2020 has been a challenging and opportunity-laden year for retailers. This article describes how retailers adapted over the last year and how they changed to meet their customer’s new needs over the Christmas season.
As the COVID pandemic and restrictions started to kick in with different paces and intensities over the globe, many businesses collapsed, countless struggled and a few successfully adapted. Among the most impacted sectors, like hospitality, services and natural resources (McKinsey), retail trade disruptions significantly damaged the economic fabric of many high-consumption economies. Some of the best examples of successful adaptation to our new environment arose from operational and strategic flexibility and from rapid technological innovations.
In the U.K., COVID-19 restrictions forced Sainsbury supermarkets to shut down many of their retail spaces, the company reacted by turning some of those facilities into ‘dark stores’, or hubs, for local bicycle delivery to the customers most in need (Charged Retail). More inherently service-based retailers had a more complex task. Mecca, a leading Australian cosmetic retailer, adapted their famous in-store beauty consultations through direct FaceTime delivery and a well-functioning digital follow-up system.
While Europe and the U.S are still experiencing a large number of daily cases and a second wave of restrictions in many areas, Asia has been ahead since day one and is responding very strongly to late outbreaks. Australia and New Zealand implemented strong lock-down measures during the year and are now glimpsing an (almost) COVID-free Christmas.
‘Classic’ Christmas tactics
Christmas festivities are traditionally associated with themes of positivity, kindness and reciprocity. Most brands start adapting their communications and customer strategies as early as September to leverage on those feelings and appeal to the ‘Love’ dimension of the CAPFUL needs hierarchy framework.
An iconic example is Coca-Cola. The brand’s positioning and identity unfold around themes of happiness, togetherness and celebration. During the festive season, Coca-Cola boosts its communications and brand imagery to lure Christmas sales. Over the years, the brand was very effective in transferring Christmas symbols (e.g., the colour red, Christmas lights and Santa itself) and meanings (e.g., kindness and togetherness) from McCracken’s “culturally constituted world” (the western Christmas culture) into its products. It has been so effective that Coke ended up defining and shaping those very same meanings.
Coca-Cola uses cultural symbols and colours to establish itself as a Christmas icon.
Source: Medium.com
But while classic examples focus on positivity and kindness as marketing tools during festivities, certain business models appeal to the need for reciprocating gifts during Christmas. The Australian online deal platform Scoopon has relied on the concept of reciprocity through its 2016 ‘12 Days to Christmas’ campaign to encourage consumers to return gifts to friends and family by purchasing on their website (Forbes).
Christmas customer strategies also stem from storytelling and Pine and Gilmore’s concept of theming and ‘staging’ the customer experience.
The high-end U.K. department store John Lewis also intensifies ‘kindness’ messages during the holidays but mostly focuses on the symbolic value of storytelling ads featuring their iconic Christmas characters. While the symbolic meaning of these tales acquires a strategic role during Christmas by enabling easier ‘escape’ and consistency with the fantasy atmosphere of Christmas, telling a compelling story has broader strategic implications for firms.
According to a 2020 Deloitte report, communicating authenticity and purpose is a key marketing trend and strategy that can keep organisations afloat in this challenging economic panorama. Clearly, a fascinating story might capture customer’s attention during Christmas, but retailers have the opportunity and challenge to make that story speak for their purpose through a memorable customer experience.
As Pine and Gilmore pointed out long ago, a memorable CX requires theming the experience, providing consistent cues and ‘staging’ it by engaging all senses to the highest possible extent. During Christmas, companies should evaluate customer touchpoints even more carefully and align them to deliver unique experiences. The largest Australian department store Myer, for instance, goes beyond traditional Christmas-themed in-store layouts and exhibitions by creating a retail solution that became a symbol of Christmas in Melbourne: the Christmas windows. For the 65th consecutive year, Myer entertains children and families by ‘staging’ story-based puppet shows in its Bourke St mall windows. In 2020, while the stores aren’t open, this is a way to keep connected with the stores.
Bourke Street Myer Christmas Windows in 2020. Source: The Age
Holidays are exciting because they are unique and limited in time. A third widely employed strategy to boost sales during festivities mirrors this finite time frame by creating a sense of anticipation and urgency.
Creating anticipation is a potent tool to increase expected reward and thus pleasure and value for the customer. During Christmas, this makes even more sense and can be conceptually associated with the idea of the advent calendar. Opus Energy went digital with its Christmas Conga Countdown advent calendar-inspired online videogame. The energy provider incentivises customers to play with prizes and, by asking for personal details to participate in the draw, enhances customer data and email marketing databases.
Personalised, loss aversion-based email marketing. Source: Email from Kogan.com
A sense of urgency is consistent with holidays’ finite time frame and capitalises on the cognitive bias of loss aversion. Kahneman & Tversky (1979) cleverly defined loss aversion as the behavioural phenomenon by which “losses loom larger than gains”, with prospects thus becoming more sensitive to a loss frame in promotions. This strategy has been widely adopted, not just during Christmas, by the retail and services platform Kogan. The ‘Australian Amazon’ heavily relies on customer data and has intensified its email marketing strategy to promote tailored price reductions and limited offers during Christmas.
