This article is part of our Retail Reloaded series. The series offers a new vision for retail businesses through an evolved use of technology, cutting-edge innovation and digitalization practices.
Position your organization for success by developing new capabilities, new skills, and, importantly, a new vision for what comes next. There are three core actions where technology can help retailers not only survive this crisis but emerge as winners. SAVE, ACCELERATE, and SHARE.
In this article, as part of the SAVE strategy, learn about how to build up resilience and manage risk effectively while adapting to new market conditions and customer expectations. We will look at a host of opportunities within three main areas which offer the largest potential for economic recovery: business (new models and strategies), operations (managing people and goods), technology (automation, e-commerce and data science).
The world has taken a sudden turn from the most advanced, liberal, and connected world that ever existed to the one caught up in the apocalyptic scenario of a pandemic outbreak.
Just a few months ago, retail was busy innovating products, inventing new realities, investing in research and development, supporting communities, making connections, and dreaming up a better future on the wings of technology and the possibilities it creates. Today, for most retailers the focus is on survival. And, to survive is to evolve.
This is why now, for many retail businesses, survival means more than just a new approach. It means evolution. The industry has talked about innovation endlessly in conferences and symposiums. Now is the time for action. Now we have no choice but to change.
So what do we mean by evolution in the context of Retail Reloaded?
The industry has never undergone a trial of this magnitude. At the same time, it has never been given a more powerful opportunity nor more powerful tools to practice responsibility, agility, and resilience. We can emerge stronger. We must emerge stronger.
We call this future-proofing, and in this article, we will share the latest strategies that some of the most successful retail businesses have used to build up resilience and manage risk effectively while adapting to new market conditions and customer expectations. Salvation and ongoing success rely on a retailer’s ability to use technology and creativity in equal measure to build new relationships with customers and partners.
If your store sales have suffered a significant loss due to the pandemic, you are far from alone. You are likely looking for ways to boost online sales and tighten up spending. You are faced with a Hobson’s choice of cutting expenses while choosing new areas in which to build new capabilities. Time is crucial and the decisions are painful.
Hundreds of thousands of workers have been laid off or furloughed. A few big players in the U.S., like JCPenney and J.Crew, have filed for bankruptcy. Many of the traditional stores that had been struggling for years, even before the pandemic, have been quickly swept aside once they were forced to shut their doors to shoppers. Existing weaknesses were quickly laid bare.
In many ways, whilst sad, these businesses were too cumbersome and rooted in the old ways. Despite numerous warnings, they failed to embrace the retail technology race. For a long time, many in retail have hypothesised that digital transformation was the enemy of average retailing. In many ways, the crisis brought about by the pandemic has simply accelerated a path we were already on.
While brick-and-mortar shops still held 80% of global sales in 2019, it is likely that 2020 brings a more abrupt shift towards e-commerce. 50/50 anyone?
We see a host of opportunities within three main areas that offer the largest potential for economic recovery. Retailers, both big and small, will compete for a piece of this new global market pie. As usual, where there’s potential, there’s risk. Let’s look at these opportunities and the ways retailers can materialize some of them in order to predict the future of retail and secure the future of retail stores.
- Business (new models and strategies)
- Operations (people and goods)
- Technology (automation and e-commerce)
Positioning and storytelling
In a highly diversified market, a retailer’s clear niche positioning is essential when trying to reach busy customers faced with an almost unlimited choice. This is especially true online where short dwell times and high bounce rates are the norms. As customers search the web, it is likely that they have already formed an opinion of what exactly it is that they wish to buy. In an Amazon inspired world, remember that customers no longer have a “where to buy” problem. They have a “what to buy” problem. For this, they seek expertise. The successful retailer will be the source of this expertise. The #1 purpose of your website, therefore, is to inform a customer, in a split of a second, of your purpose and how you are the expert they seek.
Discover what truly motivates your customer to buy your products as opposed to the ones offered by the competition. Is it the materials used? Do they like your brand and style? Appreciate your reputation as a socially responsible business? Are your products cheaper than the competitors’? Organic? Fairtrade? Handmade?
Let’s consider the branding and positioning of Simple Retro fashion brand from New York:
? The brand name already communicates the two main values.
⛳ Their “why” is clear: it is to offer “a balance between modern and old fashioned with good quality and a reasonable price”.
