Pre-Covid-19 Lessons From Nike and Under Armour

From the Basil Labs team

Retail stores across America are reopening, but are customers returning?

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In the past three months, Covid-19 has drastically impacted consumer behavior, with up to 85 percent of consumers staying at home except for essential travel and up to 63 percent of consumers avoiding shopping in physical stores altogether. To protect personal and public health, staying at home is the new normal, so it’s no surprise that retail stores are suffering. Retail trade sales in April were 17.8 percent below last year and for the particularly hard-hit sector of clothing retail, sales were down 89.3 percent from last year.

Before Covid-19 hit early this year, retail stores were already facing the growing challenge of e-commerce, but governmental closure regulations and customer concerns of safety have only intensified the challenge of maintaining the in-store customer experience.

Not all is lost. To move forward, retailers must embrace the unique competitive advantages of traditional retail adapted to new health and regulatory challenges in the Covid-19 era.

Retail’s Sisyphean Task

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Since the rise of e-commerce in the past decade, its share of global retail sales has been increasing steadily each year. Covid-19 has certainly accelerated this trend, with US daily e-commerce sales growing 49% in April 2020 compared to the month before.

Successful retailers have learned to incorporate digital channels into their selling strategies, but despite more than 9,300 retail stores closing in 2019, including Payless, Charlotte Russe, and Sears, e-commerce is still a small piece of the retail sales pie — 14.1% to be exact.

There’s something about the physical in-store experience that draws in customers, and for retailers, that’s good news, since studies show that customers spend more money shopping in stores than online. Furthermore, in many states and counties whose retail stores have been closed for months, many customers are itching to return to shopping in stores again.

Therefore, the first step in attracting in-store customers is analyzing what exactly customers value about the brick and mortar experience.

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The How

At Basil Labs, we tackled this question by looking specifically at two brand names in the athletic clothing space: Nike and Under Armour. After aggregating and analyzing around 50,000 online reviews on both brands’ retail stores across the country, we were able to decipher what customers value the most about Nike and Under Armour’s in-store experience.

We found that staff and human interaction were the top drivers in positive consumer experience — it was not only mentioned most frequently but also most positively among all topics tracked. To draw consumers back, retailers should capitalize on key differentiators between brick-and-mortar retail and online shopping. While online shopping is often quick and convenient, retailers have an opportunity to market and craft in-store experiences to be more personalized through experiential elements like interactions with the staff.

Between both companies, Price, Selection, and Discount were also mentioned both positively and frequently, while Location Size and Crowdedness are mentioned negatively but not as frequently.

img1 After separating Nike and Under Armour, it becomes clear that Nike has an advantage in the prevalent category of Staff. While Under Armour may want to focus on improving the quality of staff interactions with customers, it can also capitalize on some middle-impact categories that it holds sizable advantages over Nike, such as Product and Selection.

Innovating through Covid-19

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Now three months into the first wave of Covid-19, a new set of challenges is disrupting the in-store experience and customer foot traffic and flows — cleanliness and safety. This disruption is apparent with fewer customers buying products at physical locations, and those who do are now also concerned with adequate preventative measures against the spread of Covid-19.

Across the states, retail stores are recommended to increase physical cleaning, limit customer-customer and customer-staff interactions, and provide PPE to its workers. All of these changes are recent, and retailers must adapt.

To protect personal and public health, staying at home is the new normal, so it’s no surprise that retail stores are suffering.

A conundrum has now taken shape between limiting staff interaction due to Covid-19 cleanliness regulations and maintaining a satisfying customer experience through human interaction. While Covid-19 has recently added an extra layer to what customers value, our analysis shows that staff is still a foundational factor to creating an in-store customer experience distinct from online shopping.

In other words, in order for brick and mortar businesses to survive in the long-term, retailers must strategically adapt to short-term Covid-19 expectations while still incorporating the familiarity and value customers place on staff.

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Regional Challenges

With thousands of stores across the country, uniformity standards are essential to ensure consistent customer experiences at all locations. From a regional analysis of Nike and Under Armour retail stores, we found that Nike regions faced higher variance in both Product and Selection. Across regions for Under Armour, on the other hand, topics like Location, Price, and Selection each had the highest variances.

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Within the context of Covid-19, however, retail brands will need to maintain an even more careful balance between consistency across locations and state-by-state health and safety regulations, all the while maintaining the expectations of their customers. As Covid-19 has impacted communities across the country differently and the response to the pandemic has been fragmented by state and county, each retail store will be operating within its own unique environment and set of challenges.

What next?

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Retailers can expect evolving shopping behaviors from customers and customers can expect evolving in-store experiences. However, if retail brands want to thrive in the post Covid-19 era, it’s critical that retail place managers and marketers understand what separates the physical from the digital shopping experience, how these differences fit alongside Covid-19 expectations and regulations. Additionally, larger brands must maintain consistency across their locations despite differing state and municipal safety regulations in order to maintain consumer loyalty and consistently drive customers back to their stores.

While this case study focused on two massive brands: Nike and Under Armour, retailers are facing similar challenges across industries, locations, and sizes.

The solution here is not to simply eliminate customer experiences, but rather adapt them.

Beyond Covid-19, retailers must recognize the unique value proposition in-store retail offers and how to incorporate and innovate its value to create even greater consumer trust in the in-store experience.

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