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Drive Customer Loyalty With Physical Retail Post-COVID-19 The retail store’s role in omnichannel strategy

Loose Threads THE VOICE OF REASON ACROSS THE CONSUMER ECONOMY

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POST-COVID-19, PHYSICAL RETAIL WILL CONTINUE TO DRIVE HIGH LTV FOR OMNICHANNEL SHOPPERS (p.4)

• OmnichannelmeanshigherLTV

• Physicalcommerceisalreadyrebounding

THE THREE MOST IMPORTANT THINGS TO START, AND KEEP, GENERATING RETAIL SALES (p.6)

RETAIL VALUE PROPOSITIONS NEED TO FOCUS ON WHITE GLOVE SERVICE (p.7)

• TestDriveValueProp

• UniqueExperienceValueProp

• WhiteGloveServiceValueProp

• Post-Covid-19,WhiteGloveServiceistheonlyviableRetailValueProposition

CASE STUDY: APPLE’S REOPENING PLAN (p. 9)

TRANSFORMING INTO A WHITE GLOVE SERVICE PROVIDER (p.10)

• Customerneeds:pre-crisis

• Customerneeds:post-crisis

• Anticipatecustomerneedswithclienteling

• InAction:JenniKayne

• Enhanceclientelingwithmultiplechannels

• InAction:WarbyParker

• Seamlesstechnologyandcommunications

• InAction:Lacoste

RETAIL KPIS FUELING OMNICHANNEL SUCCESS (p. 14)

• CustomerLifetimeValue

• TrafficandCross-ChannelConversion

• CustomerSatisfaction

• BlendedRevenue

Contents

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About this WhitepaperThe COVID-19 pandemic has expedited shifts in the way customers shop, both online and in stores. Customers now view physical retail through an omnichannel lens, which requires brands to adapt to a new set of expectations.Inthiswhitepaper,LooseThreadsRetailPartnerRebekahKondratoutlines:

1. Howphysicalretail’sroleinomnichannelstrategiesisshiftingandwhyitwillstilldrivehighLTV

customers.

2. WhatyouneedtodotomaximizeROIonretailefforts:

• Ensuresafetyandestablishclearcommunicationpatterns

• ImplementWhiteGloveService

• RedefineKPIs

About Loose ThreadsLooseThreadsisaretailconsultancyproducingomnichannelstrategiesthatdrivecustomerloyalty.Weareaninterdisciplinaryteamofproblemsolversthatchallengeleaderstothinkdifferentlyandstayaheadofthecurvebydeliveringpositivevaluealongeverytouchpointwithintheirbusinesses.

LearnmoreatLooseThreads.com

ABOUT REBEKAH KONDRAT

Kondrat’sexpertisecomesfromworkingaticonssuchasApple,startupslikeWarbyParkerandFortune500companiesincludingStarbucks.Physicalretailisinastateofupheaval—butKondratseesopportunityamidstthechaosandoutlinesareasoffocusforbrandsthatarereopeningpost-COVID-19.

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OMNICHANNEL MEANS HIGHER LTV

Customerswhoshopinmultiplechannelshaveahigherlifetimevaluethanthosewhoonlyshopinasinglechannel.

Whenabusinessprovidesanomnichannel experience—an equivalent customer experience across all channels—customersaremoresatisfied,purchasemore,andbecomemoreloyaltothebrand.Buildinganomnichannelcustomerexperienceallowsbrandstolearnabouttheircustomersneedsandhowtheywanttoencounterthebrand.

PHYSICAL COMMERCE IS ALREADY REBOUNDING

Customersarealreadyeagertoreturntoshoppinginphysicalstores.

Notsurprisingly,theU.S.sawaninitialpopoftrafficwhenstoresfirstreopened,followedbyaleveling-offperiod.Fromhere,thereshouldbeasteadyincrease,inlinewiththedatacomingoutofSouthKorea,whichisalreadyreporting85%ofpre-COVID-19traffic.IntheU.S.,week-over-weektrafficdatashowspositivegrowthacrossthemajorityofindustriesandshouldstabilizeovertime.

