Listening, learning and looking ahead: Retail’s continuing Coronavirus response
May 07 2020Blog
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Continuing our regular series exploring Grocery Retail's response to the Coronavirus pandemic, this week we analyse the results from dunnhumby's latest piece of consumer research, the increasing importance of Category Management, and the actions that Retailers need to be taking now to ready themselves for an eventual recovery.
In our last post in this series, we unveiled the dunnhumby Customer Pulse, a survey of consumers from 19 global markets conducted at the end of March. Keen to develop our understanding of how Coronavirus continues to shape Customer demands, we moved ahead with a new wave of surveys using the same geographic and demographic framework.
Once again, three key issues came through loud and clear from our respondents.
A third wave of the dunnhumby Customer Pulse will be available soon.
As is apparent from the results above, one of the only constants for Grocery Retail during the Coronavirus pandemic is the speed at which Customer demands continue to change. While it might not be possible to prepare for every eventuality, adapting or refining your approach to Category Management can be a smart and effective way to keep pace with those shifting need states.
We believe that Retailers should funnel Category Management activity towards three areas.
Much of the work we're doing to help Retailers through these unprecedented times revolves around anticipating changing Customer needs at three distinct stages of the crisis: Insecurity, Transition, and Recovery. As we move through Transition, we believe that Grocery Retailers must take action now to ensure their business is ready for the new challenges ahead.
[This is the fourth in a series of articles advocating the voice of the Customer in the highly competitive food-retail industry. David Ciancio is Global Customer Strategist for dunnhumby, a pioneer in Customer data science, serving the world's most Customer-centric brands in a number of industries, including retail. David has 48 years experience in retail, 25 of which were in Store Management. He can be reached at David.Ciancio@dunnhumby.com].
Treating Customers differently based on their 'profitability' is counter-productive to building loyalty and toward creating a healthy retail Customer Experience.
Any typical Recency/Frequency/Spend analysis tells us that some Customers are more valuable than others in terms of the sales given to a retailer or brand. Further, loyalty industry methodologies like the EMO Index and the Net Promoter Score indicate that those Customers who are more emotionally engaged with, or who more strongly advocate for any retailer or brand tend to be more loyal to that entity.
Logically, it might follow that some Customers might be more profitable than others, and conversely, some could be downright unprofitable. Knowing which is which is the all-important question in a popular relationship management concept called 'Customer Profitability'.
A recent Google search returned more than 7 million references to Customer Profitability – how to segment, measure, and manage relationships with Customers based on how much an individual contributes to the firm's bottom line. An accountancy method even has developed around this concept: for example, understanding 'Customer Lifetime Value' and 'Customer Value Management Cycle' are seen as keys to business health by some firms.
But beware the siren song to consider individual Customer or household profitability.
Typically, Customers have choices around at which retailer they spend their money, what brands they select, and how much they engage with a brand's marketing. They decide to what degree they prefer one brand to another, and advocate at-will for their best (or worst) retail and brand experiences.
So, how is it that Customers can be responsible for their own profitability? Is the Customer accountable to margin by choosing to respond to a particular set of value propositions offered on the retailer's terms? Is the Customer culpable if a value proposition is not itself profitable, or if it allows for choices by Customers that vary in net profitability?
I don't think so.
Every business – and most particularly a Customer First organization – must focus its decision-making energy on doing what's right for its Customers and its shareholders at the same time. For Customers, it's about which value propositions increase participation (reach), sales (uplift), or frequency (visits) and thereby incrementally grow the basket 'one more item, one more time'. For shareholders, this means understanding which value propositions grow sales and margin and which don't.
Customers expect a fair exchange of value for their money. Shoppers cannot be expected to understand the cost to the business of the value offered. It is not the Customers' fault if a loss leader is offered, or if a store coupon reduces the net margin, or if the mix of the products bought according to one level of affluence and lifestyle delivers a higher basket margin than that of another.
In my experience, (and please feel free to provide a different opinion in the comments) credit card and financial services providers are the strongest advocates of a 'Customer Profitability' approach to relationship management. It's little wonder in these quarters that annual industry churn of accounts is greater than 40%, or that the cost to acquire / switch each new Customer account is in the hundreds of dollars as industry standard, or that business costs have spiraled upward now for decades. Of course, these increased costs are transferred to the Customer via higher interest rates or hidden in higher exchange rates for the retailer (which in turn, drive up retail prices).
