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The CX Angle Podcast: Retail Trends During COVID-19
We are in the midst of a Customer Experience (CX) revolution and customers are demanding an enhanced experience. In this episode of The CX Angle, NTT DATA Business Solutions Corporate Communication Manager, Jeremy Cross, and Customer Experience Account Executive, Ryan Kubec, are joined by Sterling Raehtz from ShopperTrak to discuss how the retail industry has trended during the COVID-19 pandemic.
Read the transcript below or listen to the podcast.
(Jeremy Cross) Welcome back to another episode of the CX Angle podcast. My name is Jeremy Cross and I am joined today by Ryan Kubec and Sterling Raehtz, who’s been on the program before. Gentlemen, how are you doing?
(Ryan Kubec) I’m doing great, Jeremy. How are you?
(Jeremy Cross) I’m fine. How you doing, Sterling?
(Sterling Raehtz) Doing pretty well. It’s great to be back.
(Jeremy Cross) Awesome. Thanks. I’m glad to have you back.
So we are recording this remotely again here in the midst of the COVID pandemic. Everybody is recording from their home and things, as you know, have been changing rather rapidly. It’s changed even since the last time Ryan and I were able to get together and record an episode of the podcast. But what we wanted to do today is bring Sterling back, because we are about a week or two away, in some instances, from the first phases of getting back to normal, which means that retailers will start to open up again. And so we wanted to bring Sterling back on the podcast to talk about some of these trends they’re seeing from their end and things that we might be able to expect as retailers begin to open up.
So with that, Sterling, go ahead and tell me, where did this new set of data come from that you have been gathering? And let’s get the conversation started there.
(Sterling Raehtz) Yeah, sure. So, last time we spoke, a lot of what we focused on was about customer experience, what’s going on inside the store and what ShopperTrak does to essentially align labor models to ShopperTrak traffic. And we’re in a situation now with only six weeks later where stores aren’t open. So the question has been what kind of data is out there to help us understand what the recovery is going to look like when it does come?
One of the things that I didn’t talk about last time was that ShopperTrak, just by the nature of what we do, we have a ton of shopper traffic data from all around the world. So to give you an idea, we’ve got about 170,000 of our traffic counters deployed all around the world in over 100 countries. And under normal circumstances, we’re counting about a billion shopper visits. That’s a billion with a B shopper visits per week.
And so what we do is, we have a separate subscription service where our retailers and non-retailers alike can sign up to see what is retail traffic is doing by individual segments, so maybe like apparel and accessories, or footwear. What is retail traffic doing on a year-over-year basis every single day?
So we would provide them an index to basically say, in this zip code, retail traffic is up 4% or down 2%, whatever the case may be. And so what we’ve been doing is taking a look with that data in mind that we have here in-house, what is the recovery effort going to look like, how are shoppers responding pre- and post-COVID? So that’s a lot of what we’re going to be talking about today.
(Jeremy Cross) So, Sterling, it wasn’t that many episodes ago that you were on the show, and a lot has changed since then. So let’s start with a little bit of a bullet-point timeline of what have we seen happen in the retail industry since we had to switch to this new way of life because of the pandemic. And what sort of trends did you start to see from that point and what’s happened since then?
(Sterling Raehtz) Yeah. So, like I was just saying, we’ve got data from all around the world, so we’re kind of tracking what traffic has been doing in China, Italy, Spain, etc.
And so maybe just breeze over what happened before it made its way to the United States, at least in the numbers — let’s say January, February — the United States was keeping its eye on what was going on in China; we saw these lockdowns were starting to happen. And so shopper traffic essentially declined to virtually negative 100% year over year for China, and these other regions because of government orders.
We’ve got a significant amount of our customer base folks here in the United States, and so we’ve been putting together some analysis for our retail partners and doing it through a variety of webinars, which I can talk about. We’ve got some public webinars coming up here in May that I’d like listeners to sign up for to take a look at this data.
