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article imageQ&A: Will COVID-19 be the death of brick-and-mortar stores? Special

By Tim Sandle     Dec 27, 2020 in Business
Are department stores (and other brick-and mortar retail establishments) truly doomed to a slow and painful death, or is there a chance of rebirth? We speak to a leading retail expert to find out.
What is the future for physical stores and can retail mount a suitable strategy to address the anticipated decline (and a decline accelerated by COVID-19 restrictions). While stores are in decline, there are digital-based strategies that retailer can embark on.
To gain an insight, Digital Journal caught up with John Kelly, CEO of Zenreach.
Digital Journal: How disruptive has COVID-19 been for retail?
John Kelly: The coronavirus has been incredibly disruptive for retail. Following a steep drop in retail foot traffic beginning in early March and reaching its lowest point in April, we saw a slow but steady increase in walk-ins from the period of mid-April through June, and we climbed back up to 50% of last year's numbers. However, from July to mid-October, we saw a flattening of retail traffic, and in the past couple of months or so we’ve observed some downward movement in the trend lines.
Now, with coronavirus cases spiking across the country, it's clear that COVID-19 is something that we will all have to live with for another several months at the very least. Therefore, moving into 2021, we predict an increase in ecommerce spending and continued depression of in-store foot traffic.
DJ: Have physical stores been hit most greatly?
Kelly: It certainly seems so. As I mentioned, foot traffic to physical stores is down more than 50% compared to last year’s figures. Ecommerce, on the other hand, has absolutely exploded in 2020: nearly 150 million people shopped online for the first time this year, and at one point, ten years’ worth of ecommerce growth occurred in just 90 days.
DJ: What strategies should bricks and mortar stores be adopting?
Kelly: In my opinion, the most competitive brick-and-mortar businesses will be the ones which:
Implement advanced health and safety measures to assuage their concerned customers—sanitizing surfaces, limiting store capacity to maintain social distancing, implementing mask policies, and adopting contactless payment options.
Communicate these health and safety measures to their customers, as well as any changes in service or offerings made by the business.
Use data to identify and connect with their most valuable consumers: the ones who come in most frequently and those who spend the most in-store.
Maintain (or even increase) their online marketing spend to take advantage of lower advertising costs and record-high engagement.
DJ: Is the answer to move partly online?
Kelly: With many states having spent a large portion of the year in either total or partial lockdown, we see from the data that brands which have been able to shift all or a majority of their offerings to online platforms are probably faring better during the pandemic than those which rely exclusively on in-store foot traffic.
DJ: How can stores attract customers back in?
Kelly: As counterintuitive as it may seem, now is a great time to boost online advertising for new customers. Consumers are more likely to perceive brands who advertise during economic downturns as industry leaders who are more stable and reliable, which could translate to increased business both now and after the pandemic passes.
Furthermore, with many competitors cutting back on ad spending, the cost of media has become quite inexpensive. The combination of lower online advertising costs and record-high online engagement rates have created a perfect storm for marketers looking to capitalize on a large captive audience.
DJ: What else will successful businesses do that others won’t?
Kelly: I would say the marketing tactic brick-and-mortar retailers should be paying the most attention to is offline retargeting. Ecommerce sites have been using online retargeting techniques consistently for more than a decade at this point, and the data shows that this capability can boost online retailers’ revenue by anywhere from 5-20 percent.
Now, imagine that same power pointed at your offline customers to drive repeat visits and increased average purchase values. We at Zenreach have been using this unique capability for the past 18 months, and have seen tremendous success here. As most marketers know, it is easier to convert a customer to a second visit or purchase than it is to drive a completely new customer, and our data tells the same story. In some cases, we have been able to drive repeat traffic into stores at rates that are very close to ecommerce rates.
More about brickandmortar stores, Covid19, Shopping, Malls
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