The long-term economic consequences of the Covid-19 pandemic are still unknown. With large portions of the global economy still shutdown, there is no certainty about when – and how – the economy will recover.
The retail sector is no exception. Retail accounts for 5.3% of the UK’s GVA (Gross Value Added), contributing high proportions to the economy and employing more than 3 million people across the country, with particularly significant numbers in the cities
such as Birmingham, Manchester and Glasgow.
With the UK high street effectively shutting down since the Covid-19 lockdown came into place, conditions are expected to be hugely challenging for all in the short term, even when the partial easing of lockdown measures starts to come into place. The impact
is likely to be particularly profound for those without a functioning online service. Moreover, the long-term impact is likely to depend on how quickly things can return to normal.
In such challenging conditions, it’s worth retailers thinking about how they can best serve their customers and respond to the crisis with an appropriate strategy to reflect the circumstances we find ourselves in. Here are four factors from Experian for
retailers to consider as they navigate their way through this difficult time.
1. Enable digital acquisition and sales channels to meet customer and business needs
Ensuring a successful transition to digital will drive rapid growth, and increase demand for customer targeting, robust fraud detection systems and risk assessment solutions.
Online retail provides great opportunities and is likely to continue to grow as consumers spend less time on the high street due to lockdown restrictions. Delivery services and restaurants which offer takeaway are expected to see a substantial increase in
Yet challenges remain. For instance, there will be a high prevalence of first party fraud - where an individual or business misrepresents their identity or gives false information when applying for goods or services on credit. Furthermore, the affordability
position of many potential customers has changed significantly over a short period of time.
Agility is the key to survival and growth. Organisations should strengthen their digital on-boarding and analytical capabilities, using the latest techniques such as machine learning (ML), and invest in insightful data and key real-time capabilities for
fraud prevention and identity management.
Enhancing digital acquisition and sales channels based on data will be a key theme among successful businesses.
2. Understand your existing customers
In a rapidly changing landscape, retailers need to consider their existing customer relationships. In times of uncertainty, it is often the right to increase effort in active customer management and focus on customer value, relationship and retention management.
Today’s customers have high expectations and are demanding guidance and support in their relationships with organisations. To deliver this, businesses need the best data, optimised decisioning capabilities and clear compelling customer journeys.
The latest customer management techniques enable organisations to engage in the changes that take place in their customers lives and as a result generate high returns that both retain customers and encourage customers to spend.
And while some customers will want to purchase more in the current crisis, there will be customers who will need your help and support through these difficult times. Your customer management capabilities should able to identify both customer groups, all
those who fall somewhere in-between, and offer solutions that ensure your business treats each individual customer fairly.
3. Update acquisition models and strategies
The rapid growth of e-commerce and changes to personal circumstances driven by the crisis, will affect models and strategies built on pre-crisis historical data, prompting the need to update acquisition models, processes and shifting consumer profiles rapidly.
Updating models and strategies will require faster updates to data sources, analytical tools and slick processes that enable organisations to move seamlessly from data acquisition, through the analysis of that data, to implementation of it in decisioning.
Adjustments to existing, and implementation of emerging, acquisition model strategies will be among the first critical steps retailers must take to help effectively manage the impact of the crisis on their organisation and their customer base.
If they are informed appropriately, new customers will accept an increase in friction during the customer journey. So, it’s possible to balance additional checks against longer application processes.
4. Outsource analytics to ease operational risk
Many retailers are expected to face increased levels of operational risk due to closure of office operations. They’re also handling critical capacity issues from sickness, key supplier failures and higher resource demands in managing unusual customer demands
through digital acquisition and sales channels.
Analytics can provide retailers with insights enabling them to identify the appropriate next steps to take in order to survive the downturn.
The development of in-house analytics capabilities can be expensive. Instead, retailers could benefit from investment in outsourcing analytics. A blend of internal and external capabilities will help organisations to respond quickly with strategies to help
them succeed when many businesses will fail.
The circumstances we find ourselves in are truly unique. As we look towards the months ahead, with an eye on recovery, there’s also no doubt that new and unforeseen challenges for retailers and all businesses will arise.
The steps retailers can take now in the short-term and in preparation for recovery and the ending of lockdown will be critical if we are to mitigate the long-term impact of the coronavirus pandemic and help the economy promptly return to its previous levels.