'Good' profitable Customers maximize their credit limits and retain high balances owed, whilst 'bad' Customers 'revolve' by regularly paying off their balances. Poaching to encourage switching is a hallmark industry tactic, using offers like 'freeing balance transfers', often punishing the Customer with hidden charges and costs to serve so that profitability by Customer might be optimized.
It's my observation that a 'Customer Profitability' mindset sits at the heart of these Customer-disrespectful and anti-loyalty practices. Simply, Customers do not have the gift of choice or the ease to understand which factors drive individual profitability, particularly given the customary qualification requirements and fine print common to this industry.
In a Customer First organization, measuring the profitability of its various valuepropositions should become a business imperative: without it there is no fact basis for managing the value exchange between the company and its Customers.
In a respectful, Customer First approach to business growth, each value proposition delivers recognizable value to Customers as well as recognizable margin to the retailer or brand. The better mindset and language is, therefore, around Program / Proposition / Offer profitability.
An emerging best practice in this area is an analysis of the relative cost of each proposition using a common cost metric vs. the Customer impact (uplift).
Analyzing the relative cost of each Customer or Customer type is a misguided exercise, and is counterproductive to growing true loyalty. If anything, the data reveals more about the retailer's bad habits than it does about 'bad' Customers.
Think about the choices Customers are given in the value propositions you offer; is the profitability of these offers in any way within the Customers' gifts of choice? Who makes the profit margin decision – you or the Customer?
Mind your language, and coach your loyalty people away from segmentations based on 'Customer Profitability'. Yes, there is a value in understanding 'Customer Lifetime Value' and 'Customer Value Management Cycle' – but only by using spending and preference metrics; profitability considerations do not belong in the equation, however.
Guide toward the best practice of measuring the relative cost of each proposition to Customer impact, using a standard cost metric.
So, I repeat, Customers do not have a choice on how much margin they give to a retailer or brand. Treating Customers differently based on their 'profitability' is counter-productive to building loyalty and toward creating a healthy retail Customer Experience.
Memories of panic buying may be fading here in the UK but have resurfaced elsewhere1. The near constant threat of another wave of Covid-19 may yet prompt another round of hyper demand. Whilst there is little hard evidence to determine the underlying drivers of panic buying2, there are numerous theories that the retail industry may benefit from exploring.
Feroud Seeparsand, dunnhumby's Senior Consumer Psychologist, outlines some likely theories to explain the 'why' behind the 'panic buy' and some implications for retailers to prevent it reoccurring in future.
Nobel Prize-winning economist Daniel Kahneman stated that 'loss aversion' was his and Amos Tversky's single greatest contribution to decision-making theory3.
We feel the pain of loss more than an equivalent gain. In other words, losing £100 hurts more than the joy of winning £100. When applied to panic buying, we fear for the loss of a product we could otherwise have had. Perhaps more to the point, we would normally have had access to a variety of products. Relative to this normal point of reference, the relative loss of not possessing a product helped lead to panic. As customers would normally possess a certain product, the relative loss of it created pain.
A curious detail is that small numbers can make big differences, a concept called 'diminishing sensitivity'; winning £200 does not double the joy relative to winning £100. In other words, even small numbers of a valued product can have a significant effect on one's decision making. It is because of this diminishing sensitivity customers may lean towards zero risk aversion, in other words not to risk missing out on a product; if you see it, buy it!
Implication for retailers: Use the new reference point that past panic buying did not stop most customers obtaining products.
Another Nobel Prize-winning economist, Richard Thaler, and his colleague Cass Sunstein highlighted numerous heuristics to nudge behaviour4; one of these is social norms or copycat behaviour. We are perhaps all guilty of assuming restaurants with longer queues have superior dishes or assuming that the more popular films, plays or books are worth consuming. When applied to retail, if a customer sees another purchasing a particular item, the odds are that they will follow. This can easily be exaggerated through social media and news reports.
It does not matter if this perception is factually inaccurate; perception will still hold sway. If customers do cause products to sell out as a result, this is likely to lead to a scarcity effect, where those products are valued even more than before. This can be further exacerbated if such products are perceived to be potential life savers, like hand sanitisers or medicine.
Implication for retailers: Highlight how most people are not panic buying. Foodstuffs North Island and South Island, in New Zealand, got out ahead by introducing their 'Shop Normal' campaign, which encouraged customers to 'shop normally and be kind in supermarkets'. Tesco in the UK also ran a 'Together we can do this' campaign in national media to encourage people to 'shop normally together'.