Consumersentimentdataalsosuggestthatcustomersarealreadypurchasingnon-essentialitems,whichwilllikelytranslateintosimilartrendsinbrick-and-mortarsalesasthecountryreopens.

Post-COVID-19, physical retail will continue to drive high LTV for omnichannel shoppers

“[We] know our omnichannel customer who shops at the store and on ecommerce has like a six-times higher customer lifetime value.” — Julia Hunter, CEO Jenni Kayne

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• 53%ofrespondentsarepurchasingnon-essentialitems

• 22%ofrespondentsarewindowshopping,whichimpliesthereisintenttobuywhentheyfeelthingsaremorestable

Customersareopentoswitchingbrandsastheretaillandscapechanges

• Ofthe21%whoswitchedtoastorebrand,61%intendtocontinuewiththatbrand

• Ofthe16%whoswitchedforbasics,44%intendtocontinuewiththatbrand

• Ofthe14%whoswitchedfornon-basics,56%intendtocontinuewiththatbrand

“[More] than half of the people are planning on sticking now with the new brands. And so this is an incredible opportunity for us to have penetration with a set of customers that otherwise would have been very difficult for us to penetrate.” — Sarah Paiji Yoo, CEO and Co-founder Blueland

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The three most important things to start—and keep—generating retail sales Retail as we know it will look, act, and feel drastically different than it did pre-crisis.

Decreased capacity and super-charged sanitation are a given, but to retain loyal customers, attract new ones and ultimately drive revenue, physical retail strategies need to:

• Evolve the Retail Value Proposition and serve a new purpose

• Transform into a White Glove Service

• Update metrics to drive success

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Retail Value Propositions need to focus on White Glove ServiceTheprimaryreasonforcustomerstovisitphysicalstoreshasshifted.Therefore,theRetail Value Proposition—the unique purpose for a store’s existence—shouldaccountfornewbehaviorsandexpectations.

ThemostcommonRetailValuePropositionspriortothepandemicwere:

TEST DRIVE VALUE PROP

Thestoreservesasawayforcustomerstophysicallysee,feelandtouchhigher-valueitemsbeforepurchasing.ExamplesincludeCasper’snaproomsandIKEA’sfamousmaze.

UNIQUE EXPERIENCE VALUE PROP

Storesaredesignedtobeinspiringdestinationsthatallowcustomerstoimmersethemselvesinthebrand.AnexampleistheNYCNikeSohoStore’sbasketballandsoccercourts.

WHITE GLOVE SERVICE VALUE PROP

ThestoreoffersahighlevelofservicewherecustomersaretreatedlikeVIPguests.Partoftheexperienceistobepampered,getspecialattentionandhaveexpectationsexceededateveryturn.Thesecompanieskeepdetailedfilesonalloftheircustomerssotheycananticipateneeds,employpersonaloutreach,andofferservicessuchasstylingappointmentsandearlyaccesstonewmerchandise.Customersareoftenofferednicetiessuchaschampagneandgourmettreats.ExamplesincludebrandslikeChanelor“newluxury”playerssuchasRebag.

Post-COVID-19, White Glove Service is the only viable Retail Value PropositionInordertokeepcustomersanddriveloyalty,eachandeverypersonmustfeelasthoughtheyarereceivingelementsofahigh-touchservice.Ataminimum,thecustomerneedstofeelthatmeasuresforsafetyexceedtheirexpectations.Communicationsbetweenthebrand,employeesandthecustomermustbeexceptionallyclearandthoughtful.

“New”servicessuchascurbsidepickupandbuy-online,pick-up-in-store(BOPIS)offeradditionalinteractionsforWhiteGloveService.Brandsandretailersmustadoptthesepracticesinordertomeetbaselineexpectations,giventherestrictionsimposedonretailunderCOVID-19.

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Case Study: Apple’s reopening planApple exemplifies the White Glove Service value proposition (pre- and during COVID-19). It has always valued the concept that retail stores are destinations that inspire and fulfill needs. Great service drives life-long customers, drastically contributes to brand lift, and increases brand equity.

Apple’s Approach

Inalettertocustomersandemployees,thebrandclearlycommunicatesthestricthealthandsafetymeasuresimplementedatphysicalstores.Italsoemphasizesthe“focusonone-on-one,personalizedserviceattheGeniusBarandthroughoutthestore.”

