The Coronavirus has drastically altered retail life in seemingly no time at all, leaving both brands and customers around the world scrambling to adjust to a new or ‘next normal’. Though the challenges facing retail customers are many, perhaps none are more formidable than the impact COVID-19 has had, and will continue to have, on their income.
Today, we’re going to talk about two areas in which this impact will be especially relevant to retail brands and their bottom lines: firstly, luxury goods and the concept of revenge spending. Then we’ll then take a look at what retailers can do to find success in a post-COVID world.
Purchasing Luxury Goods
As COVID-19 has forced countless businesses to shutter, perhaps indefinitely, the number of customers who’ve ended up furloughed or unemployed has similarly skyrocketed. For example, according to The Wall Street Journal, COVID-19 has sent as many as 20% of all workers in some American states scrambling for unemployment benefits.
Because so many personal incomes have been so severely impacted by this pandemic, demand for consumer goods has dropped considerably as well. Unfortunately, this is particularly true for luxury and fashion retailers, which have already seen their bottom lines affected by the ongoing crisis. A new, expensive handbag does not feel essential during a lockdown.
Though online orders can provide a lifeline for some fashion and luxury retailers, the unfortunate fact of the matter is that these companies can likely expect their earnings to remain subpar for anywhere from the next 5-6 months to until sometime in 2021. These retailers should hope for the former, of course, but should also continue to prepare for the latter.
The Notion of “Revenge” Spending
There’s been some talk in customer experience (CX) media about the concept of “revenge” spending. Revenge spending is the notion that, whenever retailers and restaurants are allowed to reopen, customers will emerge to spend high sums of money as both a means of releasing pent-up demand and to demonstrate (to themselves and others) that the coronavirus hasn’t “beaten” them.
Though this phenomenon may occur to some extent when and if storefronts reopen, retailers shouldn’t count on it to provide a post-pandemic sales boom. Some individuals may spend more, but the aforementioned economic difficulties mean that most consumers will still play it safe even after stores resume normal operations.
How Can Retailers Succeed?
For many retailers, this discussion may seem pretty grim. These are indeed uncertain times, but retailers can increase their chances of post-COVID success by focusing on two areas: employee well-being, and customer relationships.
Brands can drive employee retention and passion by listening intently to their concerns and implementing their feedback whenever possible. Employees will feel reassured that their organisation is listening to them, and thus feel more impassioned about their work. Both elements will be crucial to finding success during and after the pandemic, and ensuring that retailers hold onto the best talent.
Finally, retailers need to continue listening to their customers and let those individuals know that they haven’t been forgotten. Investing in long-term relationships will help convince those individuals to return once some semblance of normalcy is restored.
All told, retailers can confront COVID’s impact on customer income by listening. Brands should not jettison their experience programmes during this time, but rather continue utilising them and continue staying in touch with the individuals whose business and hard work sustains their success. No matter whether they provide clothing, luxury goods, or something else altogether, retailers that dedicate themselves to this idea will find a better tomorrow in a post-Coronavirus world.
COVID-19 presents a formidable challenge to retailers of all stripes, but they needn’t’ navigate it alone. To learn more about how to succeed in the era of Coronavirus, read our article on the subject here.