Think of the pandemic as a major, unplanned life stage. Are retail analytics playing the most intelligent role?
The health crisis has altered how people live and shop in a lot of the same ways that getting married or starting a new job would. But there is a significant difference: The pandemic affects every one of us, all at once. And this is testing retail marketing – specifically its reliance on consumer insights – at a clip for which retailers were not prepared.
Yesterday’s analytic models just won’t hold up. More than 60% of U.S. chief marketing officers said their businesses have been affected by the pandemic, according to an annual survey by the global advertising agency Dentsu, yet 43% aren’t sure which consumer behavior changes will be permanent.
It’s time for retailers to evolve their marketing departments into “EX”-factor data intelligence teams that use their consumer insights to look forward, rather than backward.
These Behavioral Changes Could Become Permanent
The pandemic not only is changing how people live across demographics, it is causing unexpected consumer segments to emerge as key players of certain behavioral traits. Here are four areas where shopper activity indicates life stage-like changes that will likely be long-lasting, if not permanent.
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Savvier seniors. After retirement, older consumers generally don’t enter new life stages. However, the pandemic is forcing more seniors to adapt to retail technologies such as online shopping and telehealth consultations. Demand for smart home devices and assistant tech is expected to increase as well as seniors avoid nursing homes. And in general, older consumers are likely rethinking their savings priorities, with some deciding to “spend it now.” Retailers should be getting their senior-friendly messages out: Shoppers 50 years and older represent 71% of the nation’s wealth, according to AdAge, yet 10% of marketing dollars target them.
The commute. Just 28% of workers expect to return to their workplaces by the end of 2020, according to recent research by the Conference Board. Considering that nearly 75% of commuters drove to work alone in their own cars, that translates to a whole lot less wear-and-tear on vehicles, parts and accessories. It also has sharply disrupted the once-reliable method of marketing certain goods in stores at specific times of the day. Some supermarkets including Whole Foods, for example, have long featured dinner-menu specials after 5 p.m. on Fridays, to attract harried shoppers at the end of their harried weeks. Now, those purchases may be made online, or in person on Friday mornings.
Brand switching. The forced shift in how we shop – such as online or as super quick trips – has led many people to change brands as well. In some cases this is due to their preferred brands being out of stock, but financial concerns have also come into play, causing some shoppers to switch to lower-priced brands. In the first six months of the crisis, 36% of consumers have tried a new brand, with members of Generation Z (up to age 23) and higher earners most likely to do so, according to research by McKinsey & Co.
Redefining wellness. The pandemic, combined with the prospect of a housebound winter, is causing more people to seek products that provide overall good health, from physical fitness to mental calm. Sales of indoor exercise gear continue to grow – stationary bike maker Peloton recently reported first-quarter sales growth of 232%. Subscriptions of some meditation apps are on the rise, and 59% of consumers have said they are shopping more health consciously. Nearly three in five consumers are seeking better-for-you snacks and meals more frequently than they did before the pandemic. And they are finding these snacks in some unexpected places, such as 7-Eleven.
Retailers Need EX-Factor Data Intelligence
Since the pandemic lockdown, retailers have proven they have the wherewithal to rapidly overcome the interruption of their operating models. Now it’s time they develop the intelligence to ensure they can continually adapt to these and other changes long in the making. Here are three ways in which your teams can do so. Call them the “EX” factors.
EXpediting analytics. An analytics team can enable a company to gather, assess and deploy consumer insights with greater efficiency through member coordination. The retailer will have to define its data goals in the context of the pandemic life stage, outline the skills and roles needed to meet those goals and then structure the team around them. Determining those goals and skills will require the next two steps.
EXpanding analytical focus. A new, unplanned life stage requires a shift in focal points. A well-appointed team will know how to dilate intelligence capabilities beyond the data sets the company used prior to the pandemic and include broader potentialities, from the prospects of older shoppers to the renewed needs of housebound professionals.
EXtending analytics longer-term. In the span of a few days, the pandemic has delivered years’ worth of change, so retailers should start using their data with similarly extended timelines. Scott Galloway, author of the book “Post Corona: From Crisis to Opportunity,” recently advised marketers to extend every trend by 10 years to gauge how well their business models and cultures can keep up. A 10-year model, aided by algorithms and machine learning software, is a safe rule of thumb.
The task for reaching consumers during the pandemic is similar to that for other life stages – create the appropriate experiences around products that meet immediate needs. Yes, the pandemic was not planned, but neither are some job changes, relocations and babies. Shoppers, remarkably resilient, will find ways not only to have their needs met, but met conveniently.
Retail’s next life stage is here, and calls for better data intelligence. Those that don’t play a role could be X-ed out.
Bryan Pearson is a Featured Contributor to The Wise Marketer and currently serves as a director and strategic advisor to a number of loyalty-related organizations. He is the former CEO of LoyaltyOne.