Informativeandhelpful,theircommunications:

• Highlightcurbsidedrop-offandpick-up

• Remindcustomerstheycanreceivesupportonlineandviaphone

• Requestthatcustomerspurchaseonlineandonlycometothestoreforsupport

Pre-COVID-19,Apple’sretailstoresgeneratedrevenue—buttheywerealsoservicecenters.Fromthestart,thebrandhasdedicatedalargepercentageofsellingspacetonon-sellingactivitiesstartingwiththeGeniusBarandlatermovingintoworkshopsandone-on-onetrainingsessions.Theseservicesarenotaboutattractingnewcustomers,they’reaboutretainingexistingcustomers—forlife.

Appleunderstandswhattherestofretailneedstorealize:Itsstoresaretheretomeetitscustomers’needsandtheneedfortheforeseeablefutureisanewlevelofservice.

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Transforming into a White Glove Service providerHighlypersonalizedcustomerserviceisnolongerreservedforluxuryplayers,andbrandsandretailers—regardlessofwhatproducttheysell—shouldmakeadjustmentstoaddWhiteGloveServiceelementstotheircustomerjourney.White Glove Service is a combination of communication, tech-enabled touchpoints and actions that go beyond transactionary gestures.

Thislevelofserviceensuresacustomerhaseverythingsheneedstoconverttoalifetimebrandfan.

Customer needs, pre- and post-crisis

CUSTOMER NEEDS PRE-CRISIS

BeforeCOVID-19,manycustomersviewedshoppingasaleisureandentertainmentactivity.Inordertobecomealoyalcustomer,theyneededtobelievethreethings:

1. Thebrand story—theinspiringnarrativesurroundingthebrandthatgarnerscustomerloyalty.

2. Thattheproduct wouldhelpthemachievetheirgoalsorenhancetheirlifestyle.

3. Thattherewasa personal trust betweenthecustomerandthebrandtouchpointsthey

frequented.

CUSTOMER NEEDS POST-CRISIS

Forastorethatisreopening,thebaselineisupdatinghealthproceduresandphysicalstoreenvironmentstoensuresafesocialdistancingforcustomers.Butinordertogainloyalcustomers,brandsneedtogofurthertorelievestressandworry.Customersnowmustbelieve:

1. Thebrand story.

2. Thattheproductwillstillhelpthemachievetheirgoalsorenhancetheirlifestylepost-crisis.

3. Thatthereisapersonal trust betweenthemandthebrandthat adds value by relieving stress and worry.

4. Theshoppingenvironmentisclean and safe.

Brandsaregoingtohavetoworkhardertoaccountfortheadditionalsetofexpectations.However,ifdonecorrectly,theyhaveachancetodeveloplong-lastingrelationshipswithcustomers.

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Anticipate customer needs with clienteling

Clienteling is the practice of anticipating individual shopper needs and proactively reaching out as new products arrive or new services are introduced.

Doingthisrelievesthecustomerofthestressofseekinginformation,andoffersopportunitiesforconnectionandevendelight.

IN ACTION: JENNI KAYNE

Atselectstoreswhererestrictionsallow,aJenniKaynestylistwilltakeyouthroughthestoreandtalkaboutstyle,sizeandfit.Ifacustomerhassomethingspecificinmind,theirstylistswillpullpiecesandcreatelooksforthecustomerviavideochat.Preferencesarekeptonfilesothatassociatescanreachoutasnewstylesarriveandcontinuetherelationship.JenniKaynestoresoffer:

• In-storepickup

• Privatevirtualstylingappointments

• Privatein-storeshoppingappointments

Enhance clienteling with multiple channels

Untilrecently,thereweretwodifferentcustomerserviceteams—onethathelpedonlinecustomersviachat,emailandtextandonethathelpedcustomersinthestore.Combining

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theseroles,orrotatingthem,nowmakessensefromacustomerrelationshipandapayrollperspective.Customerscanchatortextwithastoreassociateandcanlaterbehelpedbythatsameassociateinthephysicalstore,whichwillbuildtrustandcustomerloyalty.

