Panic Buying Sparks New E-Tail Strategies - The Entrepreneurial Way with A.I.

Breaking

Thursday, July 23, 2020

Panic Buying Sparks New E-Tail Strategies

By Jack M. Germain
Jul 23, 2020 4:00 AM PT

Panic buying and competition for consumer attention between in-store and online transactions have created a brave new world of retail that is bound to continue into a post-pandemic reality.

Marketing firms have been working overtime to plot new strategies for struggling brick and mortar stores that are battling to stay in business. E-commerce platforms are working equally as hard to help new and existing Web stores keep their lights on. Both scenarios focus on how to attract consumers and close the purchase, whether in a physical storefront or a virtual checkout counter.

Although supply shortages remain a lingering problem for consumers desperately searching store shelves and Web pages for disinfectants and cleaning products, the phenomenon of panic buying toilet paper has subsided. Still, nervous and uncertain consumers continue to stockpile provisions such as frozen foods and baking supplies.

Over the last few months, frozen pizza sales have increased 92 percent from the same period last year, according to marketing reports. Nielsen market analysis found that sales of baking mixes have grown by 489 percent, surpassing other quarantine-friendly essentials like nail polish and hair dye.

The E-Commerce Times reached out to several firms that guide brands on how to prepare for, and adapt to, changes in consumer behavior and product demand -- and what this means for the future of retail.

We discussed the current state of retail and the role technology plays in its marketing strategies with consumer insights and strategy consulting firm Kelton Global, advertising agency Scrum50, and payment systems provider ACI Worldwide.

Kelton works with brick and mortar stores to help owners reconnect with customers and adapt some of the digital sales tactics now driving retail e-commerce. It has been conducting COVID-19 consumer pulse studies throughout the pandemic to analyze consumer behavior shifts and the opportunities companies have to meet changing demands.

ACI handles electronic payments for more than 6,000 organizations globally. Its recent sales transactions report found that June produced the largest increase in e-commerce sales since the start of pandemic restrictions.

Scrum50 recently teamed up with and snack company Mondelēz in a presentation sponsored by Salsify in a Digital Virtual Shelf Summit that discussed new trends in e-commerce bundling and how brands can make strategic changes today that will continue to capture new customers tomorrow.

Shopping Trends

In early April the first signs of supply chain interruptions appeared in physical stores. Retailers around the world started shifting their business models for online support of COVID-19 social distancing requirements.

Consumer reports on shopping pattern changes in the wake of the pandemic preached the need for merchants to create ways to connect with new and long-term customers. Reports encouraged retailers to adapt as consumers could not fully solve the empty shelf syndrome buying online.

Product shortages became commonplace as reports confirmed that consumers worldwide were purchasing non-essential items, such as clothing, for their everyday lives. That, in part, gave rise to panic buying. Other reports said consumers were buying in bulk to prepare for the long haul of staying at home.

Concern about catching COVID-19 coupled with emotional worry and dealing with new circumstances fueled anxiety over shopping, noted Amy Rogoff Dunn, partner at Kelton Global.

"This could be a source of the panic buying that set in early on. It is also a result of the need to explore other products because your familiar ones are no longer there. For some consumers, it is panic buying. For others, it is a reaction to having to explore other products. There is a lot of tension around shopping today," she told the E-Commerce Times.

E-commerce sales will come back down to earth a bit after the pandemic ends, but the question is how much, according to Stacy Thomson, vice president for e-business at Scrum50.

"Online grocery shopping will continue to rapidly grow. The pandemic just helped it reach its tipping point. Retailers have been forced to improve the click-and-collect experience. Now that it has started, there will be no going back," she told the E-Commerce Times.

Research by ACI Worldwide also recognized panic buying as a reaction to consumers adapting to life in quarantine. In early February and March, researchers saw more panic buying in the personal protective equipment (PPE) sector. This included items such as gloves, masks, goggles, face shields, ventilators, respirators and disposable coveralls.