Sometimes the actions that can save lives, such as hand washing and social distancing, are simply not enough to regain a sense of control5, as they are too dependent upon the goodwill of others. Therefore, there remains a need to reduce anxiety. Stockpiling or buying more, as a form of retail therapy, is a manner for regaining control.
Scientists have found uncertainty leads to the consumption of utilitarian products (such as cleaning agents and cooking ingredients), i.e. products that give you something to do6. Shoppers are less likely to be interested in the latest fashion trends. When one adds to the mix a virus that demands hygiene, the hyper-demand for particular products can be better understood. The same scientists explore the concept of 'displaced coping', where shoppers purchased items that are of no direct relevance to their uncertainty. This may go one step to explain the recent insatiable worldwide desire for toilet paper.
Implication for retailers: Provide customers with products that may provide a sense of control, such as gardening, DIY, crafts, puzzles.
Whilst behavioural economics and nudge theory assume irrationality, game theory (which also can claim a Nobel Prize by John Nash, as featured in the film A Beautiful Mind), assumes rationality.
In the same way panic buying exists, customers may panic and create a bank run, where customers take money out en masse which then collapses a bank. In one study, it was found that asking participants to recount a time when they felt fear was found to increase the likelihood of a bank run in the form of a game format7. There was some evidence that inducing sadness was less likely to create a bank run. Given the emotion of fear led to bank runs, it is of little wonder that the fear of a pandemic may have led to panic buying.
Implication for retailers: Influence emotion to avoid fear (e.g. through in-store media and music).
A recent global survey addressed toilet paper hoarding through personality traits8. It was found that customers who felt more threatened by the pandemic, possessed greater emotionality and greater conscientiousness (i.e. planned more) led to more toilet paper hoarding. This study may suggest that appealing to higher values2,9 (ie encouraging responsible behaviour) may not help to avoid panic buying.
Implication: Encourage long term planning and purchase of long shelf life products, to ease supplies if a second or third wave returns.
This is not an exhaustive causal list, but instead focuses on theories that could have at least some practical application to limit panic buying. The theories covered include areas that assume irrationality, such as behavioural economics and nudge theory, or rationality such as game theory. Other theories may sit more on the fence.
Whatever the drivers for panic buying this is a topic that retailers need to address. Even if panic buying does not reoccur within the Covid-19 pandemic, it is likely to return in some future event whether it be a natural disaster, climate change, strikes or supply shortages.
2. Lunn, P. et al (2020). Using Behavioural Science to Help Fight the Coronavirus: A Rapid, Narrative Review. Journal of Behavioral Public Administration Vol 3(1): doi: 10.30636/jbpa.31.147
3. Kahneman, D. (2011). Thinking Fast and Slow. Penguin
4. Thaler and Sunstein (2008). Nudge. Improving Decisions About Health, Wealth, and Happiness. Penguin
5. Taylor, S (2019). The Psychology of Pandemics. Cambridge
6. Chen, C.Y. and Pham, M.T. (2018). Affect regulation and consumer behaviour. Consumer Psychology Review 2(1): 114-144
7. Dijk, O. (2017). Bank Run psychology. Journal of Economic Behavior & Organization 144: 87-96.
8. Garbe L., et al (2020) Influence of perceived threat of Covid-19 and HEXACO personality traits on toilet paper stockpiling. PLoS ONE 15(6): e0234232.
The dunnhumby Consumer Pulse Survey is a multi-phased, worldwide study of the impact of COVID-19 on customer attitudes and behavior. We surveyed more than 27,000 respondents online in 22 countries, with interviews conducted for Wave one from March 29 – April 1, for Wave two from April 11 – 14, and for Wave three from May 27 – 31. Due to the rapidly unfolding crisis in North America, dunnhumby conducted Wave four from July 9 – 12 in the U.S., Canada and Mexico only. Here are highlights from the study:
In a series of posts published earlier this year, we covered the results of the dunnhumby Customer Pulse – a global study designed to explore changing consumer mindsets during the COVID-19 pandemic. Over three waves, conducted between March and the end of May, we polled thousands of people from more than 20 countries on subjects including supermarkets' responses to the outbreak, the economic outlook, and how their shopping behaviour had changed due to COVID.
At the beginning of September – three months on from the previous wave and with supply chains stable and the changing nature of lockdowns – we wanted to revisit the Customer Pulse to see what, if anything, had changed. Below are some of the standout findings from this fourth tranche of research.
Worries fade, but some still feel unsafe while shopping
One of the key things tracked by the Customer Pulse is something that we refer to as the "Worry Index" – a representation of how concerned consumers around the world are about COVID-19. Globally, the Index has now fallen to its lowest point, down from 34% in March to just 22% in September. Australia and Korea are the only countries to show a rise since the previous study, with the latter of those demonstrating the sole meaningful increase.
