As we move out of a second round of lockdowns in Auckland, and limits on crowd sizes remain in place, the pains felt by the retail industry have never been more acute.
This became apparent in the latest Retail NZ Retail Radar, with retailers confidence taking a significant hit after the setback in Auckland; nearly 36% of Auckland retailers believe they’ll either close or are, at the least, uncertain of their futures.
As retailers battle to stay above water, the question remains: what next?
After COVID is eliminated, or even accepted, how do we encourage customers back in the numbers that they had previously—and move forward after e-commerce became the primary source of shopping for millions?
The challenge that retailers will face in this new environment is that people’s spending and consumption habits will have been seriously disrupted, and in their place, other competing habits will have been built. Where previously people went out in larger numbers to shop in their local shopping centre, some will have turned to online shopping or found other ways to entertain themselves. For example, the regular Saturday morning brunch catch-up in the café, maybe replaced by a catch-up at home, reducing foot traffic to local retailers.
But among all this uncertainty and questions with potentially unsettling answers, there is both good news—and bad news.
One of the world’s top behavioural scientists suggests many of us will return to our old habits once COVID departs – but it will take time, and will require retailers to carefully consider how best to encourage customers back into their stores.
The challenge: Undoing months of learnt behaviour
Dan Ariely, Professor of Psychology and Behavioural Economics at Duke University, and best-selling author of Predictably Irrational, recently spoke about undoing this sudden change in behaviour at Nudgestock 2020, a behavioural science conference put on by the global advertising agency Ogilvy.
Sharing the advice he provided to retailers and hospitality brands in his home country of Israel, he describes the problem as:
“…[from COVID] we will have long periods in which our habits will change … and we’ll go back to work and we’ll go back to the supermarkets, and we’ll be very afraid in the beginning … our panic will be higher than the real risk”
And this is the challenge that retailers will face.
While people’s perception of the risk of visiting their shops will change over time, the question will be how long it takes for customers to have acclimatised themselves to the true risk from visiting public shops. The sooner we get more people over this psychological barrier, the healthier our local shopping centres will be, and the healthier our economy.
As you might expect, retailers are quite motivated to solve this problem with global retail sales being expected to fall by 9.6% in 2020 due to the impact of COVID.
The solution: Encourage customers to experience the new normal
As we’ve seen since the beginning of COVID, humans are adaptable and resilient, and we are capable of learning from our experiences – as long as we put ourselves in positions to learn from new experiences.
The same is true as shoppers head back to retail environments. As Ariely describes it: “over time the panic will go down because we’ll have these feedback loops”. This adjustment to the post-COVID normal, will take multiple, safe encounters to inspire confidence and relearning.
Customers must experience this feedback in order to change their perception of the danger associated with visiting public shops and cafes. For retailers, the challenge is to shorten this learning period, to coax those people lingering on the margins back into stores sooner rather than later, to build up the vibrancy of our retail sector.
Unfortunately, it’s going to be easier to coax people back into some businesses than others. For example, people need to eat, so supermarkets are likely to be the first to bounce back. But cafes and restaurants as another example, can be more easily substituted, especially as there may be more real or perceived risk in eating out. For these locations, encouraging customers back may be a slower proposition but, with the right strategy, it’s possible.
How can retailers and businesses coax customers back?
There are no easy solutions here because getting more people out to their local shops more frequently will take time, especially as the habits and attitudes learnt during COVID will take time to unlearn and will come up against new habits (e.g. rise in online spending).
But two complementary approaches might work best in the long-run, and will be most effective where retailers can work together.
First, is to increase people’s motivation to act – encouraging people to visit their local shopping centre.
For example, Meadowbank Shopping Centre turned to market-style weekends to encourage people back into stores, creating a new experience where consumers could purchase from small, local brands—and support their community.
Whether these are revenue generators in the short-term is beside the point; the real goal here is to encourage people to slowly re-experience the wider world and experience retail in a safe manner. Ultimately, you’re not removing people’s impediments to visiting a shopping centre; you’re increasing the benefits to a point that some may be encouraged to change their behaviour.
The second is to decrease people’s perceptions of risk, best achieved by carefully controlling how social distancing, crowd sizes, or increasing aisle space within stores.
Ariely talks about the advice he’s providing to Tel Aviv, encouraging cafes to spread out over pavements and carparks to allow greater distance between customers, while slowly reducing the amount of space taken up over time. Perhaps removing seating areas and displays in centre aisles, for example, could be an idea for a COVID retail environment?
We’ll get there, but it’ll take time
While the influence of COVID has been profound, we can expect customers to return. After all, retail has been around for hundreds of years while COVID has only impacted us for a matter of months—and has many people eagerly waiting a return to their old habits.
The question is: how quickly can this turnaround occur and in what numbers? Fortunately, there are strategies that we can implement that have an influence, informed by the research and decisions by highly-motivated brands that will do all they can to find a solution.
Cole Armstrong is Director of behavioural insights agency NeuroSpot. NeuroSpot takes a scientific lens to consumer behaviour drawing from the worlds of neuroscience and behavioural economics, to help brands build better customer experiences across their channels. Drop Cole a line on firstname.lastname@example.org or visit neurospot.co.nz.