April 10, 2020
Innovation in the Middle of Uncertainty: Where Are Retailers Really Heading?
"Although most brands have mastered the basics of personalization online, the ability to re-create the in-store experience online continues to be a challenge for today’s e-commerce and marketing leaders. Whether triggering an in-the-moment abandonment message or displaying how much stock is left for a specific sku, finding solutions that can be designed, developed and delivered quickly and successfully will be the key to fine-tuning the personalization game."- Robin Barrett Wilson, Industry Executive Adviser of Fashion at SAP
The retail industry is unquestionably no stranger to rapid-fire change and the long shadow of uncertainty. From 9/11 and unprecedented natural disasters to the long slide into a tumultuous recession followed by an even slower recovery, retailers innovated new experiences, processes and technologies to survive historic disruptions.
While there were industry casualties, surviving brands became more adaptable, resilient and attuned to emerging change — until now. No one could have guessed that an even bigger shock was looming ahead. But once the rise in coronavirus infections became a global public health crisis, retailers began to face an entirely new challenge in their relationship with innovation.
No one ever wants to experience a significant global crisis. But for retailers, this latest pandemic has become an interesting study of evolving consumer behaviors and how in-store experiences can best serve them.
RETHINKING RETAIL INNOVATION
Take, for example, mandates for social isolation, remote working and employee furloughs. The longer consumers experience these restrictions, the more likely they will normalize the resulting impact on their psychological well-being and their finances — well beyond the moment the virus is 100 percent contained.
Withstanding such a profound shift in consumer behavior requires retailers to innovate e-commerce and in-store experiences by viewing their future with a longer lens. They need to monitor how social values and consumer sentiment evolve over time. Additionally, brands must account for the potential of a profound economic shift, which will require an accelerated business model change to keep prices down and minimize costs to serve.
With these considerations in mind, the pandemic is indicating three critical opportunities that retailers can tackle now to set the stage for a better future.
FIRST, THE GROWING URGENCY AROUND BUSINESS-WIDE SUSTAINABILITY
Major disruptions create an ideal opportunity for reevaluating the supply chain. Retailers can seek out alternative fabrics and processes that might shorten their time to market or reduce their carbon footprint. And this is time worth spending as consumers continue to strongly favor products that are sourced, produced, and delivered through ethical means. By developing a new silhouette with organic cotton or water-saving Tencel, brands will ultimately discover a way to attract new consumers.
Additionally, the possibility of moving production, perhaps even to the United States, may be in the cards. Innovation can be as simple as developing a small run of designs that your raving fans will love to be the first in line to purchase – no matter if you are an industry giant, a startup, or somewhere in between.
SECOND, BEHAVIOR-BASED REPLENISHMENT PROCESSES
Merchandise planning has historically been a top-down process. The company looks to grow the business by 10 percent; therefore, all merchants must plan accordingly.
By planning a future that caters specifically to evolving consumer behavior, merchants and marketers can form a close partnership during the planning process from the start. Imagine finding consumers who are most likely to purchase the latest Pantone color of the year or hem length before production starts, then producing just enough. The risk of waste is lower, and the cost of goods sold is reduced. And more importantly, consumers are very happy.
THIRD, INTENT-SENSITIVE PERSONALIZATION
Although most brands have mastered the basics of personalization online, the ability to re-create the in-store experience online continues to be a challenge for today’s e-commerce and marketing leaders. Whether triggering an in-the-moment abandonment message or displaying how much stock is left for a specific sku, finding solutions that can be designed, developed and delivered quickly and successfully will be the key to fine-tuning the personalization game.
For example, style tips can be based on consumer information gathered through in-store, online and social interactions. This sales model allows merchants to see exactly what is selling, rather than what they hope to sell — all while elevating the personalized experience on their web site.
And let’s not forget stores, where providing tools and learnings should never be an afterthought. Although consumers, at this moment, are shopping online due to extenuating circumstances, they will inevitably return to stores. Now is the time to think about extending sales associates’ tools, so they too can deliver that uber-personalized experience.
REDEFINING RETAIL FOR A NEW WORLD IN WAITING
Despite the frenzy of major, historic disruptions like COVID-19, no person, let alone retailer, knows how our world will change once the dust settles. We just know it will.
However, this reality doesn’t mean that the industry should stand on the sidelines and watch our new world unfold. Retailers should pay attention to the fundamental values and expectations of their consumers now to shape the shopping experience during times of uncertainty — using each small, incremental change as a building block for the future.