While worries may be dwindling generally, this can change rapidly based on local circumstances, and in-person shopping is still a point of concern for many: one third (33%) of those surveyed said they still don't feel safe from infection while shopping. Although this figure has fallen considerably since waves one (42%) and two (43%) of the Customer Pulse, this does mean it's of critical importance to retailers to keep communicating the efforts and importance of supporting colleagues and customers by focussing on positive drivers of a safe shopping experience and activities supporting vulnerable customers.
Those persistent worries should not detract from the phenomenal work the Grocery Retail industry has done to reassure Customers over the past six months. Stores (48%) continue to outpace the government (33%) in terms of who shoppers believe are doing a good job of dealing with the virus, a trend that has remained consistent across the duration of our study. Retailers in Canada, Australia and the UK are seen to be doing particularly well.
Early changes to shopping habits remain in place
The early months of the pandemic saw major changes to Customer shopping behaviours. Trips decreased, as did the number of stores being visited, while basket sizes and ecommerce usage both skyrocketed.
Six months on from our initial survey, those behaviours remain largely unaffected. While the number of trips that Customers make has slightly risen, it has not done so with any degree of significance. Broadly, shoppers have continued to stay local, and visit stores only when they need to. Only a minority are shopping new stores.
Consequently, many shoppers continue to spend more when they do shop; around a quarter (23%) say they are still spending more each trip. Basket sizes can fluctuate though and some markets saw spikes particularly sharply towards the end of September*, likely a consequence of infection rates beginning to rise once again and many shoppers wishing to stock up in the event that tighter restrictions could follow.
One the most profound changes in behaviour during the outbreak – the upsurge in online grocery – continues apace. Ecommerce now accounts for 28% of weekly shops, the same as it did in May, and relatively stable since the start of the pandemic when it stood at 30%. Many respondents plan to continue to adopt online alongside store shopping with 59% saying they plan to continue using online channel. The tipping point for online is well and truly here.
Although many of the pandemic-based trends have remained consistent during the past half year, some shifting dynamics are worth bearing in mind. In the UK specifically, while the initial outbreak saw large superstores lose much of their trade to both smaller shops and digital channels, much of that custom is now being pulled back in from small and medium stores, as well as convenience locations.
Financial worries have remained constant, and frugal behaviours are rising as a result
In regard to both their personal finances and the economic outlook for their country as a whole, many shoppers are now a little more optimistic than they were when the Customer Pulse began. That said, concern is still rife; around half (47%) of consumers have worries about their own financial situation, and more than two-thirds (67%) say the same about their national economy.
Accurately or not, this prolonged concern has translated into widespread belief that grocery shopping is becoming more expensive. Some 41% of global respondents believe that prices have risen, with many countries showing a significant increase since May. France is the only country in which this figure has declined.
The upshot of this persistent financial worry is that many Customers are now beginning to act more frugally. More than half (51%) are looking to lower-priced stores, with similar numbers increasing coupon usage (45%), opting for the lowest-priced goods (41%), and looking online for the best available sales. As we reported in June, a new age of value perception is here.
Eight important shifts will define the future for Grocery Retail
As Customer behaviours continue to flex around the impact of COVID-19, we believe that Retailers need to continue to focus on eight key shifts and business enablers as they continue to respond and future proof their business for the future. Consumer behaviours
For more information about COVID-19's impact on Grocery Retail, please visit our dedicated resource hub.
* Data from this edition of the Consumer Pulse has been supplemented with recent insights from HuYu, dunnhumby's receipt scanning and rewards platform.
In the decade since Richard Thaler and Cass Sunstein's Nudge: Improving Decisions About Health, Wealth and Happiness was published, nudge theory has enjoyed unprecedented success.
Predicated on the idea that individuals respond better to indirect suggestion than outright commands, nudge theory is commonly used as a way of subtly influencing our behaviour towards positive choices. The idea has gained such traction, in fact, that many governments around the world have created "nudge units" in a bid to tackle thorny issues like obesity and the climate emergency.
Just as governments are exploring how nudge theory can be used to tackle real-world challenges, retailers have a similar opportunity with regard to their customers' dietary choices. With even a few small changes, retailers can help to nudge shoppers in the direction of healthier food decisions.
What follows are some of my favourite nudges that grocery retailers could easily implement to aid customer health.
