3 strategies to help your business through the recession
The economic slowdown from the coronavirus pandemic has officially put the U.S. economy in recession, and nobody can accurately predict how long it will last.
But there are some economic signals—and trends from the last recession—that can help businesses navigate this downturn and move toward recovery. Here are 3 business strategies for your recession playbook.
1. Invest in digital transformation
One of the biggest disruptions so far has been the massive growth in digital commerce. A new eMarketer report estimates e-commerce will reach 14.5% of total U.S. retail sales this year, representing an all-time high and the biggest-ever yearly increase. Nearly two-thirds of shoppers expect to continue those online buying behaviors into the future.
Similar research shows many shoppers will be reluctant to spend time in stores for the next year or more, so now is a good time to double down on digital tools. The number of new stores created on Shopify, a major e-commerce platform, between mid-March and late April jumped 62% compared to the prior six-week period. Retailers are also upgrading their platforms to give shoppers contactless payment options, including digital wallets and point-of-sale financing.
Investing in digital infrastructure helped many businesses succeed during the 2008 Great Recession. In a Harvard Business Review discussion focused on adjusting to the “new normal,” Nancy McKinstry, CEO of Wolters Kluwer, urged businesses to make similar plans now: “The first priority is to focus on digital transformation that affects your customers.”
2. Double down on customer centricity
Customer centricity was another winning strategy for businesses during the last recession. Rohit Deshpande, a Harvard Business School professor, said that businesses often gain market share when they emphasize customer-centric practices during a downturn.
“It is even more critical for firms to become more customer-centric by researching and understanding their customers’ new problems caused by fear, isolation, physical distancing, and financial constraints, and attempt to structure their offerings to meet these new unmet wants and needs,” Deshpande said.
Here are some current examples of this approach:
Panera Bread added free, unlimited refills to its subscription coffee service.
Dunkin’ offers extra loyalty points to customers who pre-order on their mobile app.
Best Buy, Lowe’s, and others created zones in their parking lots for customers to pick up online purchases without leaving their cars.
Walmart, Whole Foods, and other major stores reserve select times for seniors only.
Small adjustments that accommodate your customers’ needs and provide a good experience can pay dividends in repeat business and long-term customer loyalty.
E-commerce retailers may also find new opportunities to win loyalty with an older demographic right now. Shoppers in older age brackets are buying online more today than ever before, and eMarketer estimates a 5.8% increase in online buyers aged 45 and above this year. That’s nearly 5 million new buyers.
3. Find ways to expand affordability
Widespread business closures and job losses have constrained budgets for many Americans. It has also moved people to save money at a historically high rate while spending less.
During this critical time, appealing to an impulse for saving money can help drive sales. Discounts are one way to achieve this. Another is flexible payments—giving shoppers the option to pay over time.
When shoppers can split a purchase into smaller payments over a set time period, they perceive the total cost as more manageable, which can make a difference in your sales. Retailers that offer flexible payments with Affirm see up to 85% higher average order values.
“The pay-over-time option with Affirm has given customers the ability to stretch a little bit further and still be comfortable in the purchase they’re making,” said Tom O’Rourke, Vice President of Retail for designer jewelry retailer David Yurman.
As we all look forward to an economic recovery, strategies focused on digital transformation, customer centricity, and affordability can help your business weather this recession.
See how offering flexible payments with Affirm can help drive sales now.
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