? Their mood board effectively communicates the designer’s inspiration in a well-understood style of the Pinterest social network. Websites that use social networks to show their products used by customers are a big hit these days.
? The transparency of their supply chain and manufacturing is a huge plus. Customers appreciate honesty and openness. They are aware that the majority of production happens in China, so why hide it? Instead, the brand focuses on the positive impact their business has on the local community.
♻ Sustainability – 60% of the fabric used meet the American environmental standards.
The current climate has changed the investor space as well. Many are shifted in favour of strengths in environmental, social, and governance (ESG) models, with a clear mission and positive impact on people’s life and the environment more widely. ESG investing has seen a steady increase in inflows and returns since the beginning of the pandemic and is likely to continue advancing after it.
Retail businesses are in a unique position, too, to reconsider their business models. Many urgently need to find ways to integrate sustainability into their business.
In their article on sustainable grocery retail, Oliver Wyman argues that in spite of the fact that 82% of grocery retail CEOs cite sustainability as a key priority, more than 99% of all grocers remain unable to implement sustainability throughout their organization. The article suggests five important factors that organizations should consider.
Revamping the existing retail systems, disrupting markets with new products or platforms, or spinning-off a branch that has started to make sense as a venture on its own, has many associated risks.
In one of the previous Retail Reloaded articles, Discover retail ventures worth investing in, we consider the need for a creative, iterative approach to risky investments as part of the innovation cycle. It calls for a strong initial hypothesis to be established, which is then both customer and market-tested via a combination of controlled releases, prototypes, and MVPs. The learnings from these tests are incorporated into the solution, increasing the probability of the product-market fit. The so-called Discovery process saves money that companies can then invest in delighting customers.
Establish lines in the sand. From customer satisfaction ratings to actual sales numbers, improving the definition of actionable metrics and their dynamics in regards to a venture’s timeline is an essential skill when measuring a venture’s success. New ventures are prone to becoming passion projects with no visible or foreseeable ROI. It is crucial to know when to stop or pivot.
Leverage tech partnerships. Partnering with a high technology company, like our own, can help retailers expand their capabilities, vision, and reach in the technology space. It also strengthens the business’s ability to see new opportunities where these were previously invisible. Technology companies have traditionally worked with businesses from a wide array of industries and often bring cross-industry ideas that are innovative for your space.
Process improvements, automation, optimization, employee care, customer acquisition, and retention. There are a number of moving parts to a successful operation. How should we now be thinking of these when urgently needing to move forward and increase revenues in the face of an economic meltdown? Retail might be best seen through the following lenses:
Values at the core — Supporting customer values and allowing them to make a positive impact when purchasing eco-friendly, sustainable products. Over one-third of US buyers who took part in the CGS’s sustainability in retail survey, expressed that they would pay up to 25% more for sustainable products. Moreover, while still in shock from the COVID-19 crisis, customers will demonstrate long memories of how brands reacted during the crisis. Doing good at this time will be rewarded by customers in the post-COVID world. A current example beyond the pandemic is the #BLM movement which has been raging around the world. New generations expect more; they look to connect with brands with whom they share core values and attitudes.
Price consciousness — With an economic downturn and high unemployment on the horizon, customers are becoming more concerned about spending. They will be fishing for offers and best buys, postponing the purchase of luxury goods until more stable times. Now is the time for retailers across all sectors to reconsider their pricing strategies and allow for more flexible options and promotions.
Flexibility — Ensuring you have the tools for managing a more flexible and remote workforce, as well as systems in place for easy hiring of ad hoc work and crisis situations, will accelerate the move toward more agile employee distribution throughout stores, warehouses, and corporate offices. Use data and workforce management apps to monitor and manage the demand for work across the board.
Safety and responsibility — Just like customers, employees are looking for a higher purpose in their work. Being a more responsible, equal-opportunity employer, with a focus on hiring with the company culture in mind, will ensure you have a loyal workforce even when the times are rough. Concerns about health and safety have emerged as the top priority for stakeholders across the value chain.
Efficiency and sustainability — sustainable sourcing, supply chain and waste management, automated logistics, perfected delivery, all are top of mind concerns for retailers in all sectors. Leaders are looking for ways to improve efficiencies, ensure savings, and to reduce the environmental impact of their production and supply chain.