In 2018, scientists published their findings from a seminal experiment in which some of the UK's leading retailers removed snacks and confectionery from the checkout. Purchases of sweets, chocolate, and crisps subsequently fell by 76% when compared to supermarkets that kept those items in place. In other words, just changing the location of products can nudge shoppers into healthier decision making.
In 2012, scientists investigated whether the sale of healthy snacks next to the checkout in a hospital canteen could be influenced by the amount of shelf space they were allocated. Healthy products were given a quarter of the shelf space in the first test, and three-quarters in the second, with sales rising from just 14% to 44% as a result. Visible availability of healthier options clearly plays a big role in pushing us towards them.
One particularly innovative nudge was discovered by a group of US scientists in 2017, who found that introducing an area in a trolley specifically for fruit and vegetables led to higher sales of those items. As with the previous example, the amount of space dedicated also had a role to play. In one study, increasing the size of the partition from 35% to 50% of the trolley increased customer spend on fruit and veg from $14.97 to $17.54.
Change4Life is a campaign run by the UK's Department of Health, aimed at nurturing healthier lifestyles. A 2015 study commissioned as part of the campaign suggests that "normalising" the purchase of fruit and veg goes a long way towards influencing shoppers. When trolleys used statistics showing how many other shoppers purchased fruit and veg, spend in those categories rose by 12.4%. Social norm communications like this are a classic form of nudge that exploits our deep-seated concept of conformity (in this case in a very positive way!).
Obesity isn't just a problem for adults. To help tackle childhood obesity, the Food Dudes programme put cartoon role models at the centre of its in-school campaigns. One London-based study found that fruit consumption amongst the poorest eaters increased from 4% to 68%, while an unexposed control group showed no change. Whilst this may not show increased consumption in a retail context, the concept of using accessible and entertaining imagery and characters to promote healthy eating out of store should be equally applicable in-store.
Some of these techniques came together last year when the Royal Society for Public Health showcased Nudge, a pop-up at The People's Supermarket in London. While the store was only open for two days, the purchase of sugary drinks was halved according to customer feedback. There are plans to make Nudge a permanent feature of the store, and to use data from every purchase to help identify further opportunities to influence customers towards healthier choices.
And new nudges are always popping up. In November 2019 a new DnaNudge shop opened in London. Combining a wristband and app, DnaNudge aims to help users make better food shopping choices based on their DNA and lifestyle. Food is scanned using the wristband, which will then flash red or green based on its suitability for the owner's biological profile. A product with high salt content will flash red for a user with high blood pressure, for instance. DnaNudge, which recently showcased at CES 2020, is collaborating with Waitrose to study the effects of this approach on pre-diabetic customers.
Food labels themselves can be also used to encourage healthy eating, by translating calories into walking time to nudge people into healthier choices. This approach is often called Physical Activity Calorie Equivalent, or 'PACE' labelling, and has shown promise in reducing the number of calories and the amount of food consumed by the public. Some results in the UK have been so promising that the Royal Society for Public Health has called for PACE labelling to be introduced. Despite further research needed to assess its real-world impact, this nudge is likely to receive more attention in the near future.
It's a sad fact that non-communicable diseases (such as heart disease, cancer and diabetes) still account for around 70% of global deaths. Furthermore, many of these deaths are due to factors that the victim may be able to influence, with tobacco use, alcohol abuse, diet, and inactivity all contributing to that number.
While grocery retailers might not have a direct responsibility for commanding their customers to eat better, they do have the opportunity to play a huge role. As behavioural science becomes better-known around the world and savvy customers expect retailers to make it easier for them to make healthier choices, expect a tipping point soon at which the nascent nudge becomes the new normal.
Are you looking to increase your contactable Customer base? How much money are you losing on incorrectly identified Customer communications? Throughout our 30 years of big data experience working with clients across industries around the globe, we have found that maintaining contact through relevant Customer engagement is a crucial component of putting the Customer First.
Essential to preserving contact data is ensuring that you have the most up-to-date information from your Customers; not an easy task. On average, people in the United States will move an average of 12 times in their lifetime. United States Postal Service data indicates 14% of the population change addresses annually. As email contact has grown, it's important to note that, on average, 30% of people change their email addresses each year. This is driven by ISP or job changes, or just to stop being spammed. As people move away from home phones to primarily mobile devices, phone numbers are stabilizing as consumers maintain the same numbers through physical moves.
