A pandemic is a crisis few businesses are prepared for – after all, insurance estimations put the risk of pandemic at less than 1 per cent annually. As a result, many business owners are unequipped for the economic changes that take place during a global outbreak of illness.
However, the challenges retailers will face as the coronavirus – known as COVID-19 – continues to spread are not unprecedented; and there are strategies that retailers can employ to mitigate some of the damage.
The Australian Retailers Association (ARA), has advised members, “The coronavirus, like any other virus, has a lifecycle. This is not a permanent state of affairs. It’s a serious, but temporary crisis. Proactive retailers will need flexible systems that are easy to change and can automate optimal order routing. Success will depend on the agility and scalability of your systems.”
For jewellery retailers, the solution starts with marketing.
“The trouble for jewellery retailers in a time of crisis, like the COVID-19 pandemic, is that sales of jewellery are motivated by celebration and love; they don’t sell on negative sentiment but positive sentiment,” explains Peter Ryan, director Red Communication.
“To sell anything at all at this time, retailers can’t think functionally. They have to think about emotional motivation and the only emotion I can think of at times like this is to make sure the ones you love know it. Keep them close and never be afraid to show them your love.
“Jewellery is a great way to do that and throughout history, in times of crisis, that has been the case.”
Illustrating this phenomenon is the trend for engagements to increase during recessions and in wartime.
While jewellery retailers may wish to focus their marketing efforts on this theme of love and family, even more important is keeping the channels of communication with customers open in any way possible.
While some may be tempted to cut advertising and communication costs, retail experts advise that a more useful strategy is investing in remaining ‘front of mind’.
Ellen Fruchtmann, director of Fruchtmann Marketing, advises retailers to “think ahead”, telling US jewellery industry publication The Centurion, “I can tell you from experience that the retailers that remained front and centre in [the US recession of] 2008 got stronger. Sales volumes increased, without a doubt… I’m not saying that because I’m in advertising, I’m saying it because we’ve seen it.”
While she acknowledged that recent weakness in the stock market – the ASX200 recently fell to its lowest level since 2013, while the Australian Dollar dipped below $US0.60 – has left many consumers “not in the mood to buy jewellery”, the effects are likely to be temporary.
“The bigger picture is that we don’t know when the stock market will rebound,” Fruchtmann explains. “It always does, but the question is when, which no-one knows. Will that have an impact on the psyche of the consumer? That’s what all retailers need to be thinking about now.”
In the meantime, others advise retailers to embrace the e-commerce side of their business, both in terms of digital marketing and online shopping.
“You must have a strong online presence during this period,” says Jeff Gordon, director of The Gordon Company, a jewellery sales, strategy and promotion business based in Florida.
“Let customers know you have options [beyond] in-store shopping.”
Jewellery retail and training expert Jimmy De Groot advises retailers to "stay in the game": "Stay in contact, keep the faith, and always be doing something to stay in touch with customers."
He cites texting, phone calls, social media videos, FaceTime, and video-conferencing with a printed 3D design as some of the ways retail jewellers can interact with customers who aren't able to visit the store.
Indeed, with many consumers working from home or limiting their outdoor activities, researchers are predicting a boost to the consumption of digital media.
In its recent report The Biggest Business Impacts of the Coronavirus, international digital marketing research firm eMarketer predicted “digital media consumption to increase across social media, over-the-top video and online gaming – similar to what we’ve already seen in China.
“Social networks could be a major beneficiary, as people turn to these platforms to connect with friends and family who may be at a distance or to access news content.”
It also stated that video streaming apps like YouTube would likely see an increase in usage.
These trends present an opportunity for retailers to advertise at low cost on these platforms.
The eMarketer report also noted that “changes in online shopping habits may be particularly prevalent among older customers – the group most susceptible to the coronavirus and most likely to avoid stores because of it, but least likely to shop online.”
This shift could not only provide short-term sales, but permanently shift their purchasing pattern to online shopping.
Meanwhile, the ARA has advised members to invest in delivery services: “If Australians begin to isolate, whether by choice or by advice, there will be a similar spike in demand for deliveries, and retailers must be prepared.
“The retailers that have an advantage will be those who are set up to dispatch from local stores and are not as reliant on those who operate from a central warehouse.”
Bracing for the financial fallout
While putting resources towards e-commerce and marketing can help retailers survive the temporary financial shock of the virus, Ryan warns that the changes in consumer behaviour may last for many months.
“By all means, move to online – but functional options will not overpower the fear and panic that is enveloping people right now,” he says.
Restrictions on travel, social distancing, school closures, reduced trading hours – even mandatory cessation of trading – as well as employee absences and shipping delays are just some of the factors that combine to hamper service-based businesses.
For retailers of discretionary items, such as jewellery, reduced footfall – particularly in shopping centres – will likely lead to cash-flow problems.
The Australian government has announced an assistance package, to be administered by the Australian Tax Office, to provide relief to small business owners; Victorian Premier Daniel Andrews has indicated that a “survival package” of “emergency cash” for businesses may also be required.
In addition, all four major banks have announced relief packages for businesses in financial stress due to the COVID-19 pandemic. These initiatives range from waiving fees on merchant terminals to deferring repayments on vehicle and equipment finance loans, providing restructuring and extension options, and providing business counselling services.
Mark Hand, group executive Australian retail and commercial banking, ANZ, told The Age that the bank had learnt from the early 1990s recession, and suggested it would be “lenient on customers that were suffering temporary damage from the outbreak, such as those that missed a key season or were able to obtain stock at a critical time”.
Meanwhile Guil Lima, chief executive business division, Westpac, said in a statement, “This is an extremely difficult period for some Australian businesses. We want our customers in any affected sectors to know there’s a range of ways we are ready to support them.”
From a long-term perspective, Canadian retail futurist Doug Stephens believes there may be a ‘consumption spike’ once the coronavirus epidemic is brought under control; he likened this ‘brush with mortality’ effect to the one that occurred after the September 11, 2001 terrorist attacks.
In an interview with Business of Fashion, he advised businesses to adopt a future-focused perspective: “Use this time to reinvent how you do what you do, bring consumers new alternatives, new value, and in the process even reinvent your own brand. Don’t let innovation stop, because this could be the window of opportunity.”
Meanwhile, retail and consumer product consultant Robin Lewis and global fashion supply chain expert Margaret Bishop believe the aftermath of the coronavirus could “level the playing field” when it comes to discounting.
Writing on the Robin Report blog, they note, “Supply disruptions that reduce inventory offer the legitimate excuse brands and retailers need to reverse the overproduction and deep discounting they have come to depend on and now regret.”
They advise retailers to “make less, sell at full price, meet profit goals on lower volume and higher margin – and reduce pervasive waste across multiple industries.”
Most importantly, experts say businesses and individuals should avoid panic.
Prof Ilan Noy, chair in the Economics of Disasters at Victoria University in New Zealand, told the ABC that the economic impacts are “largely because of the changes in behaviour and not directly because people are sick”.
“There is no necessary panic. There are necessary changes in behaviour, but panic is unadvisable in any case,” he said, adding that governments and media should work to keep people calm.
Ultimately, the full impact of COVID-19 cannot be predicted with total certainty; but the lessons of the past and the experience of the present can help prepare business owners as much as possible for what lies ahead.
Stay all in: Don't let fear govern your life or your business
Jimmy DeGroot, founder JewelryStoreTraining.com, has previously shared his jewellery sales and marketing tips
with Jeweller. Here, he explores the best ways to deal with a crisis based on his experiences as a retailer
following September 11, 2001 and the US recession of 2009.