Navigating The COVID-19 Crisis: A Guide For Retailers

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:

Acting on shifting conditions, helping you to gain an understanding of the changing channel demands to retarget trade and marketing strategies.
Winning at the digital shelf is the main objective, through dominance in online availability and search presence.
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

This industry may be affected most and is estimated to recover in Q4, with impact seen heavily in Asia and Europe. Brands need to plan a year ahead to manage their reputation, protect its people, and prepare for long-term changes.

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

adlucent-COVID-19-guide-for-retailers With trade tensions, declining demand, tight inventories, and complex supply chain, compounded by a strong reliance on Asian autocrats, this industry is looking at a disruption until Q3.

Oil and Gas

adlucent-COVID-19-guide-for-retailers The fuel industry is experiencing low demand with China as its 2nd-largest consumer and the Middle East beginning to respond to the current crisis. Timing will depend on markets and Chinese demand and is estimated to come back in Q3.

Consumer Products

adlucent-COVID-19-guide-for-retailers Companies with small margins or those already at risk experience the biggest issues here. There is sustained demand for delivery, and brands can get ahead by embracing omnichannel strategies. This industry should start to rebound when the disease is perceived as “under control,” around Q3.

Consumer Electronics & Semiconductors

adlucent-COVID-19-guide-for-retailers

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.

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