Contact data maintenance also includes an effective and trackable process for removing Customers who "opt out", unsubscribe or otherwise request to not be contacted. Beyond Customer fallout for not honoring their request, regulations such as GDPR and CCPA can deliver fines as high as €20 million, or up to 4% of the annual worldwide turnover of the preceding financial year (whichever is greater), for any violations.
So, how are you collecting and managing sensitive, frequently changing Customer metadata? These three questions can help you perform a quick data health check for your business:
Here are the most common data management options we encounter across industries:
Maintaining Customer information manually through an internal data team can be time-consuming and costly. It may require Customers to update their information online or through a call center, with an internal data team to validate the changes, and your Customer engagement team to be made aware of the changes so they can update their downstream systems. If you are in contact with your Customers on a weekly basis, this process will need to be on-going and thorough to accurately capture the data changes.
Many third-party CRM systems and databases exist, often removing the manual steps from this process and may even automatically update Customer address information via online sources. In many cases this information is based on publicly available data or the USPS' address tools. However, these updates can verge on being "creepy" to many Customers. Automated systems do remove many of the manual touch points for your teams, but the information is then strictly provided by the third-party databases and processes. Additionally, downstream systems often still require updates from these tools to maintain the most correct Customer information across your data landscape.
While there are some hybrid models of options, here are the main pros and cons we have identified for the primary methods:
|Internal Pros||Internal Cons|
|The fastest method if you own and manage your data ingestion platform||Managing a metadata repository tied to your website or mobile platform may require significant improvements in your front-end systems and teams|
|Your internal security can ensure that personal data standards and protections are maintained||A true "Customer master" repository will require significant resources, a robust data governance structure and regular audits for both security and data accuracy|
|The easiest method for maintaining your Customer opt-outs and communication preferences||If there is a data breach from your systems, your company is 100% liable for the breach|
|Platform and tool agnostic. An internal "Customer master" repository can serve as a single source of truth for Customer data within your organization|
|Leverages the information provided from your Customers which in practice should be the most trusted|
|3rd Party Pros||3rd Party Cons|
|Removes significant pressure from your internal teams and systems as you are pushing the process to the 3rd party||May require you to maintain your own Customer opt-outs and communication preferences external to their platform|
|If the data resides on and is consumed from their systems, on-going security becomes less of a concern for your internal teams*||May not allow Customer provided information to be captured or maintained|
|Can be a very accurate source if they are leveraging governmental and legal databases||May require the use of their specific software and technology, limiting the ability for your organization to create an internal "Customer master" on your own databases and downstream systems|
|May be updated on a real-time basis from their systems||You are tied to the 3rd party data match and update process dependencies. Additionally, some companies limit the daily number of requests or queries|
|APIs and other data integration points with the 3rd party may be made available ensuring that all internal teams have the same "Customer master"||Are they consuming publicly available data (ex. mortgages and legal proceedings) or are they using some large unmanaged database to match Customer details and data?|
|How often are they confirming the accuracy of their data? Example "John Smith" may simply be a typo from years ago or it could be correct. How do they confirm accuracy?|
|*If the 3rd party or their associated processors breach your Customer information, you may still suffer reputational and financial consequences|
Regardless of your chosen data mastering methodology, the Customer's preferred data should always be treated as the "most trusted," as this is the data your Customer is asking you to use. We recommend prioritizing Customer-provided data over other sources, only falling back on alternate sources if there are issues with Customer communications.
dunnhumby can help your company develop a comprehensive Customer mastering solution, regardless of your existing CRM process, technology or vendor. We have spent the last 30 years working with Customer data in many different stages of maturity and complexity. Through this process, we have developed proven best practices to collect and maintain your Customer metadata. If you are interested in discussing Customer mastering or Data Consulting, please reach out to your dunnhumby client representative or Contact Us.
It's a well-worn phrase by now, but it's true that the COVID-19 crisis has drastically altered the global retail landscape. Here in the Asia-Pacific region, a majority of markets are now looking past the panic of the first wave and towards the future. In this series of articles, we'll explore how grocery retailers must adapt to a more omnichannel reality to thrive in a post-pandemic world.
Throughout the COVID-19 crisis we've seen the sharp rise and fall of many trends. As countries veered from one phase of the pandemic to the next, we've seen everything from panic-buying and stockpiling, to a booming demand for hygiene products. While some of these trends have stuck, the resumption of a more 'normal' life in many parts of the Asia-Pacific have seen others tail off.
