3 Steps Retailers and Restaurants Need to Take in Response to Evolving Customer Behavior
From The Buxton Co
Customer engagement with the retail and restaurant industries is constantly evolving. Lifestyles and preferences change. Technology introduces new ways of interacting with brands. Expectations shift.
The COVID‑19 pandemic, however, introduced rapid and pronounced changes in customer behavior. Seemingly overnight, customer purchases shifted almost entirely online. Some consumers reduced spending as they nervously monitored economic conditions while others increased entertainment purchases to cope with quarantine boredom. Many stocked up on home essentials.
Buxton’s GPS data on consumer visits to retailers and restaurants during the peak of the stay‑home orders and early days of reopening confirms the anecdotal accounts of changing customer behavior. For example:
While limited service restaurants generally saw less of a decline in consumer traffic than full service restaurants, the amount of the decline varied by state, and in some highly dense markets the decrease in traffic was almost equal across restaurant categories.
For a time, peak grocery shopping days shifted, which has important implications for staffing decisions in an industry already stretched thin.
Consumers are not necessarily racing back as businesses reopen, if early data from states that have implemented economic recovery measures is any indication.
Rethinking Your Retail and Restaurant Business Strategy: 3 Important Steps
As the U.S. and other markets around the world move past the first wave of COVID‑19 infections and focus on recovery, it’s clear that customer behavior will continue to evolve. But how? What will “normal” look like? How soon will we get there? What are the implications for a brand’s business strategy?
These unanswered questions lead to a lot of confusion among retail and restaurant leadership teams … and a lot of opinions on the right path forward. How do you bring order to the chaos and design a strategy to compete in the months ahead?
We believe that smart retail and restaurant leadership teams will focus on monitoring changes in three key areas: customers, competitors, and markets.
Monitor Changes in Your Customer Base
Successful retailers and restaurants have always understood that customers should be at the center of their business strategies. As customer engagement with your brand shifts, it is important to track changes both in visit volumes and the composition of your customer base.
Are certain customer groups slow to return or engaging with you only through online channels? Stores located in trade areas with high concentrations of those customers may need to emphasize curbside pickup or delivery. Marketing to these customer groups should emphasize the steps your brand is taking to ensure customer safety and offer alternative purchasing channels. If your organization is strapped for cash and looking to eliminate costs through selective store closures, defining customer traffic patterns and the key types of customers present in each trade area can be additional inputs to help guide the decision.
Customer profiles – whether developed through traditional methods or through mobile analytics – play an important role in providing these insights to the leadership team. To be truly effective, the profiling exercise needs to be conducted regularly to track changes over time.
Assess Performance Relative to Competitors
In every challenging business situation, there are winners and losers. Keeping a pulse on your competitors’ traffic volumes and customer trends can provide important clues about true market conditions and help you to assess your own performance more accurately.
Is your competitor gaining the types of customers you are losing? Is their traffic up while yours is flat? These insights can be early warning signals that your strategy may need to change.
Keep a Pulse on the Recovery at the Market Level
The world is expected to continue battling COVID‑19 for some time, even after the initial crisis is over. Phased re‑entries may be followed by later shutdowns until advances in medical treatments make widespread closures unnecessary.
Leadership teams need to monitor consumer traffic volumes at the market level, not just the store level. Identify when and where markets begin to recover so you can plan and prioritize phased re‑entries.
The Bottom Line
Evolving customer behavior means that business is far from usual in the retail and restaurant industries. As retail and restaurant leadership teams respond, identifying changes in customers, competitor performance, and market activity will be crucial to making the right strategic decisions.
Buxton is the leading customer analytics firm that helps organizations identify who their customers are, where those customers are located, and the value those customers have to the organization.
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