Leveraging COVID at Christmas
The pandemic inverted recent trends of globalisation and ease of travel. Distances between people increased, with many family members unable to see each other and spend time together. Such a phenomenon amplifies the importance of communicating love and togetherness during Christmas but also poses the challenge of relating to a sensitive ‘public mood’ (O’Hanlon, 2020).
While in June Coca-Cola was preparing for several possible contingencies through different ‘scenario-responsive’ ads, it quickly backed-off for a more generalised (and less expensive) marketing effort (The Grocer). This spring, the American beverage giant strategically reduced its marketing effort for better efficiency and to devote resources to COVID-supporting initiatives.
Coke’s never-ending “Share a Coke” campaign with bottles featuring different names and professions still fosters a message of positivity and community highly compatible with festivities. Through a touching family story, the 2020 Christmas commercial further leverages on the increased emotional need for meeting our loved ones after this literally “restrictive” year.
Similarly, John Lewis’ “Because together we can make a big difference” campaign uses emotional appeals and storytelling to urge customers to purchase from them and thus donate to families facing financial hardship. However, while at an operational level, the U.K. chain had to adapt to the pandemic scenario, communications are still not completely COVID-consistent. As with Coca-Cola, the ad could have benefited from some form of reference to consumer reality, like featuring face masks or social distancing instructional cues.
Customer strategies and communications like the above partially ignore the physical reality prospects are facing. The main risk here is sparking cognitive dissonance sentiments that could end up undermining those positive cues initially sought and so central to Christmas communications. While it is vital for retailers to maintain the symbolic appeal of a Christmas-themed customer experience, an explicitly communicated effort to keep families and prospects safe will further enhance those positive emotional cues and, potentially, increase sales.
Christmas co-creation and customisation
According to Deloitte, two other ‘hot trends’ to keep customer engagement high in 2020 are co-creation and customisation, particularly enhanced by this year’s increased digital information flow.
With such a brutal shift of customer relations and touchpoints towards an almost exclusivity of online channels, this year has got many businesses used to manage larger amounts of data and customer insights. However, during these festivities customers in many countries will have to actively look for companies from their homes; competition will be fiercer and the need to “emotionally cut through” even more crucial. This Christmas more than ever, businesses and retailers will have to establish and appeal to special emotional bonds with their customers.
In their “What's your Ferrero Rocher packaging design for Christmas or Valentine's?” campaign, Ferrero has partnered with Mindsumo to crowd-source and co-create a new Christmas design for the iconic Ferrero Rocher. The objective is for the best-selling chocolate to win over Asian countries and Australia as the top Christmas mass confectionery product.
Within the same industry, Oreo went for an apparel-like (i.e., Nike) mass-customisation approach. Launched just before the holidays, the OreoID portal allows customers to personalise almost every aspect of the product, from the actual biscuit (creme, dip, sprinkles, with the possibility to even add image and text) to quantity and packaging options.
Walking a line: operational and promotional equilibriums
In this (almost) post-pandemic Christmas, retailers and businesses will require adaptive strategies to meet customer needs seamlessly at all touchpoints and in areas with different stages of restrictions. Overall, online and physical retail spaces are going to have equal importance; this poses a problem of balance firstly under an operational perspective.
In areas like Europe and the U.S the online channel will be the largely preferred one, this means that critical competitive requirements, rather than advantages, will be 1- or 2-day delivery and a seamless multichannel experience. Given the strain logistic networks are going to face, businesses need not only perfect ordering and inventory management systems but also innovative solutions to increase supplying capacity (e.g., John Lewis “dark stores”).
Australasia is, in most areas, experiencing a more relaxed legal-economic scenario, with a lower number of cases and gradually easing restrictions. Here, according to a Monash University report, the physical channel will be the most crucial one, but around 19% of Australians will still complete their Christmas shopping mostly online. Australia’s largest supermarket chain Woolworths is an excellent example of balance: while enhancing their famous ‘last-mile’ and ‘long-haul’ logistic networks, the retailer also implemented in-store solutions like the new 3D customer tracking technology to improve staffing, customer experience, and safety.
Promotional and communication efforts should also be very attentive and adaptive to international and regional legislative differences. Even though the necessity for classic Christmas positivity, togetherness and storytelling will still be central to advertising strategies, retailers and businesses should avoid representing images that are incongruent with the reality customers are currently facing.
Although retailers like John Lewis and international brands like Coca-Cola are, rightfully, leveraging on people’s increased emotional needs for bonding and for a return to ‘normality’ in their Christmas communications, some players, including Amazon (below) are delivering compelling and emotionally touching stories while faithfully depicting our new reality.
Christmas Customer Strategy Summary
Classic Approaches
1) Messages of positivity, kindness and reciprocity
2) Storytelling, theming and ‘staging’ the experience
3) Sense of urgency and time consistency with festivities
2020 Strategies
1) Communicate positivity and togetherness but be mindful of the ‘public mood’
2) Understand the issue of theming the experience through multiple channels
3) Focus on relationships, harness the value of increased customer data insights
Keys for success
Achieve an operational balance between online and physical channels
Balance communications between positivity cues and reality
Tommaso Bacchi Reggiani is currently undertaking his Master of Management (Marketing) at the University of Melbourne and is a research intern at CapFeather.