One trend which is set to stay is in eCommerce, particularly within grocery. Lockdown drove a surge to online grocers the likes of which we have never seen – and it seems customers have been convinced by the online experience. According to multiple recent studies China's grocery eCommerce market, already a booming sector with 29% growth last year, is now tipped to grow by 60% this year as the coronavirus has driven whole new segments of customers to the online grocery market. The trend is also sustaining; the main growth driver in JD.com's record-breaking '618' event this year was grocery, with sales almost doubling.
While general retail has been building momentum online for some years, grocery has been something of a laggard, rarely accounting for more than 15% of the overall grocery market. Historically the major barrier to entry to online grocery has been trust – over 50% of customers do not trust online grocery deliveries to pick the freshest and best items. For years this has been a catch-22 scenario for retailers: customers don't trust the quality of online grocery because they haven't tried it, but they won't try online grocery because they don't trust the quality.
COVID-19 has caused a new wave of customers to finally take a leap of faith into digital grocery. Retailers can be happy that they've won new customers online, but now comes the hard work of retaining them.
Much has been made of retailers' attempts to keep up with surging online demand during the early phases of the pandemic. Even in globally advanced eCommerce markets like the UK, the lead retailer has had to significantly expand delivery capacity to keep up with demand. In order to meet the needs of new customers, retailers have rightly focused on having the right physical infrastructure in place.
However, if retailers want to keep meeting the needs of customers, they'll now need to focus on a different kind of infrastructure - the online customer experience.
The ease of shopping online is a double-edged sword for retailers. If customers can shop online with one retailer, they can shop online with any retailer. Your competitor store is no longer 1 kilometre away, it is one click away. Customers can literally browse competitor shop windows while they are in your store, and for countless retailers in the Asia-Pac region where online sales have historically been low, their digital stores may be looking rather outdated.
So while you may have won new customers, the fight to keep them is much more challenging.
The principles of great customer experience online are the same as instore. It's about helping customers easily find what they want. It's about helping customers feel they've got a good deal. It's about having a well-laid out store. Fundamentally, a great digital experience is about putting customers first and responding to their needs. Thankfully, the nature of eCommerce makes it possible to know these needs in detail through the wealth of data available to retailers. The data you're likely already collecting will tell you everything required to build a better overall and individual shopping experience for each customer who shops online.
Here are 3 ways retailers can act now to build a winning customer experience online:
Retailers in Asia have a limited window of time to win the continued business of new online customers. As these customers become more familiar with the experience, the greater will be their demands and their likelihood to look elsewhere when their experience is sub-optimal.
At dunnhumby, we've been advising grocery retailers on digital best practise for over 10 years, led by 30+ years of leading experience in data science and we have developed a range of products for retailers to deliver exactly these kinds of industry-leading customer experience online, powered by retail data.
In the next part of our series on the post-COVID landscape in Asia-Pacific, we'll explore the diverging needs of customers in the wake of the pandemic, and how omnichannel personalisation can help retailers meet those needs efficiently and effectively.
 E-commerce drives China's stay-at-home economy in coronavirus aftermath & China's online grocery sector set for explosive growth, says GlobalData
 Chinese shoppers are staying online. That's great news for JD.com
 Study cites barriers to online grocery shopping
 Tesco Delivers One Million Online Orders In A Week In The UK
Last March, when we realized the potential impact that COVID-19 might have on all aspects of our lives, dunnhumby launched a survey to understand how the virus would affect consumers food shopping habits. It was designed to help our clients better meet the needs of their Customers by seeing the impact of the virus through their customers eyes.
Little did we know at the time that one year later we would still be dealing with the impact Covid-19. This study presents the results of the sixth global wave of the study and the seventh wave for the United States. Other waves were conducted in March, April, May, July, September and November of 2020. This wave was conducted in February 2021.
This report focuses on just how things have changed over that year and what remains the same.
Retail leaders must objectively understand how their business currently considers Customers before trying to set a more Customer-centric direction and focus. There are some formal assessment methodologies, like dunnhumby's Retail Preference Index (RPI) and Customer Centricity Assessment (CCA), which offer detailed evaluations of a business' capabilities, strengths and weaknesses based on Customer perceptions (RPI) or global best practices (CCA).
The approach outlined below is not intended to replace these formal tools; rather, these observations are intended as a kind of 'toe in the water' to help retail leaders form early hypotheses and points of views. These are rules of thumb, heuristics culled from global experience. Later, leaders might use these observations to informally check progress from time to time as a way of assessing whether the "program in the stores matches the program in our heads".
Hence, the context and laboratory for these suggestions is the retail store, where the rubber meets the road, so to speak.