Transparency and traceability — gone are the days of blissful ignorance and careless consumerism. Retailers today have a responsible role to play in making our world a better place. They need to make sure that the origin of materials and human labor is traceable and accountable. Haute couture and high-end fashion brands have shown awareness and are starting to invest significantly in this area.
Today, the lines between technology and retail are blurred to the point where yesterday’s sophistication is today’s standard. The winners in the Post-COVID world will be diverse, but all will share the fact that tech is at the core of their business. Technology has transformed retail, and it will continue to be the pillar of its acceleration.
Automation and digitalization — technology is at the service of internal efficiency improvements and savings through new ways of considering automation. Ocado, a British technology company and online grocer, has emerged as the world leader in warehouse automation, processing millions of items every week. Its vision, journey, and the dedication of its CEO, Tim Steiner, is a case study for any budding technology entrepreneur. Similarly, Amazon is automating a complete store to door experience in their futuristic City of the Future vision.
Experience — technology is central to the support needed for seamless shopping experiences. Whilst this was traditionally thought of as a physical experience, increasing attention is being given to the creation of online experiences. Incorporating emerging technologies, such as augmented and virtual reality, working across both domains, has garnered significant interest among retailers. When faced with the impossibility of undertaking model shoots for its vast and rapidly changing catalogue as a result of COVID, ASOS, the UK pureplay fashion retailer for twenty-somethings, turned to a technology solution.
It has already been trialing an augmented reality solution that delivered impressive results in showing multiple outfits on a single human image. Initially, ASOS had been praised for the inclusivity of using this technology by allowing its customers to see multiple garment sizes. But this technology would prove a ready-made and even more valuable solution faced with the impact of social distancing upon its traditional ways of shooting models. Our team at HTEC has designed a VR shopping experience platform, in partnership with GrayRoom architectural visualization studio, for our customer Trillenium. These solutions are more within your reach than you might have expected.
Customer data science — data is today a crucial way to know your customers, predicting their needs, and being there at the time when they need you. By this, we mean catching the fluidity of a customer’s relationship towards a product over time. The data must capture the overall experience a customer has with the product itself and the ecosystem around it. This includes its actual functionalities and the functions the product takes in the customer’s life, but it expands well beyond these and transcends into a more abstract realm of emotions.
Data for data’s sake can soon become overwhelming. Today the challenge is to perfect our skill in determining those metrics that are actionable. In other words, data that leads directly to a choice being made. We are able to extract the feeling a customer gets from interacting with the product’s website, app, social media, customer support, commercials, brand image, and the likes. In short, actionable metrics will draw from the perceived, as well as the hidden value of a product, and bring us closer to that customer feeling.
What to invest in today?
With a 59% jump in US store closings (compared to 2018), an attitude that embraces change is today’s must-have. In this new paradigm, the road ahead will be lead by retailers empowered with a strong technical ability to execute within volatile environments. Technical prowess, with deep roots in its use of innovation, will deliver visibility and tangible value to retail businesses. This prowess is now at a premium within the industry’s long history.
As cloud technology became mainstream, development resources were democratized and they started empowering businesses across the globe with new capabilities emerging faster than ever. This meant that the question “How to build” has been replaced with “What to build”.
When deciding on the latter — data plays a key role. Technology on both ends (aggregation and capturing) is vital to enable data-driven decision making which invests in customer experiences to drive success in the Post-COVID world.
As technology takes over menial factory and warehouse (even store) jobs, through automation and robotization, possibly the most obvious next change that retailers may face will be reimagining staff roles and how to enable a wider canvass for them through new tools and technologies. We call this supersuiting and it will be the subject of a future article. One thing is for sure. We must free valuable store staff from their prisons behind the till and allow them to return to delivering increased service to customers.
This is an unprecedented opportunity for the retail industry to show responsibility and evolve its relationship with its customers, employees, investors, and our natural environment. Technology can and must be used as an enabler of this global transformation. The question is no longer whether retailers need to invest in building technology, but rather how quickly they can decide and deliver what to build.
In our next article, we explore the strategies of some of the world’s most innovative technology companies and how they move from assumptions to decisions when building winning solutions and products with minimum waste and maximum SAVE.
If you need professional technology advice on any new venture ideas that you have, use the form below to get in touch with us. We can help you discover and build products that will accelerate your digital presence with your customers and prevent you from spending resources on the initiatives that don’t stand a chance.