But as it relates to the United States in January and February, we started to realize that the Coronavirus was going to start making a bigger impact than maybe we’ve seen with other diseases in the past. And so as we start to track our data, we really start to look at what happened from essentially March 1st moving forward. So on March 1st, retail was basically tracking at about a negative 5%, a little under 5% year-over-year change. And that’s just due to the typical trend that we’ve seen in brick-and-mortar retail, which is, as e-commerce becomes more adopted, brick-and-mortar traffic starts to decline, and that was sort of what we expected it to be.
But as the media started to pick up on the effects of Coronavirus, we look at — I think it was March 9th — Tom Hanks announced that he had tested positive — excuse me, it was March 11th — the NBA was saying that they’re going to be delaying their schedule or suspending their play for the year. NCAA announced that March Madness was going to be suspended. And what we started to see was Americans started to travel to stores , long before any of these stay-at-home orders were put into place.
I think the first stay-at-home order went into place, I think, March 19th — that might have been California – and shopper traffic was already down about negative 80% for the year, or year over year, before the government even stepped in. So that has a lot to say about customer sentiment or confidence, about retail shopping. And so that’s what we’re seeing, and that’s what we saw basically prior to any legislation being put in place.
(Ryan Kubec) So, Sterling, that’s interesting that you guys are able to capture that data, see that trend that it was happening before. I’m guessing, too, that your customers probably specifically are interested in what is the trend going to look like as stores start reopening? Because as Jeremy said, we’re a couple of weeks away from where the plan to open America back up again is starting to go into effect. We’re starting to see looser regulations and restrictions across the country, state by state.
What are your customers asking for, or what are you expecting them to ask for? What are you guys doing to help them prepare? Because I’m guessing it’s going to be very abnormal traffic as things start to open back up.
(Sterling Raehtz) So the number one buzzword going around our company and what’s going on with conversations with our retail partners right now is related to occupancy. So I’m looking at shopper traffic right now as a pre- and post-COVID world where what happened before COVID, it really doesn’t matter in terms of shopper trends, because essentially a lot of retailers are at zero traffic and have had the slate wiped clean. And occupancy is really what we’re focused on.
So if you were to look at some of the states that have started to loosen restrictions and all these executive orders that are going out, there is some sort of occupancy requirement placed on retailers, among other things. So, for example, I think it was in Georgia where there is a five person per 1000 square foot limit, or I think it’s 20% of the fire marshals’ max occupancy, whichever is lower. And then that would be different than here in Michigan, where it’s four persons per thousand square feet in your store and 25% of the fire marshals’ max. So those numbers might not be exact, but the point is that retail is starting to open back up, but not all localities are under the same requirements.
So we’re being asked by retailers, how can we ensure that we’re complying with local regulations and keeping the safety of our customers and our employees in mind? So we’ve had some retailers who are focused on, we’ll just put an extra person at the front door and hand count. And that is a solution. But we have the technology and most of these stores, and so we’re encouraging our retailers to think about how can you already leverage the ShopperTrak traffic counters that are there to do this automatically and with a system. So while it might be easy and convenient just to place a person there to kind of monitor the traffic going on, it doesn’t really create an audit trail. So there’s no way to go back and say, we had this number of customers per hour per, day for the last week. And so the technology is in place to create a pretty robust system.
So, again, yeah, it’s very different than where we were about six weeks ago, where we are talking about getting as many shoppers into the store as possible and then aligning your labor requirements. Now we are putting sort of a glass ceiling on how many people can come into the store and then how can we manage that we’re not going over these occupancy restrictions. So that’s really what ShopperTrak is focused on right now.
(Ryan Kubec) Yeah, that stinks. I mean, I think we’ve seen, at least here in Michigan when they put that restriction on it, it kind of went into effect immediately. So the local stores and establishments didn’t really have time to put together a plan or send out an RFP and get infrastructure put in place. And so I’ve seen anything from more sophisticated, with people working on an iPad that clearly has some type of program for counting traffic coming in, all the way down to what looks like — the only way I can describe it is like a local restaurant hostess sitting there with a pad and pen counting people coming into the store and people coming out and constantly trying to do a tally of who’s in the store.
So that’s interesting that you guys are able to take data that an infrastructure that’s already in place that is literally geared toward counting how many people are in your store at what times, and being able to kind of repurpose that and offer it to your customers in a different way.
