Second Verse: Different Than The First?
Username: Name: Membership: Unknown Status: Unknown Private: FALSE
To put it mildly, the past few weeks have revealed enough destabilizing events across the globe to keep retailers on their toes for quite some time to come. Is COVID over? Not by a long shot. We’re not in the business of predicting what the upcoming school year, or NBA season, or holiday get-togethers are going to look like in the coming months, but it’s safe to assume that if Australia is having a hard time getting its citizens to go back into their bunkers due to new variants, we’re going to have some issues headed our way as the weather starts to cool off in the coming months in the United States.
In the face of this instability, retailers have had to change their processes to keep up with a changing consumer. The percentage of shoppers who prefer to take delivery of merchandise outside the body of the store (curbside, lockers, parking lots, etc.) has risen dramatically and retailers know it.
At the same time, supply chain disruptions, out of stocks, and sudden spikes in demand for products suited for more solitary pursuits have become common, and retailers struggle to keep up. The question is, are they any better prepared today?
While they were able to brute their way through early changes, the most successful retailers had already made significant technology investments that at least got them “close” to the new requirements. This helped them reap both top and bottom-line improvements. In fact, just as their “cross-channel” shopping counterparts before them who were generally more profitable, it’s quite clear that average order value of almost two-thirds of customers who buy online and pick up outside the store is higher than those who either go in the store, or simply take direct delivery at their homes.
While it is unclear if these new consumer preferences will last, it IS clear retailers must prepare as if they will. In fact, the most frequently cited Business Challenge in our most recent survey (What Contactless Retailing Means For The Store) is the continued rise in consumer expectations regardless of what competitors do, even as they also worry over behaviors of eCommerce giants like Amazon and Alibaba.
Retail Winners find themselves recognizing that consumer demand has preceded retailer readiness, but they are less inclined to worry over their existing technology foundation, which for others, quite simply, is not up to the challenge.
All retailers see an Opportunity in these new customer behaviors, though the perception of Retail Winners vs, others are slightly different. Winners see customer order pickup as the best of both worlds – online and in-store – while others simply see the opportunity to increase total sales.
Organizationally, we know that processes built for efficiency in the 1990’s and early aughts lose their effectiveness in the new whirlwind of choices consumers expect to have, or, as we say in the Organizational Inhibitors section of the report, “the hyper-efficiency of the customer self-service model of pre-omnichannel days stands in the way of adopting new ways of serving the customer.” Winning retailers recognize that the store is a new kind of node on the supply chain, with part of it acting as a distribution center, and part acting as the endpoint we’ve come to expect.
The implications on technology are huge. Capabilities become network, rather than store centric. While retailers still drool over the array of options available to them to support new customer tastes, it’s clear that for many, they have a very long way to go before they can turn top-line results into bottom line improvements through implementing highly valued technologies.
As always, we present important recommendations to retailers to help them navigate the constantly changing sea of customer demands at the tail end (see Brian’s article this week), and we hope you take the time to read the full report here.
The next wave of disruption may well be different than the first: let’s hope a big part of that difference is that retailers are simply better prepared for it.