As quarantine measures ease, more and more stores, salons, and workshops are slowly opening their doors. However... customer sentiment has changed fundamentally in light of the crisis and the omnipresent Covid-19 virus. Purchasing habits and customer motivation have shifted; six weeks of isolation have shown people that they can live without shopping and spend less... and many consumers actually like this. What will your response be to these changed conditions?

What are the expectations for shopping in physical stores?

The near future of physical stores does not look bright. Customers have spent the last six weeks in isolation, realizing they can spend less. Following the lifting of measures, we can expect ‘renunciation demand’—consumers will find pleasure in lower consumption. Fear of the crisis, fear of infection, and the degraded shopping experience brought about by anti-corona measures (social distancing, mask-wearing, queuing to enter stores, limited shopping hours, etc.), combined with the consequent increased appeal of online shopping, will very likely change customer purchasing habits in the long term.

The opening of some IKEA centers in Germany is a good reflection of the likely future for physical stores. These retail centers prepared for the opening: they were equipped with posters warning shoppers about safety distances and monitors showing the current number of visitors; salespeople received protective masks. In short, they were ready for the new business reality.

And then... the customers didn't come. "The atmosphere in the store was very relaxed, no queues at the checkouts, no crowds," said Stefan Stukenborg, manager of the IKEA branch in Cologne. Customers are simply not yet ready to buy products they don't urgently need. The shopping atmosphere is gloomy; the fear of financial uncertainty and the potential danger of infection is paralyzing consumer purchasing habits.

How are retail companies adapting to the new business reality?

Focus on Online Sales In recent weeks, customers have been forced to shop online. Practically all stores recorded growth in online sales, some even by 10 times (according to ceneje.si research). Current conditions will dictate stronger development of the online aspect of sales for brick-and-mortar retailers. What can you do to convert as many customers as possible into online consumers?

• Make online shopping more personal. By including a 'live chat' option in your online store, you replicate the personal shopping experience—the customer gains the ability to communicate with a salesperson, just as they are used to when visiting a store.
• Leverage the data you have on your customers. Data collected through purchase tracking via loyalty cards can be a good source for targeted communication with customers. Data mining can uncover numerous opportunities for additional online sales, turning your 'generic' online communication into personalized targeting of the most likely customers with tailored offers:
• • Unique offers for physical store customers who haven't yet made an online purchase.
  • Individual offers for customers based on their past purchasing habits.
  • Special offers for your most loyal customers.
• Free delivery for online purchases. Delivery costs still represent a barrier to online shopping for some customers. If possible, offer them free delivery.
• Buy Online, Pick Up in Store. You can offer customers the synergy of online and physical shopping. They order online and pick up the purchased items at their chosen physical store on the same day.
• Customer-friendly return policy. Buying products that a customer needs to try out (e.g., clothing) is still seen by many potential buyers as risky ("What if I don't like the product?"). A simple and free method for returning unsuitable products makes the purchasing decision easier for customers.

Promote Store Gift Cards Gift cards represent immediate revenue and a guarantee that customers will return to stores in the future. Selling these cards is particularly beneficial for stores with lower margins, helping them weather the initial blow of the crisis. You can offer cards at a discount, create bundles with partner companies, or offer gift cards in digital form.

Build a Pre-order Strategy Offer customers the option to pre-order products you know they will need. Prepare attractive offers that activate customers while bringing you immediate revenue.

Effective Inventory Management Retail companies may also face inventory problems. You have too much of some products and too little of others. Some products cannot be supplied, while for others that you cannot sell, you have long-term contracts with suppliers. One of the main goals for retail companies in the coming weeks will be inventory optimization to free up cash flow.

ABC Inventory Analysis Divide your sales program into 3 groups:

• Group A: Products with a satisfactory margin, for which you expect constant sales and rapid inventory turnover.
• Group B: Products with a satisfactory margin that do not represent large inventories; lower sales are expected.
• Group C: Products with lower added value and a longer sales cycle, representing many individual transactions. These products are candidates for deeper discounts, bundle sales, or even stock liquidation. This gives the company much-needed cash flow and space for goods that sell faster.

Focus on Products with a Better Value-to-Price Ratio During a crisis, customer needs will shift toward greater value for their money, which is already noticeable in the sales growth of generic brands in grocery stores.

Stop Automatic Orders Changed consumption patterns will force some companies to change their ordering. They will need to focus on ordering products that are currently selling and stop orders for products that are currently not interesting to the market. Stopping orders will negatively affect relationships with suppliers, but it will be a necessary step to regulate cash flow until conditions stabilize.

Which Measures Should You Take?

Retail companies are feeling the consequences of the crisis strongly today. You must quickly make decisions that will have an exceptional impact on the company's future. The future (and in some cases, survival) of the company depends directly on the correctness of these decisions.

Ultimately, customers will confirm the appropriateness of your decisions; their purchasing decisions will determine whether you took the right measures. Much is at stake, and companies are limited by time and resources.

What can you do? You can test your decisions with customers before you implement them. Through strategically targeted market research, you can find out what to expect from your customers in the current conditions and which company decisions and actions have the highest probability of success.

Do you need professional help? At Artur.com, we help you ask your customers the right questions, prepare customer sentiment research, quickly gather information from your target group, and prepare research reports for you. We collect the right information from your customers to help you make the right decisions faster.