"The sector saw a drastic increase in sales. In fact, a majority of merchants' inventories started selling out by the last week of March. In April and May, we saw a shift toward purchases of electronics and office equipment as the restrictions came into play and most people worked from home.

"Between May and June, we noticed another abrupt shift in the category of purchases, as airline and ticketing declined while increases in other areas like outdoor equipment and sports took over consumer spending," Erika Dietrich, vice president of Global Fraud Prevention Risk Services at ACI Worldwide, told the E-Commerce Times.

Tactical Maneuvers

As companies focus on getting their retail locations back up and running, they cannot ignore e-commerce channels, suggested Brian Gioia, director of product strategy at Scrum50.

"That continues to be a vital part of any brand strategy undergoing the transition [to] a post-pandemic world," he said. "In our new normal, how will brands balance the two sales channels and what trends will continue to thrive in our new marketing landscape?"

The big thing is the tactical changes, noted Scrum50's Thomson, whose company focuses on marketing strategies for physical storefronts. Major changes are happening with in-store consumer behavior.

Physical shoppers used to shop for a variety of reasons that included a combination of socializing, stocking up weekly, or simply getting out of the house.

"That is now mostly replaced with a shopping behavior we call anxiety-filled mission. Some of the other reasons people used to shop went away with the pandemic," she added.

People in Scrum50's surveys talk about how they now go physical shopping much like they are carrying out a military mission. They are carefully preparing, gearing up for it wearing special clothes, going into the store with a particular focus, and coming out with a feeling like they have won. They have conquered their shopping list at the end, Thomson explained.

Consumer Fatigue

This is language Scrum50's researchers did not hear in the past when people talked about their shopping. Now they hear a ton of anxiety filling up.

That anxiety comes from several places, she noted. Shoppers are doing something they have not done before. They have to deal with close crowding, among other pressures from close social contact and concerns about other peoples' reactions to masks, being judged by them, and being told what to do, noted Thomson.

"People want the comfort of familiar products. When they can't find it in the store, they do not want to have to go to more stores. Add to this the feelings of being bored at home," she added.

Shopping now seems to be two opposing lines of behavior. People have to decide between in-store shopping and online shopping.

The Five Ws

Clearly, tactical changes are setting in. For instance, the classic pattern or formula is the 'Five Ws' of retail, Thompson said. Those are:

  • The WHO is people are mostly shopping alone. They no longer bring their kids or their partner because they do not want exposure to illness.
  • The WHAT is grabbing as many items as possible.
  • The WHERE is a big factor. People are used to shopping near home and on their way home from where they work. Now many people are not going to an office to work. So people feel safer just shopping from home.
  • The WHY is shopping out of necessity to re-provision.
  • The WHEN is dependent on conditions and availability.

"Some of these things are going to be temporary. The others will form the new normal," Thomson said.

What is definite is that the surge in online shopping was accelerated by the pandemic. Many people would never have made the switch without being pushed by COVID-19.

The result is an entirely new population of people becoming comfortable with online shopping. But not-so-traditional brick and mortar stores will still exist. They are not going away, at least not fully.

"Pandemic or no pandemic, most brands will always have some percentage of their sales coming from brick and mortar retail. The behavior changes have created a surge in newer business models like kits, subscription services, and online experiences," said Thomson.

The Magic of E-Packs

Some marketing agencies are schooling their retail clients to use a new set of strategies to attract Web visitors. This new approach involves creating multiple package sets to entice e-commerce customers to try new products. Other agencies are encouraging physical store operators to try adaptations of that approach.

Some of that discussion was exchanged recently in an on-demand webinar hosted by Salsify.

The webinar focused on the significance of product bundling and packaging techniques that have risen dramatically since the pandemic outbreak, particularly around the abrupt shift to e-commerce.

Mondelēz's vice president of U.S. e-commerce Jeff Jarrett and Scrum50's Thomson discussed with a Salsify Digital Virtual Shelf Summit executive the strategies for creating popular kits and bundles called "e-packs."

