The retail sector is going through a disruption accelerated by the COVID-19 pandemic. What is the outlook for the other side of the pandemic? There are some important cornerstones of the transformation that successful retail companies need to have in order to survive and grow through 2021 and beyond. Below are a few priority areas that companies need to proactively address.
1. Purpose will be a given for successful companies. The digital revolution has enabled a total transparency, where information is readily available for anyone who is interested in how a company is dealing with D&I at the workplace, suppliers’ working conditions, sustainable materials, low carbon logistics and whether management is taking a stand for a good cause, among other things. There is no space to fly under the radar anymore. A strong North Star to aim for, clear goals and commitments to reach, and the best possible communication are basics for future success in retail.
2. Technology and Digital as a workhorse (with a human touch). This is not just about the obvious things like browsing and shopping online but for every corner of the business. The pressure on productivity and margins will just continue to increase after the pandemic is over. There are big savings to be realized in logistics, staff management, customer returns, accounting and, of course, all interactions with customers, suppliers and other stakeholders. The visible parts for consumers are the processes of searching, comparing, deciding, buying and evaluating the products and services. The leading companies will use digital meeting places to give an excellent brand experience, with products and services in user-friendly digital applications.
3. Data about the customer behavior is important for success. With an increasingly scattered media landscape you need to know who your closest friend is. Talking to the right consumer with a personalized message is much more successful than mass marketing.
4. Physical store will continue to be an important meeting place and an opportunity to bring the complete brand experience to the customer. However, if the store is not bringing an extra reason for the customer to visit, it will just be a cost. Nike store and Sonos are good examples of stores that give you unique experiences. The winners will have a seamless connection between the store and the digital meeting place. Consumers are increasingly demanding a swift and accurate store pickup service. Target went for a whole menu of transport and pickup solutions two years before the pandemic and has shown extraordinary growth figures this year. The other side of the coin is Dollar General with 16000+ stores and building 1,000 a year. DG has tremendous success with just a brick and mortar presence, serving the lowest income areas of the United States.
5. New business models to reach hesitant consumers. One threat and opportunity for traditional retailing is the fact that young consumers do not see owning things as a way to express their personality or to get status, as it used to be—not the least propelled by the climate debate often linked to overconsumption. Therefore, the winners in retail must connect the purpose of their business to a variety of different models to reach different consumers. A recent example from Selfridges’ new strategy in the UK: repair, resell, refill and rental. Companies can reinvent their business and show that they are a part of the solution, not the problem.
The conditions for retail are changing very fast and the companies that can adapt to the new demands will grow in a stagnant market. Understanding how to meet the customer in the digital world with knowledge from data, having a clear purpose and involving the co-workers in the journey, understanding the power of a diverse base, using technology to lower costs and increase customer satisfaction, and understanding new models that simplify purchases and meet new customer groups are critical issues that will determine a retail company’s ability to come back stronger from the COVID-19 pandemic in 2021 and beyond.