Navigating The COVID-19 Crisis: A Guide For Retailers

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The Adlucent team pulled together our findings summarizing the impact of the COVID-19 crisis on retail and ecommerce to provide strategic recommendations for advertisers. There is a lot of uncertainty right now in this unprecedented situation, things change daily, and businesses of all sizes are feeling the impact of the virus both financially and emotionally. Our goal is to help advertisers navigate the current landscape and achieve continued success in digital advertising programs.

Retail Impact and Broader Economic Outlook

Changes in Shopper Behavior During COVID-19

Consumers are spending more time in their homes and limiting their trips to brick and mortar stores. This phenomenon is leading to an increase in online shopping and pantry-loading, which are purchasing habits that are becoming the new norm. Advertisers need to shift their way of thinking to match changing consumer behaviors by adjusting their marketing and trade activities.

What Do You Need to Know?

• 50%+ internet users said, in February, they are likely to avoid stores if the COVID-19 outbreak worsens
• Amazon sales of essential health & wellness and pantry-loading categories increased +100-200% the week of February 23rd, which outpaced last year’s Prime Day sales
• There has been about a 3x growth in out-of-stocks items online in early March due to consumer pantry-loading

Your Brand’s Presence Will Determine Customer Loyalty

Building up your online presence now – from a place of empathy and understanding for your customers – is more important than ever. If you have products that are out of stock or unavailable to purchase online, you risk not being top-of-mind at your customer’s next shopping trip. Know that brand loyalty decreases during times of economic uncertainty. Businesses can help their customers stay loyal to their products by nurturing relationships online and keeping products readily available on the digital shelf.

3 Ways to Minimize Risk and Make the Most of a Challenging Situation

Real-time responses to marketplace conditions are vital in adapting to the current landscape. There are significant opportunities that can support healthy changes in a brand’s marketing strategy during this time, such as:

1. Acting on shifting conditions, helping you to gain an understanding of the changing channel demands to retarget trade and marketing strategies.
2. Winning at the digital shelf is the main objective, through dominance in online availability and search presence.
3. Easing consumers’ transition during social distancing by offering digital educational resources and relevant in-home recommendations that leave a lasting impression with your audience.

How to Quickly Retarget Investments to Align with Consumer Shopping Behaviors

The shift from in-store to online is just one of many changes occurring during the COVID-19 crisis. How exactly can brands stay on top of the new retail reality? Monitor variations in volume and demand. Observe the balance between in-store and online and adjust trade and online media to where your consumers are shopping. In conjunction, monitor demand shifts via a robust item-level scorecard to flag supply chain issues. Keeping a close eye on the marketplace will help retailers make more informed, quick decisions to keep up with consumer shopping habits.

All Sectors Impacted During COVID-19

All industries are seeing the effects of COVID-19 on business. From most to least impacted, these are the major sectors facing negative impact, along with their estimated recovery time, according to McKinsey and Facebook IQ¹.

Tourism & Hospitality

Aviation/ Airlines

This industry is seeing restrictions around non-essential travel with risk of a broad, prolonged slowdown. Domestic travel should see some recovery in late Q3, and international may bounce back closer to Q4.

Automotive

Oil and Gas

Consumer Products

Consumer Electronics & Semiconductors

Supply chain disruptions indicate a need to diversify. Given the trade tensions and reliance on Chinese exports, recovery will vary and is slated to occur around Q2.

COVID-19 Action Plan for Businesses

Safety and security provided by trusted brands to their consumers are critical during a crisis. Uphold customer loyalty by fulfilling sought-after products and services as soon as possible. Customers will appreciate having their favorite products readily available with quick delivery of their purchases. Taking action by staying in control of the supply chain, providing transparency, and being trustworthy will assure shoppers that they can depend on your brand. Consumers are looking for companies to act responsibly and do right by the community and their employees. Responding in an ethical way that is relevant to what is going on in consumers’ lives is key to remaining a valuable brand consumers will turn to.

Immediate Response: Customer Communication

Focus on business continuity and manage communication with customers. Establish an emergency response that will adapt customer communication messaging to whatever circumstances are taking place. Effectively maintain ongoing dialogues, respond to changes in consumption scenarios, and market relevant products thoughtfully.

Short Term: Change Management of Communication

Adapt communication messaging, re-adjust your marketing strategy, and ensure sufficient marketing investments, keeping your communication efforts up-to-date. Brands should begin with the creative framework of “Assurance-Assistance-Action” to re-think existing campaigns, re-evaluate the customer experience, and capture demand bounce-back signals. It’s best not to pause all ads during this time, but rather leverage the strengths of the platforms to work with the situation at hand.

Mid to Longer Term: Demand Rebound & Structural Enhancements

During these conditions, seize demand rebound and make long-term strategic adjustments. Estimate market recovery timing and ensure sufficient marketing investment and inventory distribution, to prepare for business rebound. Seize the opportunity to enhance the internal capability of the company, gain visibility on supply chain resilience, focus on developing contingency plans for future crises².

Channel Recommendations:

Website:

• Welcome shoppers with warmth and empathy on your home page
• Use transparent messaging on your homepage, product detail pages and cart to communicate delays in shipping or changes in product availability

Paid Search & Shopping:

• Closely monitor traffic and search query trends for changes in demand
• Update inventory and pause backorder SKUs as frequently as possible
• Proactively shift budgets and bids to affected products and categories, including evaluating mobile performance
• Create negative keyword lists and DSAs for low and out of stock items
• Align budgets associated with local/store visits objectives to new store hours and/or closures, and adjust LIA spending for store closures
• Campaigns with any COVID-related messaging will not be approved to run

Social and Display:

• Collaborate with PR and communication teams for proactive messaging and content guidance
• Leverage video across Youtube, Social, and OTT as consumer behavior shifts to consume more video
• Consider testing new upper funnel efforts to meet consumers where they are spending time and continue brand engagement
• Host livestream events to stay in touch with your shoppers
• Continue customer service efforts via social channels, and be transparent about potential response times
• Social campaigns with any COVID-related or insensitive messaging will not be approved to run

 Amazon:

• Consider FBM options if you are affected by the FBA non-essential item restriction
• Vendor Central sellers with inventory challenges should consider shifting Amazon search budget to other channels
• Be prepared for shipping delays; one day and Prime shipping is delayed up to four days at the moment
• Campaigns with any COVID-related wording or price gouging will not be approved to run

For a condensed version of this information, including channel takeaways, fill out the form below to download our “Navigating the COVID-19 Crisis” infographic.

We’re Here to Help

The Adlucent team knows that much has changed amid the COVID-19 crisis. If you are a large retail or ecommerce brand needing strategic guidance during this time, please do not hesitate to reach out to us with your questions.

Sources:
1 “Coronavirus COVID-19: Facts and Insights – McKinsey.” Accessed 20 Mar. 2020.

2  “COVID-19 Outbreak Update: Status, business … – O Antagonista.” 26 Feb. 2020. Accessed 20 Mar. 2020.

Adlucent

Adlucent is the performance marketing agency that proves outperformance has no limit. Powered by our purpose-built platform, Deep Search™, Adlucent unifies the best of human and machine for a scientific approach to marketing. We work transparently in partnership with B2C and B2B retailers and brands to create custom, predictive programs that drive ever-better outcomes. Our services include paid search, shopping, social, retail media networks, display media, video, performance creative, consulting, and measurement. Headquartered in Austin, Texas, Adlucent is part of Advantage Solutions and ranked one of the top marketing companies in the U.S. by AdAge.