Jarrett explained that e-packs are retail product bundles designed to expand sales of his company's brands at combined price point. His company researches customers to see what they already purchased and want to buy more conveniently online.

E-packs serve two functions, according to Jarrett. They are profitable for companies and provide a convenient price point for shoppers.

They also serve a universal additional function, suggested Thomson. They provide a desire to buy additional products that they did not know they wanted before the saw the bundle.

"Sparking a desire for an unplanned purchase is key to incremental growth. It's the art and science of presenting products and services in a new bundle or suggesting new usage occasions," Thomson told the E-Commerce Times.

Planning and Presentation

Testing is critical to creating optimal bundles. Mondelēz goes through extensive testing to determine which product combinations will resonate best with customers, she explained. Consider mixing and matching categories (e.g. cookies and crackers) to encourage trials or improve buy rates.

"We also spend a great deal of time thinking through the value of each offer to its customers, how it fits into their lives, and how best to communicate that through content on e-commerce platforms. Profitability is right around a $12 price point, so that is considered when building assortments and bundles," she added in describing the marketing strategy.

E-packs are universally useful to all merchants moving online, noted Thomson. The e-pack model is most useful to any merchant that has a great variety of product lines. Value is created by bundling products.

"With Mondelēz, shoppers are able to perfectly fill their pantry with one click. With e-packs, it's the brands you want in a quantity that fits your life," she said.

A related marketing strategy is the ability to create bundled packs not available anywhere else. The key is to be relevant but inspire consumers to buy something they did not want before, offered Thomson.

Planning the assortment is important, she added. Presenting products is not the same in e-commerce as it is in a brick and mortar store.

Inspiring Content for Discovery and Conversion

Consumer packaged goods (CPGs) are items that people consume regularly. They require consistent and constant replacement and replenishment.

Outside of traditional CPGs, entirely new categories have emerged like murder-mystery subscription boxes. Popular ones like 'Hunt a Killer' send monthly boxes with clues/games that can last up to six months. Alternatively, you can buy a one-mystery box that will keep eight people entertained for one evening, Thomson explained.

"The opportunity brands have in e-comm now is providing content that is super relevant. You can't assume that you can just put a pack on a website and people will know what they want. You have to guide them a little bit," Thomson said in the webinar discussion.

Brands can quickly optimize their content by understanding how people shop on the digital shelf. Think about what consumers can't feel, smell, or taste and how you can inspire them to put your product in their shopping cart, she advised about using the strategy.

Do not rely on the physical shopping experience to drive the virtual shopping trip. A great example is providing scale, especially at club stores, Thomson cautioned.

"Even if you think shoppers know how big a box of crackers is, they don't always translate that to the item in their basket. Setting consumer expectations, and then exceeding them, is one of the most important aspects of driving reviews that ultimately drive more sales," she explained.

Payment Services Innovation

The pandemic has changed consumer behavior and we expect that many of these consumers will not be going back to the way things were, according to ACI's Dietrich. Consumers who were reliant on cash before the crisis have switched to digital payment methods for safety and convenience.

"Corner shops, convenience stores, and smaller merchants that previously preferred cash are likely to continue accepting digital and electronic payments. In fact, electronic payments and digital payment services have become crucial to navigating the crisis for both consumers and businesses," she said.

In the long-term, real-time electronic payments could offer a cheaper, faster way to pay, added Dietrich. Cards have interchange fees and slower settlement to the merchant.

"We expect to see greater innovation, and the launch of many more payment services into the market to capitalize on the shift away from cash," she predicted.


Jack M. Germain has been an ECT News Network reporter since 2003. His main areas of focus are enterprise IT, Linux and open-source technologies. He is an esteemed reviewer of Linux distros and other open-source software. In addition, Jack extensively covers business technology and privacy issues, as well as developments in e-commerce and consumer electronics. Email Jack.





July 23, 2020 at 07:29AM

via https//www.brucedayne.com/

Jack M. Germain, Khareem Sudlow