Loyalty NZ CEO Lizzy Ryley
Given all the global chaos and concern about Covid-19, you would be right to think the worst about our economy – and the retail sector especially. Predictions for a GFC-style recession make sense, especially when we all saw the June retail sales figures. The 15% dip represented the biggest drop in 25 years, according to Stats NZ.
What we’re now seeing at Loyalty NZ, however, is the opposite. Our retail partners are thriving, reporting solid sales and strong forward demand. Our Flybuys points issuance supports this. And so do the industry statistics. Retail card spending rebounded at a record rate in the September quarter, according to Stats NZ. Spending jumped 24.6%.
That growth is not evenly spread. The sectors to enjoy the biggest rebound are what you’d called ‘home and shelter’. All that nesting and home cooking is showing in the numbers. And I read that swimming pools are in high demand.
But even hospitality, hit so hard by the lockdowns, has done better than many expected, returning to the same levels as 2018.
Former BNZ economist Tony Alexander wrote in Stuff in late October that things are looking up. “Courtesy of good control of the Covid-19 outbreak in New Zealand, high flexibility in our economy, good economic momentum heading into the shock, and the many other insulating factors I’ve been listing since early this year, our economy is bouncing back.”
So given all that, what are retailers to think – are we battening down the hatches or hoisting up the main sail?
I’ll leave the economic forecasting to others. As a business person and a marketer, I remain cautiously optimistic. I’m cautious because Covid-19 is creating havoc worldwide and the predictions for recession remain relevant, if not for us then for our major trading partners. What is it they say about America sneezing?
I’m optimistic, though, because both here and in Australia we have done an incredible job of avoiding the worst impacts of the pandemic. Our down-under bubble is fast becoming the envy of the world.
What can retailers do to prepare – and even flourish – in the coming months?
My first thought is to stick to the tried to true: attend to your regular customers. Research has proven time and again that retaining customers has the greatest ROI of any marketing initiative and can lift profitability by as much as 95%. For a large retailer that means doubling down on your data to identify repeat customers and reward and incentivise them to come back and do more business with you. For small retailers, who may not have access to the data smarts of larger businesses, you can leverage your email lists and loyalty programmes to remind your customers that you exist and have great offers for loyal customers.
Flybuys has excellent mechanisms to incentivise and reward loyal customers. We have recently revamped our offer, including Flybuys Thanks, a simple customer engagement mechanism programme that allows businesses of varying sizes to access the Flybuys database of 2.7 million New Zealanders, without having to be a fully-fledged Flybuys partner.
Second, make the most of being local. In the last eight months Kiwis have been urged to support local businesses and they have done so in droves. And in this case, reciprocity is key. Your local customers have stuck with you, so you need to return the favour. Again, data is important here. Loyalty NZ’s data team, Lab360, has the ability to use Flybuys data to identify members in your area and make highly targeted offers to them. We can cut across multiple datasets to find just the right person, in your area who loves those hand-made Italian open-toe heels for summer. Or whatever is right for your business!
It’s not hard to do a targeted promotion. Surprise and delight with 2-for-1 deals or offers to donate to a local good cause. And make sure it’s personal. Nothing speaks kindness more than remembering someone’s name.
Third, now is a great time to invest in your digital capability. It’s tempting to watch your pennies during recessions but think of it this way: we were expecting doom and gloom and to cut, cut, cut to survive. But these last few months of recovery have given us a surprise boost. So use this time to invest in data management, e-commerce and marketing automation. In the last year at Loyalty NZ, we’ve invested heavily in overhauling our customer value proposition; updating our mobile app and at the end of October we launched a new e-commerce platform to run the Flybuys store. We could have pulled the pin on spending but we’re committed to staying ahead of the curve.
Remember, the onslaught of global etailing continues, especially as consumers shop for value. As one economist puts it, the world is flat. So it’s your job to bend it to your advantage.
Fourth, let’s back ourselves! In New Zealand we’re notorious for talking ourselves into recession. I spent a while working in Australia and one thing they don’t lack is confidence. As a country we have invested billions in keeping Covid-19 out and now is the time to build on that investment with confidence, pride and excitement.
I’m with Tony Alexander on this: the best is yet to come.
Lizzy Ryley is the CEO of Loyalty NZ.
See the new Flybuys offer for all Kiwi business at flybuysopen.co.nz.