The world is slowly re-emerging from the COVID lockdown with most retailers and brands already instituting short-term plans for business continuity.
If there’s anything to be learned from what happened to the retail industry during the early days of the pandemic, it’s that, despite all the enterprise transformation, retail innovation and retail tech initiatives, nothing could have prepared retailers for the types of challenges that their customer service, store operations, supply chain and logistics teams were faced with when all of their customers were suddenly forced into using digital as their only mode of shopping.
Surprisingly, no company was safe from the ripple effects caused by the shift to 100% digital. E-commerce giants like Walmart struggled with slipping delivery dates and inventory shortages, while Amazon temporarily lost the ability to fulfill their PrimeNOW and Prime same-day delivery promise, not to mention they had a major issue with their own sellers’ price gouging of essential items.
So here we are, approximately six months into the global pandemic and what have we learned from the “COVID Effect” on retail? First and foremost is this — some of what happened during the pandemic was already in play well before 2020. Companies that were trailing in deployments of retail technology infrastructure, customer engagement, fulfillment and e-commerce solutions were the ones that fared the worst in the situation.
The biggest losers during COVID had been in a crisis before things got ugly. Specifically, the mall-anchor department store retailers such as Macy’s, Nordstrom’s and Kohl’s had already been running out of financial runway and trying to stay afloat — struggling to fast-track innovation efforts and reinvent themselves with a variety of retail technology strategies against the backdrop of a highly competitive market of DTC, big box and e-commerce companies.
The winners were big box retailers like Target, Walmart, Home Depot and BestBuy, showing record sales numbers in their Q3 2020 share-holder reports. The strategic investments in customer service, BOPIS, e-commerce, in-store mobile customer engagement helped shore up their ability to keep doing business with the myriad of limitations placed on their physical stores. There was however, a ripple effect caused by the surge of customers to digital commerce, critical failure points in e-commerce customer experience and fulfillment across the enterprise technical infrastructure that would not be visible under normal circumstances.
Retailers must adapt their strategies now and address the fact that the way consumers shop has been irrevocably changed, and there’s no reason it’s ever going back to the way it was. IBM released data on how COVID created an environment where the emerging consumer digital commerce behaviors have been accelerated by at least five years. The most recent consumer studies by McKinsey revealed that over 75% of shoppers have tried a new shopping behavior during COVID. In addition, the trend of customers being more loyal to the brands they shop pre-COVID has all but eroded thanks to the stock piling behavior caused by the pandemic. These days, shoppers are much more willing to switch brands due to product availability or for more convenience.
This translates into a situation that is less about restructuring traditional loyalty programs, but more about how retailers select the right retail technology solutions to solve the failure points relating to the customer experience. These days, consumers are very short on patience and are not willing to put up with any needless friction or inconvenience in the shopping journey regardless of if it’s in-store or online.
As foot traffic back to the physical stores is gradually — albeit slowly — increasing, shoppers have four key expectations for retailers during the pandemic: flexibility, safety, consistency and transparency. The following is a “short list” of retail tech opportunities that address these core expectations.
- Customer experience
– Walk-up, curbside, click and collect, drive-through
– Digital signage (indoor/outdoor)
– Cashierless stores
- Customer-centric convenience
– Buy now, pay later
– Contactless transactions
– Efficient + easy-to-navigate ecommerce
- Operations and supply chain
– Machine Learning Demand Forecasting
– Autonomous delivery + unattended vending
- Home Commerce
– Virtual shopping (augmented reality and virtual reality)
– Home delivery partners
In terms of priority, customer loyalty will be retained by the retail tech that helps reduce the high anxiety levels of customers — by keeping them more informed; notifying them on how long the line is to get into the store; alerting them on an order status while they wait on the curbside pickup; or finding easier ways to navigate the e-commerce site. These are the solutions that will do much more for keeping customers loyal versus making sure the shelves are stocked with a certain brand of toilet paper or antiviral, disinfectant cleaning products.