Walking around a store (or better, walking around several), can give many clues toward understanding a retailer's attitude about its Customers, as well as revealing some of the challenges ahead for installing Customer First. As Customers ourselves, we are qualified to assess an organization's 'readiness' for Customer First, simply starting by walking around.
How a Customer experiences the store shapes their perception of the brand, and there are dozens (even hundreds) of 'moments of truth' for Customers in each shopping trip – opportunities for the retailer to win more loyalty, or indeed to lose it. And it only takes one 'bad' experience to erase all the good.
Leaders can form an opinion about the Customers' true shopping experience by observing 'Who really runs the store?' – a way to put on a Customer lens to assess if the Customer, the retailer, the supplier, or no one is driving shopping experience decisions, like range and presentation. For example:
Of course, analysing any available loyalty data will later tell us how Customers shop the category and that might well be by brand (or flavour or size, etc., and will certainly vary by section). But this first assessment helps us begin to form our perspective on how tuned-in the business is around its Customers, and about where within the business leaders might need to begin to install insights and the Customer language.
Store signage not only delivers a written message, but also a type of 'body language' that Customers tune in to, albeit not always consciously. Look around the store to see both the written and hidden messages, and hear the tone being communicated: ask, do messages speak respectfully to Customers? For example:
While walking the store, traveling through stock rooms and the employee break room, note the signage and messaging aimed at staff. What seems to be valued more – numbers or people?
What policies and rules guide employee behaviour?
How are they expected to interact with Customers?
Are the messages respectful of staff? Of Customers?
What do signs say about the culture around Customers?
dunnhumby's Loyalty Drivers analysis suggests that Customers exhibit four 'mindsets' in their shopping journey – Discover, Shop, Buy, and Reflect. One element of the 'Reflect' mind-set includes the decision to return, exchange, or to request a refund when the product or service does not quite suit.
On your store walk, observe who has the power to satisfy Customers making a return or wanting a refund: is the front-line employee empowered to satisfy the Customer, or must the Manager be called? Is there one 'service' desk where Customers must queue to get their money back, or can the helpful cashier make it good on the spot?
Examine the return policy to assess its sensibility and ease from a Customer viewpoint. For example, must a Customer act within 7 or 30 days, and is a receipt required and signature under penalty of perjury? Is the taking of an oath necessary, or perhaps a drop of blood? The store's practice says volumes about who deserves trust in the eyes of the business. Requiring levels of approvals and higher management involvement (or some other form of hoop-jumping) is neither trusting of employees nor Customers.
The return / refund policies and practices are strong indicators of a company's readiness for, or progress along the Customer-centric journey. Customer First organizations give front-line employees broader authority to resolve Customer needs, and extend the power to satisfy Customers to most members of staff, in some form. For best practices in this area, please see the policies from Nordstrom in the U.S. and Ritz-Carlton globally.
Senior leaders set the tone for how Customers are regarded and treated in the business both by their words and their actions, of course. And the C.E.O.S – Customers, Employees, Owners, and Suppliers – all take notice. It's widely documented that leaders who walk the walk are more effective than those who only talk the talk.
One simple yet powerful way to assess readiness and progress is seeing how leadership's walk and talk align. A word cloud, like the one illustrated below, makes the point very clear. In this example, recent shareholder statements (same quarter) were compared for two companies on a Customer-centric journey. We can see different progress in a form of 'walking the walk' at Retailer X and Retailer Y. The C.E.O.S are hearing what really matters to the leaders, and are forming the Customer culture accordingly, all the way down to store level.
The store shapes Customers' perception of the brand; there are hundreds of opportunities for the retailer to win or lose loyalty in each shopping trip. Customers take clues, consciously and unconsciously, throughout their entire shopping experience, and draw conclusions about retailer warmth and attitude toward shoppers. And it only takes one disappointing experience to erase all the good.
Retail leaders must take an objective assessment of the shopping experience using a Customer lens to understand their current state and readiness for customer centricity. Pay close attention to the body language and tone of your policies. Store signage, employee empowerment and communications, and practices around assortment and presentation are clear indicators of the organization's attitude about the Customer.
This is the first in a series of LinkedIn articles from David Ciancio, advocating the voice of the customer in the highly competitive food-retail industry.
In the first episode of Customer First Radio, Dave Clements, Global Head of Retail for dunnhumbyand David Ciancio, Global Head of Grocery for dunnhumby kick off the series by discussing what it means to be a truly Customer First business, share which retailers and brands today embody a Customer First mindset, and examine how Customer First materialized during the pandemic with retailers.