(Sterling Raehtz) Yeah, and be clear too, this isn’t just a retail problem. These are regulations that are being put on virtually any public space. We have a fairly significant portfolio, about 400 shopping centers around the United States and in the world. So these are the exact same conversations that we’re having with commercial property owners, some government spaces. You know, we’ve got a really great case study that’s going to be coming out here pretty soon about the Staten Island Ferry where they’ve adopted our technology so they can see how many people are on that ferry at any given time, and those numbers are being reported up through the highest levels of the State of New York government. So it’s virtually a ‘new normal’ for all public spaces.
(Jeremy Cross) What comes to my mind — and I want to ask Sterling – is, so occupancy is the big buzzword right now. It’s the big KPI that you’re looking at. But what I want to know is what other sort of trends might be shifting. What trends have shifted because of the COVID pandemic and, specifically, it comes to my mind — let’s just use the grocery store as an example — because they’ve been open. Some of them have been looking at occupancy already, as to the number of people in the store. I know myself personally, I have only been using pickup and haven’t been going into the store. But if I were going to a retailer and I knew that I’m likely going to have to wait in line to get in, is this influencing the amount of time that a customer might stay in a store because they know they’re going to be going there less often? Have you seen any trends in that or other trends as to when people are shopping, stuff like that?
(Sterling Raehtz) So the time in store is not a metric that we’re capturing, to the extent that we are just [looking at] shopper traffic data coming into the store. So I’ll talk a little bit more about maybe temporal patterns, and specifically weekdays versus weekends.
So it is the ebb and flow of retail where most shopping takes place on the weekends because, let’s be honest, there’s an entertainment value to shopping. And that’s one of the largest tourist activities to do in any given area. And so what we’ve seen is there’s been a major shift from that amount of shopper traffic coming into the stores on the weekends to be actually more spread out across the week. And what we see is that it’s likely that consumers are avoiding perceived crowded shopping times, right? So if most people know that an individual store will be busier on a Saturday morning or Saturday afternoon, specifically for grocery, than it might be on a Tuesday afternoon. And with most people working at home or some people furloughed or out of a job, that gives them the opportunity to be able to be shopping at typically non-peak periods of time during the week.
So definitely on a day-by-day basis, it’s starting to flatten out, so to speak, across the week. But if you’re also going to look at what shopper traffic is doing in terms of time of day, there is a very slight shift moving towards shopping occurring earlier in the day. It’s only about 4%, but it is somewhat notable to say that over the course of all retail right now, and typically these data points are coming from what has been termed as essential retailers, and that’s somewhat subjective. But what we are seeing is that more shopping is taking place a little bit earlier in the day, maybe across the board, 15 to 30 minutes earlier than we typically would have seen. And that’s probably also a result of shoppers trying to avoid peak periods of traffic.
(Jeremy Cross) Okay. And then I would imagine also — and Ryan, this is going to be right up your alley — I imagine that the increase in e-commerce has obviously really, really picked up and hit the retail industry in different ways. Ryan, I’m going to actually pitch over to you because I think you had some questions about e-commerce that you want to ask Sterling.
(Ryan Kubec) Yeah. I was curious if you guys are seeing anything or your customers are talking about this, because obviously when those lockdowns went in place, traffic went to zero or very close to zero. And so everyone had to shift their purchases to an online channel. Do you see that being a trend that’s going to continue?
I think we’ve seen that over time more and more buying has been happening online, but in our last episode with you, you talked about how this younger generation actually enjoys going to stores. I guess this could go one of two ways. People either get more used to or accepting that they’re going to just have to buy things online or people are cooped up in their house so much that they just can’t wait to go back into a physical brick-and-mortar store. Do you have any indication on which way that’s going to go or how that’s impacted your customers?
(Sterling Raehtz) Yeah, so it’s a really interesting point, and I’m going to shift a question back to you in a second. But at ShopperTrak, we are always investigating essentially the Holy Grail, which is from the moment somebody sees an ad online to when they make a purchase, whether that’s on store or online, those are all data points that we’re trying to track.
