Retailers Made a 10-Year Digital Leap in 10 Months
Indeed, said Shelley Bransten, corporate vice president of retail and consumer goods industries for Microsoft, “COVID-19 has really been the chief innovation officer of this industry.”
One example is REI, the Washington-based retail chain that specializes on outdoor gear. Chris Putur, REI’s executive vice president of technology and operations, explained that while the company had an e-commerce platform it was proud of in 2019, “we did see a 10-year leap of business that we were doing in in stores that shifted over to digital very quickly.”
For example, while the company already had an option to buy online and pick up in-store in place, it had to quickly roll out curbside pickup when stores were forced to close to shoppers. And because many of REI’s products are precisely the sort of goods consumers want when they’re no longer able to go to public indoor spaces, the company dealt with demand spikes even as it was building a new fulfillment process.
“For example, bicycles: There was a big long stretch where we were selling five times as many bicycles as we normally would,” Putur said. “So, we not only had to do curbside pickup for regular goods but curbside for bikes. Bikes are a considered purchase. We had to implement things like virtual outfitting, so if you couldn’t go to a store because it was closed but you wanted to talk it through, you could schedule an appointment and talk through the purchase with an expert.”
Joel argued that the retail industry is in the second of a three-phase pandemic recovery process. The first phase, survival, began when the pandemic started in North America in March and ended in late summer. During that phase, retailers tried to quickly adapt their business models for the times, hoping they’d survive until business returned to normal. Many of those that were already struggling did not survive.
The second, the sustain phase, involves retailers trying to continue to meet customer needs under trying circumstances. Most have stabilized their businesses. All retailers are aiming to hit the strive phase, which is the mode retailers were in pre-pandemic, when most were healthy and thriving.
Why Data Become Critical to Retailers in 2020
At the same time, Bransten said, the industry saw four key trends unfold in 2020:
- Data exploded, and brands found new ways to monetize it. The “tricky thing” is that most data that retailers possess is unstructured, Bransten said: “Our machines are only designed to make sense of about 10 to 20 percent of it. Retailers are increasingly asking, ‘How do I make sense of this data so I spend less time preparing data and more time responding to it and personalizing it?’”
- The pandemic has spawned arrangements between retailers and a host of partners. “We’re seeing partnerships around last-mile delivery, like between Walmart and Instacart, for example, and also some unlikely partnership around things like digital services, such as between Walmart and AT&T, where they’re collaborating around 5G capabilities to digitize their stores,” Bransten said.
- Sustainability and e-commerce have emerged as more important during the pandemic. As consumers have more time, they’re learning more; they want to know about retailers’ supply chains and business practices.
- According to McKinsey, 75 percent of consumers have reported a new shopping behavior during the pandemic. That could mean buying something online they’d always previously bought in person, or trying contactless payment.
“We were forced to innovate in 2020,” Joel said. “The question we’re asking in 2021 is, which of these innovations will we keep?” He cautioned retailers not to simply return to pre-pandemic business models when stores reopen fully simply because it’s easier. Consumers changed during 2020, and brands must understand who they are now.
Bransten argued that retailers have changed too, and most are not going back. “One lesson I learned in the past 10 months is that retailers that laid digital tracks early were better equipped to understand the massive change that was coming in their consumers’ behavior,” she said.
Keep this page bookmarked for articles and videos from the event. Follow us on Twitter at @BizTechMagazine, or the official conference Twitter account, @NRFBigShow, and join the conversation using the hashtag #NRF2021.