Retail was in trouble long before COVID-19 hit. The past five years saw daily reports of store closures and retailer bankruptcies. The growth of e-commerce eroded many retailers’ top-line revenues, forcing them into an ongoing cycle of discounts and promotions just to keep up. Even amid this debacle, direct-to-consumer brands increasingly expanded their physical presence. Digitally-native eyewear brand Warby Parker currently operates 65 outlets and luggage-maker Away raised $100 million to open 50 stores.
When COVID-19 put an abrupt stop to physical retail, many strained small- and medium-sized businesses quickly moved their business online, as shown by Shopify’s 47 per cent revenue growth in this year’s first quarter. All the while, customers – impacted by stay-home orders of their own – turned to e-commerce, with even those who had been previously reluctant to shop online placing their own orders, and helping to boost e-commerce numbers proportionately.
Struggling brick-and-mortar retailers that do not have good online offerings worry about whether they can get customers back in stores promptly to satisfy them. Some worry they might never recover.
Not all bleak
Nevertheless, all is not gloom and doom. After months of confinement and a surprisingly flawed online experience, people yearn to return to normal. The COVID-19 restrictions have exacerbated our natural need for social connection. Despite being digitally connected, people crave face-to-face human contact. That’s evident in the retail activity in recently reopened countries.
At its Guangzhou, China, flagship store, Hermès registered $2.7 million in sales on its first day. In Paris, long lines stretched in front of the Champs-Élysées H&M store. And in Montréal, dozens stood patiently outside a downtown Zara, eager to buy summer clothes. The urge to get out and socialize prevailed over enduring safety concerns.
Some employees are similarly impatient to leave the house to resume work. While most office staff transitioned easily to remote work, some suggest that COVID-19 has exacerbated the loneliness and lack of social interactions, despite companies’ claims of sustained productivity. For retail staff who thrive on human contact, the situation has been far less seamless.
Personal human connection vs. digital
Beyond the craving for social contact, the human touch is also what many retailers rely upon, especially in the beauty and luxury sectors, where sensory experiences are critical.
A recent PwC Consumer Intelligence Survey of 15,000 global consumers confirms what has been observed in countless shopper-retailer interactions: The human touch still matters, with 75 percent of survey participants stating that they want more in the future, not less. Furthermore, most shoppers consider customer experience more important than price and product quality.
Similarly, in the hospitality and travel sectors, human contact prevails. When COVID-19 hit, personal connections with travel advisers helped hundreds of travelers return home after their flights were cancelled. Meantime, customers with e-platform reservations struggled.
In the COVID-19 recovery period, physical stores are uniquely poised to offer this crucial human interaction. A 2015 study led by Marshall Fisher, professor of operations, information and decisions at the University of Pennsylvania’s Wharton School of Business, clearly shows the importance of human interaction in retail, and its impact on revenues.
Yet in 2020, as retailers slowly reopen, they are focusing on safety and hygiene protocols, and continuing to fail to invest in their own human capital. Instead of recognizing the long-term benefits of devoting attention to their employees, they obsess over minimizing labor costs, thereby, leading to increased employee turnover and poorly managed stores. This is significant, as with less traffic coming into stores, expectations from those brave enough to venture out are significantly higher, and retailers must invest in their teams if they want to stay relevant.
Training is key
Product and industry expertise are similarly not negotiable. Fisher’s study found that retailers who train their front-line employees sell 125 percent more than those that offer no training.
To overcome the current COVID-19 sanitation requirements and foster an authentic human experience, retail workers must also demonstrate specific interpersonal soft skills. To do so within a no-touch situation means capitalizing on other senses to engage. From that initial eye contact and open body language to a warm welcome, empathetic and friendly communication is key. Companies that commit to training sales advisers to expertly sell products while demonstrating high levels of relationship-building skills won’t just attract and retain the best employees. They will also drive in-store sales and customer retention.
It is time to stop considering employees as a cost and stores as showrooms. Instead, retailers should invest in their in-store teams and train them to become revenue generators. The human touch will define who the winners will be in the post-COVID market.
Frederic Dimanche is the Director of the Ted Rogers School of Hospitality and Tourism Management at Ryerson University. Solange Strom is the former CEO of L’Occitane Canada. (Edits courtesy of TFL)