But for right now, honestly, most of the conversations that I’ve been having with retail partners and commercial property owners, it’s all focused on buy online, pick up in-store strategies. So if you look at some retailers — I think Best Buy’s been out front — and I know that I’ve talked about them a little bit in the last podcast, but they adopted a strategy very early on where they said, hey, we’re going to shut our stores, but we’re also going to make it available to pick up the product curbside. And that’s different than their strategy was before, where you had to walk inside the store.
And I actually had that exact same experience with Dick’s Sporting Goods over the weekend. Now, the good news coming out of Michigan lately was that golf courses are opened up, and so I may or may not have made a purchase related to golf — depending on if my wife is listening or not — over the weekend and had the opportunity to test out that strategy that Dick’s had put into place and it was very seamless.
So for us, we are primarily focused on what the strategies are going on with the brick-and-mortar stores. And that’s certainly a significant adoption that we’re seen going along with the commercial property owners, as well. They’re trying to figure out, how do we handle customer traffic flow coming on to our property where we’ve got, 10, 20, 30, 40, 50 retailers on our property who are all implementing these strategies. How do we navigate that traffic flow onto our property and make it easy for the tenants — i.e., the retailers — to execute that strategy? So that’s what we’re also focused on, is helping them through that ‘new normal,’ so to speak, here for the next six months or whatever it might be.
My question going back over to you, Ryan, would be what has e-commerce been doing over the last six weeks? I have some assumptions, but I would expect it will be booming pretty well.
(Ryan Kubec) Yeah. It’s exactly like you said. It’s just been interesting across the board. So, as you’d expect, the amount of purchases has gone up, because, for a lot of folks, it’s their only option. There’s some interesting data out there. And, Jeremy, I’ll find it. There’s a report that shows a trend analysis of what products were being bought online versus this time last year. And the No. 2 product that grew the most since last year was bread makers, oddly enough. So, just interesting things like that. Obviously, that’s based on percentage. So probably not a lot of people were buying bread makers last year. So we’ve seen different behavior than we’ve seen before from customers and consumers.
But one thing that we’ve specifically seen is significantly more interest in commerce and self-service, which we talked about in the last episode. But the biggest shift that I’ve seen — there’s actually two — the first would be, we worked with a lot of companies that are B2B, B2C in designing their e-commerce solution. A lot of these customers will come in and say, help me design the most perfect online customer buying experience we can have; let’s scope all of that out, let’s put it all in phase one. So that way we can wow our customers right out of the gate with the best experience they’ve ever had.
Which is fantastic, and pre-COVID that may have been a good strategy. Post-COVID, I don’t think anyone is still considering that. What we’ve seen is people taking that, here’s our end-state goal of what we want, and they are chopping that down and saying, what is the minimum viable product I can get stood up and out to my customers as soon as possible? And then we help them come up with a release strategy of how they’re going to roll out those different features and functions over the next year. So rather than having a year-long project that you go live with everything at the end of a year, you may still have everything, but you’re able to get a quicker time to value if you can get something stood up and start providing that access to your customers. That’s one trend that we’ve seen.
The other trend that I think is going to grow a lot more, and I’ve only heard a few customers talking about this so far. Specifically, I’m talking with consumer products customers, is if their main sales channel in the past was strictly business to business, they’re selling through the large retailers or suppliers, when all of those stores closed down and their inventory got locked up, maybe they didn’t have the best online strategy. It definitely had a supply chain disruption back up the chain to where these manufacturers’ products stopped moving because they were so based on really the downstream things that they didn’t have as much control over.
So we’re seeing a lot more traditional B2B customers starting to say, we need a direct consumer line as well. And I think we’ve seen interest in that before, and a lot of those companies are saying, we primarily sell through distributors or we primarily sell through some of the larger retailers, and so how do we navigate this space of having our own online channel without alienating our business partners that we do a lot of our business. So I think there’s just going to be more traction with that and probably more understanding that some companies are going to say we cannot have all our eggs in one basket. We need to diversify our sales channels.
(Jeremy Cross) So ultimately, at the end of all of this, we know things are changing day by day. Things are going to be different when we come out on the other side of this.
And so I really have a question for both of you, Sterling and Ryan, do you guys have some thoughts here about what you would advise for retailers? What would you advise our clients, Ryan, on doing to be best educated coming out of this? And how are they going to get back to operating in this ‘new normal’? What would you advise them to do?