Brandsandretailersmustfirstensuretheyhavethesystemsinplacetofacilitatethislevelofcustomeroutreach.

IN ACTION: WARBY PARKER

Glassesarebothafashionaccessoryandamedicaldevice(forsome),soensuringitscustomerscanquicklygettheirquestionsansweredisamustforWarbyParker.Hereareallofthewaysyoucangetintouch:

• Call,Email,TextandChat

• Hometry-on

• Virtualtry-on

Allcustomerserviceassociates(bothin-storeandonline)aretrainedonhowtoreadaprescriptionandonhowtodetermineifglassesareagoodfit,toowide,ortoonarrow.

Seamless technology and communications

Curbsidepickupandnext-daydeliveryarenowthenormandtheseprocessesmustbeseamlessinorderforcustomerstokeepcomingback.Inventoryshouldbevisibleacrossallchannelsandsystemsshouldbenimbleenoughtomeetcustomerswheretheyareatthemomenttheyarereadytobuy.

Customersdon’twanttowaitforbrandstosendanemailanymore,theywanttheabilitytogetinformationforthemselves.Nowisthetimetoinvestintechnologythatgivesthecustomergreatercontrolandvisibility.

IN ACTION: LACOSTE

AsLacostereopeneditsretailstores,ittookintoaccountthecustomer’sdesiretoseeinventorybeforeentering,aswellasotherimportantinformationsuchascleaningschedulesandstorecapacity.ByscanningQRcodesthroughoutthestore,customerscan:

• Browsecurrentstoreinventory

• Seethelasttimethestorewasprofessionallycleaned

• Seereal-timeoccupancylevels

• Getinformationonwheretoobtainmasksandhandsanitizer

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Retail KPIs fueling omnichannel success AOV,UPTandconversion,alongwithrevenue,arethemostcommonlyusedmetricstodetermineaphysicalstore’ssuccess.However,remainingsiloed,thesemetricsdonottaketheentirebrandecosystemintoaccount.Ascustomersincreasinglyuseamixofpurchasingchannels,newKPIsmustbedevelopedinordertomeasureefficacy.

Brands and retailers must adopt market-level KPIs to truly understand the impacts of an omnichannel strategy, focusing on geographies—not channels.

Themostimportantmetricsshouldtrackcustomerbehavioracrossmultiplechannels:

CUSTOMER LIFETIME VALUE

Brandsnowmorethaneverneedtohaveunifiedcustomeraccountsthatcansystematicallytrackallpurchases.

TRAFFIC AND CROSS-CHANNEL CONVERSION

Trafficisameasurementofpotentialandsingle-channelconversiononlytellspartofthestory.Itisnoweasierthanevertorecordcustomerinformationevenifshedoesn’tmakeapurchase.Thisinformationcanthenbeusedtotrackwhetherornottheyconvert,thetimetoconvertandinwhichchannels.

CUSTOMER SATISFACTION

Notonlyshouldcompaniestrytounderstandtheircustomers’thoughtsandattitudestowardsthebrand,buttheyshouldalsoremembertodiscerngeneralcustomersentimenttowardshoppingasawhole.Withgreatuncertaintyahead,brandsshouldlookforwaystostayabreastofshiftsincustomerbehavior.

BLENDED REVENUE

Asaforementioned,brandsandretailersshoulddevelopawaytotrackandreportonblendedrevenuebygeography.Eachtimeanewsaleschannelisintroduced—beitdigitalorphysical—theimpactonoverallmetricsshouldbeobservedclosely.Throughthisexercise,brandswillbetterdiscernthemostoptimalchannelmixforeachgeographicregion.

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Omnichannel strategies are the only way to scale and stay ahead of the curveConsumershaverapidlybecomeaccustomedtodiscoveringnewbrandsandmakingpurchasesinpreviouslyunfamiliarways.Ratherthanabandoningtheirphysicalretailshops,brandsandretailersthatsurvivewilladoptastrongeromnichannelapproach.Thereisunderstandablyamajorfocusondigitalrightnow,butphysicalretailisnottobeignored—thecustomerisnotignoringitandneithershouldbrands.