May 27, 20205 min read

How retailers are fast-tracking recovery after the COVID-19 crisis.

by Fredrik Thambert

While many retail sectors are struggling with the consequences of the COVID-19 outbreak, this is also a time for reflection. What works well, and what doesn’t? And more importantly - what can be done to come out better and stronger when the crisis is over? Klarna has asked over 300 UK retailers what they are focusing on to improve their business’. Here are some of the key takeaways.

Like many other countries, the UK is slowly starting to ease its restrictions after several weeks of lockdown. Some High street retailers will soon be able to reopen their stores which is a welcome sigh of relief. But the long-term trend of declining brick-and-mortar sales has been accelerated by the shift in consumer behaviour as people have been forced to do their shopping online, discovering the perks of e-commerce compared to physical retail. This is causing brands to fast-track their strategies to thrive in a post-corona world.

Klarna UK recently arranged a virtual Smoooth Session where we asked all attending retailers to tell what they’re doing to come out as winners after the worst stages of the crisis have passed. Their answers provide great insights into what’s going on in the industry, so we decided to share some of the key learnings. If you missed the event, it’s not too late, you can view it online.

Shift in communication.

A key ingredient to come out stronger after the crisis is a tighter bond with communities acknowledging the difficult situation that people are experiencing. “We aim to support our community and beyond in times of need and hope to be remembered by our actions of mental, financial and local support”, says one retailer in Klarna’s survey.

Another one points out the importance of adjusting the tone of voice and consumer-facing content to align with the current situation. At the same time, it’s important to keep up hopes and bring some positivity to people’s lives. “Tracking consumer behaviour is key, examining and moving towards positive mindsets will be in the heart of our recovery action,” one retailer says.

One positive thing that has come out of this crisis is that engagement-levels on social media have increased and brought people closer, albeit in digital form. Brands that have successfully tapped into the conversation have a great possibility to strengthen their relationship with new and existing customers. “So many businesses have done this so well over the lockdown period and I believe this has been the biggest positive to come out of all of this” as one person says in Klarna’s survey.

Reduction of inventory and focus on sales.

The lockdown has had a big impact on retailers who were forced to close down their stores. As a consequence, they’re now stuck with excess inventory that they need to get rid of. That’s why a lot of fashion retailers are now selling their spring collections with large discounts. “Discounts as a fast measure” and “stock clearance via all possible channels” as two retailers say. Another brand mentioned a “complete rethink of our stock and replenishment programme” as a measure to improve their business.

While getting rid of stock is a short term solution to trim operations, steps are also being taken to ensure long term viability. Nurture and retention of existing customers to make sure they come back after the lockdown ends is something that a lot of merchants are focusing on.
“There are many cost-saving measures being actioned behind closed doors, but as I believe the consumers’ priorities will be shifted after Covid-19, we need to find a new way to connect”, says one respondent.

Or as another one puts it: “Relationships and partnerships with customers will be key to navigating this. Without a good relationship, neither party will survive”.

Transforming the business.

Despite the challenging times, this is a golden opportunity to rethink priorities and to invest in projects and infrastructure that will generate future success. Looking at how consumer behaviour has changed over the last few months will provide insights into how the future state will look like. “We will learn the lessons from trading as a pure player whilst stores have been temporarily closed and continue with these learning across all retail channels (stores) in the future”, says one retailer.

For many merchants, this means improving their online stores in conjunction with High street locations. “One thing our business is doing to fast track recovery post-COVID-19 is delivery of an omni-channel retail experience by activating Ship From Store (endless aisle) and Click + Collect services. Additionally, changing the structure of the direct-to-consumer org chart by ensuring there is no conflict of interest between physical and digital channels” another retailer says in Klarna’s survey.

Improving the customer experience.

Another important aspect of retaining customers is to improve the overall shopping experience, whether it’s online or offline. Steps are made to ensure that the entire customer journey, all the way from inspiration and browsing to the checkout and post-purchase experience is on point. “Improving website UX”, “becoming more nimble in how to service customers”, and “listening to our customers’ needs” are three things that companies are doing now to improve their business.

At Klarna, we’re dedicated to helping retailers in all aspects of their customer journey. We drive traffic through our app and shop directory, as well as offering flexible payment options that drive conversion and higher average order values. If you want to know more about how we can make your business get ahead, read more here.