(Ryan Kubec) So I’ll jump in, and Sterling can wrap it up for us. I guess from our standpoint, what we’re having discussions with our customers about is understanding that things are not going back to the way they were before. So really, really paying attention to trends. And I’m guessing that’s something that Sterling may talk about, as well. Trends and buying behavior and what’s going on in the market — what’s unique to your industry.
And then the other piece — and we’ve talked about this before — is getting something out there fast. It doesn’t need to be perfect, but it needs to be there, because I think we are going to see a lot of customer bases start to move toward that ease of use, ease of access, how quickly can you get information, ease of ordering, visibility into inventory and any back-ordered items. All of that is going to be more important to people now. And once they get used to that, it’s not going to be going back. So getting those sales channels up that are self-service based and rolling those out more, you need to have something there, even if it’s not perfect. You need to have something now. And so that’s what we’re working on. You know, our team has been scrambling furiously for the last six weeks, and we’re rolling out packages where we are helping large customers stand up e-commerce environments in 14 weeks, which used to be 52-week-long projects. So we’re getting them something that’s useful, meaningful, and valuable to their customers; you know, integrated with their back-end systems where they’re able to use it. And it’s going to function, can provide information, easy ordering, but it doesn’t need to take the whole year. We can roll that out in phases.
Sterling, what are your recommendations?
(Sterling Raehtz) Yeah, our number one talking point with our retail partners right now is about having a coherent and thoughtful communication plan in place to your customers. So we’ve been monitoring a lot of McKinsey’s surveys over the last couple of weeks about consumer sentiment and confidence, and while the United States does have a pretty positive outlook on retail recovery in the next 6-12 months, things are just going to be different, right?
I can say from personal experience, going to the store for the first time with a face mask on is a little disconcerting. It’s something that is necessary and new, and so it just creates a different environment for the shopper to be in the store.
So, again, like Jeremy was saying, these changes are happening day by day. You know, if you look at social distancing compliance, with ways to make sure that you’re compliant, you’ve got stickers on the floor, you’ve got signs on the front door, you’ve got emails coming out from your CEO, you’ve got all these different streams of communication going on to the customer. Take a breath, start to think about what’s the best way for a shopper to feel confident about coming to your store and knowing what to expect if there’s a line; there’s a plan in place. You know, for example, we talked about occupancy, there’s going to be times where the shopper limit has been reached in the store, and that’s okay; it’s for everybody’s safety. But you’ve got to let the customer know that is a possibility and that there is a plan in place to get them inside the door. And that, again, essentially it’s just knowing and giving the customer confidence that there is a plan in place that they can come and get what they need and get out the door and be safe about it.
(Jeremy Cross) I think those are some very simple and yet impactful suggestions or guidelines as we start to get back to this new sense of normal. And I think everybody is uncertain. And you’re right, Sterling, that the first time you go into an establishment wearing a mask and everybody else is wearing masks, or even when you see the people in the store who chose not to wear a mask and they’re the ones who are sort of the fish out of water, there is this unease that is attached to all of this, because we’ve never had to do this before. And I don’t know if we will revisit this come next fall as we get into the fall months and this comes back. Are we going to be accustomed to living in a very specific type of a world when hit with a pandemic and something that we’ve never had to deal with before, especially from just a customer experience or from a personal experience, professional experience, all of those different things.
Ryan, you got any closing thoughts that you want to add in before we close out the podcast for the day?
(Ryan Kubec) No, just thank you for listening. We hope that you and yours are staying healthy and staying sane. Be sure to take care of yourself. This is, I think, going on longer than a lot of us expected when it first started. And I think a lot of us are coming to the realization it’s going to be a while yet before things feel normal again. So check in with the people you care about, and now that the weather’s starting to warm up, get outside. Take care of yourself.
(Jeremy Cross) Sterling, it was a pleasure having you on the show today. I want to let everybody know that ShopperTrak will be doing a series of three different webinars, and we are going to include those in the show notes. So, that way, if anybody is interested in signing up for those, definitely do check out the show notes.
Again, thanks for listening and we hope to see you next time on The CX Angle podcast.
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