What is Econometrics and how can it help brands?
It’s a method economists use to understand what makes sales of a product go up or down. So, market trends, changes in the product or the way it’s delivered, seasonality, availability, and marketing activity can all be evaluated and prioritised.
It’s particularly useful to ecommerce brands when they are thinking about things that aren't trackable, like a TV or poster campaign, or a change in the way the economy is behaving.
There have been some pretty obvious changes in consumer spending (more online spending, spikes in certain retail sectors like beauty, health, groceries etc). How are we able to separate short- term changes vs what is likely to remain as longer-term trends in consumer behaviour?
Changes will last if they are in people's interest to keep them. Realistically, that means that when lock downs are lifted, and the threat from the virus subsides, most things will go back to normal.
That said, some changes that were already taking place slowly, because they are in people's interests, will accelerate because of Covid 19. One example is working from home instead of the office. This is cheaper on real estate for employers, and more convenient for employees. It was already becoming more prevalent over time, and with this big current experiment, people see that it can work. So, you get news like Twitter saying it’s going to be permanent, and everyone's fine with it.
Shopping online is like that. The percent of retail sales that are online has slowly been growing, and that's because it’s a better technology in sectors where shopping in store is a chore rather than a joy. Lockdowns are giving everyone a taster of that, and some will no doubt change their habits for good.
This latter point is important. Ecommerce providers who have their supply chains in order have a golden opportunity at the moment to gain a slice of a larger online shopping pie.
How has the typical customer journey changed? What do retailers need to do to anticipate more change? What do brands need to do to support this?
For different shoppers, the answer is different, and the biggest criteria to think about is not age or gender, but economic circumstances.
Lockdowns have been concentrated in sectors that employ young people on low wages - shops, restaurants etc. These groups are the worst affected economically, and many of them aren't buying anything. Any sell message to this group will sound tone deaf right now. The job for brands is to keep the relationship going, and only that. Even cutting prices on consumer durables, for example, probably won't help and there is a risk of devaluing your brand.
At the other end of the spectrum are people who are unaffected financially, perhaps office workers in sectors like finance. This group represents a good opportunity for ecommerce brands as they aren't spending money going out, and are spending time surfing the web. It’s a good time to offer these people innovative ideas like 1-hour delivery in metropolitan areas, or luxury products that they might not otherwise buy.
And then in the middle is most people - around 80% of us according to a recent survey by Populus - that are comfortable at the moment, but a little worried about the future.
This majority is watching to see what happens. Many will be postponing big purchases, but some will be using lockdown as an opportunity to plan for the future. These people are open to being inspired at the moment, and risk-free payment plans will help them to spend.
As non-essential brick and mortar look set to open soon, what do brands have to think about given the fact that the virus is likely to act in unpredictable ways.
Clearly ensuring a dual and integrated presence - being active in both bricks and mortar and online - is going to be critical.
Our media is overwhelmingly pessimistic at the moment, which will lead many to believe that shoppers won't return to real world shops.
That may be the case for some, but there will also be shoppers that are desperate for the kinds of experiences you can't have delivered to your home. So, for example, there were queues outside luxury stores in China after lock downs were lifted, and Hermes in Gunagzhou took $2.7m in one day. There were similar scenes in New York after 9/11.
Once the virus risk has abated, it will be important - not just for retailers, but for everyone's state of mind - to get out the door and into real life again. There is a role for brands in helping to facilitate that, by reassuring their customers that it is safe and that life goes on.
Marketers and ecommerce trading teams need to start investing and preparing now for the quick recovery economists predict.