why? Because right now we are all being trained and conditioned to shop online at an unprecedented rate. Just like Richard Liu’s customers were. 

This is our new normal, and the local bakery has taken notice. 

What does that mean for us as marketers? Simply put, we need to adapt both immediately and for the long-term. 

But what does success look like here? While supply-chain and distribution are not my areas of expertise, I can offer some advice from a marketing perspective. 

It goes without saying an eCommerce presence is now almost a pre-requisite, whether that takes the form of a Shopify website, a full enterprise solution, a Google Smart Shopping campaign, or shoppable ads on Instagram.   

No matter the base platform(s) you’re working with, research points to the fact that during a recession, when customers are more likely to be judgmental, “maintaining strong experiences for current customers trumps efforts to bring in new customers when it comes to driving overall demand”​2.   

Common ways to achieve this include: 

  • Ensuring that your web interface is mobile-optimised 
  • Setting up a Google My Business account to make it easy for consumers to find your business within the Google search engine 
  • Using data to create a personalised experience (e.g. enabling cross-sell or upsell based on a customer’s specific behaviour) 
  • Using data to optimise digital conversion funnels on behalf of customers (e.g. to prevent leakage from an abandoned cart) 
  • Communicating authentically - based on your brand positioning, values and tone of voice. 

Customer experience extends beyond your owned assets. Advertising budgets (for the most part) have dropped and optimisation of spend is now more crucial. This is a complex subject but tactics we have successfully deployed for clients include: 

  • Being more granular with our use of online audience data/segmentation to eliminate waste 
  • Implementing omni-channel marketing strategies so that we are not spending money chasing a sale online if that person has already converted in-store 
  • Using technology to enable templated development of multiple digital creative assets at once, so that our clients pay for one ad with hundreds of permutations as opposed to hundreds of ads with one permutation 
  • Ensuring the right content and social assets are available (made for mobile, vertical, short-form video, etc.) ​  
  • Using the power of machine-learning to optimise (e.g. Google Smart Shopping Ads, or Marketing Cloud). 

Of course, there are plenty more possible solutions to be explored, however they can’t all be covered here. This piece is not intended as a panacea for declining sales, it’s simply a commentary on the new normal for retail advertising. We not only need to be thinking about the pivotal role of eCommerce, we also need to act. 

My local bakery has. 

Richard Hale, General Manager - Media