It’s true that retail is changing at a breakneck speed right now, but this presents a real opportunity for businesses to rebound post-pandemic closures as better, stronger businesses in the future. Those who are forward-thinking can capitalize on the momentum of this change.
The question is: what, exactly, should they do?
In Part Three of this three-part series, we’ll look at what the future may hold for retail. We’ll also share some strategies for anticipating some of the ongoing shifts within the industry so you can be one of the brands that leads the pack when it comes to innovation, improved customer experience, and overall business resiliency.
Put digital strategies at the forefront
The biggest trend we’ve seen during COVID-19 industry-wide, is the shift to digital channels and away from the physical store. But for some brands, this is more than a consequential decision.
Nike, having reported a 38% decrease in revenue due to COVID-19 reported a 75% increase around digital sales this quarter. As such, they’re anticipating layoffs in order to focus more on digital sales, which they hope will lead to greater agility and simplicity within the organization.
Microsoft also recently announced the closure of all 83 of its retail stores, and is now shifting gears to focus on a handful of what it calls “Experience Centers,” about which details have not yet been released.
The theme here: Fewer stores and a larger focus on selling through digital channels.
Richard Kestenbaum wrote in Forbes:
The shutdown has necessitated rapid learning by retailers about these trends, and it looks like Microsoft (and many others) are listening. Consumers have figured out how to do much of their shopping online, and retailers are figuring out how to do all or nearly all their selling online, too.
Here are a few things you should consider if you’re also leaning into a digital-first approach.
Investing more in digital marketing
For retailers who are leaning into digital sales channels, digital marketing should increase alongside this shift. From testing different types of advertising across social platforms, to pay-per-click campaigns, to partnerships with influencers–there are many different opportunities to explore. Let data inform your decisions on where you invest digital marketing dollars and remember: Experimentation isn’t a one-and-done; it’s an ongoing process.
Get more and get additional insights into the vast world of digital marketing here.
Leaning into omnichannel
Omnichannel means using all your selling channels; not just online. It's a fully-integrated approach to commerce that provides a consistent, cohesive experience for customers regardless of the channels or touchpoint, which is critical right now. To do this well, you first need to define the experience you want to deliver across the board, create an ongoing feedback loop with customers, and then consistently work to improve the overall customer experience leveraging those insights.
We’ve written extensively on this topic, so be sure to check out our tips on how to win with omnichannel here.
Finding ways to recreate store-like experiences in a digital environment
Part of improving the customer experience means using technology and tools to recreate store-like experiences for digital shoppers. This can include things like creating branded virtual experiences and implementing visual search.
Apparel retailers like Mizzen + Main are already putting this into action with digital 3D-modeling tools that allow online shoppers to see how items look from a 360-degree view on different body shapes and sizes.
Become more data and tech-centric
Looking forward, we can expect to see retailers rely more heavily on data and the implementation of new technology.
Why? If you ask Mark O'Hanlon, managing director of global management and strategy consulting firm Kurt Salmon, leveraging data and new technology are critical cost-cutting measures for retailers–and it should be used to determine everything from what a physical store’s footprint should look like post-COVID-19 to understanding basic consumer needs.
“The future of stores will likely be about convenience and meeting micro-market needs. It’s about understanding the consumer and knowing how you’ll meet them–then deploying the right inventory to the right places. As such, we’ll likely see more data used to inform hyper-local assortments," said Chuck Reynolds of Deloitte Digital.
Data from NRF echos the need for retailers to incorporate new, helpful tech:
- 66% of customers say shopping technologies and innovations have improved their overall customer experience
- 3 of 5 consumers say retail investments in technology improves their experience both online and in-store via greater personalization
Here are a few things to consider if you’re increasing your use of data and technology.
Use data and tech for more accurate forecasting
With so much uncertainty surrounding the economy, orders being cancelled, and supply chain disruptions, forecasting via data and technology will be critical moving forward.
Aside from customer experience focuses, data and technology can also be used to more accurately forecast cash needs, for store planning, inventory, staffing, and anticipating shifts in demand should stores have to re-close due to a second wave of COVID-19.
Integrating new tech to improve/create a safer in-store experience
With so many innovations around online and in-store retail, right now there’s an opportunity for brands to leverage these new tools to improve the customer experience while making it safer for shoppers to buy (regardless of where the purchase takes place).
Multi-brand retail center Showfields, for example, developed an app that allows shoppers to book interactive tours, is hosting shoppable livestream events, and is leading digital roundtable discussions, too.
A few other options to consider:
- Augmented and virtual reality offerings that help buyers make smarter purchasing decisions
- A new POS system that allows you to accept contactless payments and digital wallets
- Apps like Shopcode that let customers skip the checkout line completely
Ongoing testing and experimentation to improve the overall customer experience across digital channels
With customer experience becoming the next competitive battlefield for retailers, experimentation and ongoing testing will be the only way to truly know what’s working (and what’s not). Aside from split testing and customer focus groups, you should also conduct surveys and do outreach to loyal customers to discover new areas of the business that can improve.
As Lindsay Kwan wrote on the WiderFunnel blog:
You can accelerate your learnings for how to evolve your business through experimentation. Even if these seem like small wins, compounded over time, they’re driving your business’s growth through digital technology.
Repurposing physical store space
With the dramatic decrease in foot traffic at historically busy areas like Boston’s shopping district where retailers and small businesses are already facing the challenges of high rent costs, it’s clear that in the world of physical retail, change is happening–fast.
Add to this the rapid reduction of would-be shoppers as a result of universities closing and travel being limited, and it’s not hard to see why right now is a critical time to reconsider their physical retail footprints.
This begs the question: what does the store of the future look like?
In our view, brick-and-mortar will still be a main channel for retailers, it’ll just be viewed through a new lens. Let’s look at a few ways retailers may repurpose their store spaces.
Stores as local fulfillment centers
With many shoppers still not ready to go back to regular in-store shopping, retailers are finding ways to leverage their stores as local order fulfillment centers, most often by offering a ‘buy online, pick up in store’ (BOPIS) option.
Adobe Analytics data shows that BOPIS orders increased 208% in April compared to the same period last year. Independent brands like jewelry retailer Kendra Scott are already putting these models to work.
To do this well, retailers that sell both online and off should ensure they have inventory consistency across channels, and should provide tools that help online shoppers find and buy items they can then pick up at a nearby store (or curbside).
“The store as a stage”
In the future, we may come to view physical stores as more of a stage for brands than a platform for selling. Instead, the “store as a stage” concept positions stores as spaces that allow brands to boost awareness, to host community-building events/experiences, and to build relationships/educate new shoppers (but without a major focus on driving sales).
Cosmetic company Glossier is known for doing this well and using their retail stores as a platform for relationship-building.
If you ask Ashwini Asokan, Founder and CEO of Vue.ai, she believes online retail in this new world order is the transactional end of the spectrum, and the physical store space is our experiential, sensorial end of that spectrum. She said:
Retailers should re-imagine retail spaces for play, for serendipity, and for discovery of the new; we certainly see AI as a centerpiece to this story.
The future is now
Retail might never be the same, but this is an exciting time for those who are prepared to capitalize on the evolution. Retailers who want to improve both the business and customer sides of the equation will be the ones who deploy an omnichannel strategy so they can connect with customers wherever they are and however they prefer to shop.
Start your future-facing planning now, and be prepared to pull ahead as you implement new efforts that reflect the necessary changes in a post-COVID retail landscape. In case you missed it, go back and read Part 1 and Part 2 of this series, too.