The impact of WFH and the giants of online retail

In order to assess the impact of COVID-19 on the industry, Office Power conducted a research programme that featured webinars, an in-depth economic analysis and an industry survey - this included a focus on the future of home working and the threat of big online retailers

The first question asked of respondents was around the potential implications of the rise in home working. This is a key theme for the industry as it is likely to have an impact beyond the pandemic itself, with most futurologists predicting a ‘hybrid’ office culture. Statistics show that 45% of people in employment worked from home in April 2020 (source: ONS); this is compared to just 5% throughout 2019. This rate will be a lot higher for white collar or office-based employees.

This significant rise will come as no surprise to anyone as customers and colleagues have been forced to stay at home. It is anticipated that the government will continue to encourage employees to work from home, if they can, until a vaccine is rolled out. It is also fair to conclude that employees will continue to work from home - with varying degree of flexibility - on an ongoing basis, and the potential of ongoing restrictions on social and working life meaning we will not see a quick return to the ‘old normal’. Asking respondents about the ongoing impact of this, 88% share the view that home working will be significant in the future, with 48% believing that up to 30% of employees will continue working from home permanently (see Figure 1).

Given the previous importance of the office as the dominant environment for dealers to sell into, the fragmentation of the working location of customers is an ongoing concern. It raises a series of questions which must be dealt with: • How might customers be found in the future? • How will the existing customer base be managed in this fragmented environment? • How can cost-effective fulfilment services be provided when employees are spread out rather than office-based? • How can dealers compete in an e-commerce environment - which is the primary purchasing channel for the home worker?

CENTRAL TO SURVIVAL This understanding of the customers, and the ability to reach them wherever they are, has proven to be - and will continue to be - central to survival in this new environment. Where once rapport with individual buyers in customer companies was sufficient for maintaining contact, now e-commerce will become the prevalent channel for managing a much more fragmented relationship. With companies and their employees remaining at home for the foreseeable future, it will be key for dealers to build a clear understanding of their customer base via customer relationship management (CRM) tools and deploy a contact strategy to ensure different customer types receive relevant messages and promotions which are important to them, wherever they are.

Segmentation, targeting and positioning – known as STP – is a very effective tool to apply in this situation. Accurately and consistently segmenting the customer base by who they are, their working environment and what they need or want is one of the key ways to trade profitably with an increasingly fragmented customer base.

Due to the shift to home working, there has been a significant increase in pick, wrap and deliver (dropship) deliveries - in other words, the ability to deliver wherever the customer is. Applying similar segmentation techniques to target different delivery options, timings and charges is critical. So, building a clear, single view of the customer, truly understanding and supplying what they need and, ultimately, delivering what they want when and where they want it, will prove a clear advantage as various levels of lockdown continue and when we move to a ‘new normal’.

ASSESSING THE IMPACT The Office Power survey also looked at the impact that overall market competition may have - notably online, and including the immense competitive force that is Amazon. Unsurprisingly, there proves to be a significant concern about this area, with 82% of respondents being worried that online competitors will become an even bigger threat in the near future. This is well-founded given that Amazon recently announced they’d grown 27% in the three months following lockdown. This staggering growth is within the context of online retail growing at its fastest rate ever, peaking at nearly 30% of all sales in the UK in May 2020. Undoubtedly, many customer habits will have been irreversibly changed as a result of these enforced periods of lockdowns across the country.

It is crucial to avoid direct competition with Amazon as this is simply not a battle that can be profitably won. Dealers should also be wary of trading on Amazon marketplace; while this may provide turnover, and working capital, it will be unprofitable in the vast majority of cases. It is critically important for dealers to trade customers and not orders; understanding the customer base via a strong customer database and CRM is how you build up loyal and profitable customers.

It is also important to have high levels of integration between CRM and online systems enabling promotions, on-site messaging and merchandising that can be targeted towards what the individual customer wants to see. It is critical to extend this customer understanding to sales teams so that they are able to have the right conversation, and offer the right products at the right price.

Essentially, it is about managing the customer through their lifetime with the brand, encouraging them to come back and order more. Knowing how their needs are developing is how you build an online presence that offers something that Amazon doesn’t focus on so much – a deep, efficient and local relationship.