2020 was the best and worst of years for retailers.
It saw the demise of some much-loved stores, while others went from strength to strength. Retailers able to pivot have proven they can use technology not only to unlock new efficiencies, but also to build new customer relationships.
Perhaps retail is now coming full circle, with a greater emphasis on building relationships with the communities it serves. As we emerge from the pandemic, retailers have an opportunity to integrate more deeply into the lives of customers and communities.
Recognizing retail’s contribution and its impact on trust
To serve consumers living in lockdown, retailers shifted their operating models at speed to scale digital fulfillment and logistics. Their response to the pandemic elevated them in the eyes of consumers. Instead of being viewed as transactional and profit-focused, grocery retailers, in particular, were seen to demonstrate their broader social responsibilities by creating employment opportunities (delivery drivers) or online solutions, to keep people safe at home during lockdowns.
But while retailers’ actions during the pandemic helped them to earn more trust from consumers, they should guard against complacency. The EY Future Consumer Index reveals that while 62% of consumers say they trust retailers to some extent, only 9% trust them completely.
How can retailers enter the consumer’s circle of trust?
Moving away from transactional interactions and toward closer relationships has brought some retailers into the customer’s circle of trust, with 35% of consumers saying the values of an organization are now more important when shopping. Shared values and a sense of belonging have become increasingly important.
Fundamentally, consumers’ core demands remain the same: make my life easier, make my life feel better and make my life more fulfilling. Those retailers who can become a part of consumers’ lives by either providing time-saving convenience (invisibility); holistically solving customer problems (indispensability); or creating life-enriching experiences (intimacy) can build a trusted relationship with their customers, as follows:
Invisibility. Today’s consumers want their lives to be easier. As a result, retailers must understand how to serve their customers’ needs without them even noticing. Ways they can do this include providing checkout-less or self-checkout stores; auto-replenishment of popular items, such as milk and bread; subscription services; convenient delivery; or simple layouts that save time.
Indispensability. Retailers have an opportunity to help to solve holistic problems – even problems that consumers didn’t necessarily realize that they had. For example, a retailer serving a health-conscious consumer might sell them a nutritious meal, but to become indispensable, they might bundle this into a package that includes vitamin supplements, gym membership, health insurance and lifestyle advice. They’ll draw upon a wider ecosystem to curate in a way that delights and assures.
Intimacy. Retailers will become “experience creators” when they create digital and physical spaces that their customers want to spend time in, with a sense of shared values. A compelling shopping experience can be anything that the customer enjoys doing, including browsing for bargains. For example, a retailer that hosts social events and generates revenue from the merchandise it sells.
Value beyond the balance sheet: building on the past
Decades ago, your local shopkeeper knew your family and your life story, they would recommend products they think you’d like. Invisibility, indispensability and intimacy all originated from the principles of the traditional local shop, but now retailers can augment them with subscriptions, packages, timely delivery or auto-replenishment. Growth in retail is no longer about scale and efficiency, but about creating relationships that deliver longer- term value.
As retailers build their value for society they move toward further integration into the lives of consumers and their communities. They will look for ways to demonstrate the benefits they bring – for example, the innovations and sustainable practices they offer and the employment they provide.
Retailers have been closely intertwined with the fabric of society for centuries and their role as a social force for good has been further underlined by the COVID-19 pandemic.
Permission to play an active role in consumers’ lives and society
As a result of the pandemic, the public has given retailers permission to play a more active role in society and their lives with 45% of consumers reporting they see the positive impact brands make. So, retailers need to consider how they are going to use that permission going forward – while applying the principles of invisibility, indispensability and intimacy. They will create the greatest value for their businesses if they see their pivotal role in society as a platform for change and serving their customers even better in the future.
Thomas Harms is EY global retail leader. The views reflected in this article are the views of the author and do not necessarily reflect the views of the global EY organization or its member firms.