This year’s National Retail Federation (NRF) Big Show has inevitably involved a lot of retailers ‘showing off their scars’ from the impact of COVID. As part of that, there have been some compelling exemplars of how to pivot to new operating modes in a crisis and an emphasis on the importance of tech-enabled agility to react to fast-changing circumstances.
With the arrival of vaccines, there is at last a glimpse of hope for some kind of end to the pandemic, even if a return to so-called normality still seems a very long way off. But retailers can at least be looking ahead to what comes next and talking to their tech providers about their needs moving forward to deal with the new shape of retail.
With that in mind, here are some of the broad themes that retail sector technology providers have flagged up over the course of this year’s NRF event.
Everything’s gone faster - and there’s no slowing down now
Let’s get this one out of the way first. Something that’s emerged as a compulsory element of any presentation about COVID’s impact on digital transformation is the inclusion of a big number to show how much the approval and implementation of such transformation has speeded up under crisis conditions. Pick a number, take your choice - five years work in five weeks, ten years in ten weeks, X years in X weeks etc etc.
But the variations in estimated uptick do nothing to undermine the fundamental reality that the past 10 months have seen things get done and done quickly. It turns out that we didn’t need all those sign-off meetings after all...
As Anna Rosenman, VP of Product Marketing at Salesforce, sums it up:
Companies had three years of digital transformation on their roadmaps and those roadmaps got really condensed. All of a sudden, those digital transformation initiatives had to take place within a few weeks.
The question now is whether retailers will - or indeed can - slip back into the 'bad old ways' of doing or whether there’s been a ‘no going back’ shift into how organizations sign-off on and implement transformation programs.
Early birds and the omni-worm
Building on existing investment will continue to be important and a competitive advantage. Shelley Bransten, Microsoft’s corporate vice president, consumer goods & retail industries, argues:
If there's one thing I've learned in this role in the last 10 months, it's been that the retailers that really laid those digital tracks early were better equipped to understand the massive change in the amount of data that was coming and the massive change in their consumer behaviour. And we're seeing them actually come out of these very challenging times not just into recovery mode, but to really come out much stronger.
From many retailers there’s been a lot of frantic digital catch-up going on. How viable such efforts are is open to question. If the COVID crisis rumbles on for many more months, some degree of closing the gap might occur, but it’s more likely that the omni-winners will retain their advantage.
Consumers have learned to be disloyal
Disloyal customers are a new norm. This has been driven in part by supply-chain issues that led to shortages - both genuine and those of 'toilet paper panic' nature - early on in the pandemic. Microsoft’s Bransten points to research that suggests 75% of consumers have reported engaging in new customer behavior in recent months:
Fifty percent of consumers who always went to the same supermarket on their way home from work or what not, have shopped in a new way now. Likely they've had groceries delivered to their home. Four in ten consumers in Europe have actually purchased something online for the first time that they've only ever bought a physical brick and mortar store.
This brand disloyalty has been seen particularly in the grocery and home essentials space, the sector of the market that most suffered from panic-buying in the first weeks of the crisis. Rose Spicer, Oracle’s Head of Global Retail Marketing, says over 80% of consumers have discovered store own brands as a result of the lack of their usual choices on the shelves. That can provide opportunities for rival retailers, she points out:
One in four of those consumers plans to stick with these new brands in their entirety, so that's such a great opportunity for retailers to really control that. Toilet paper was obviously in high demand during this last run, cleaning products as well - those are two opportunities where people can do private label. There was a lot of cooking at home and there was a lot of stockpiling of carbohydrates and other things to feed your family and be able to not make all of those different trips to the grocery store. This has created a pretty cool opportunity. So think about private label and how does that really fill the gap when you're running out of stock in the store?
Get in front of consumers if you want to hang on to them
The flip side to that own brand opportunity to poach market share that is cited by Spicer is the threat that this poses to established labels, the gorillas in their particular product categories. Nothing can be taken for granted, Spicer reminds them. A proactive response is demanded:
You need to actually get your brand in front of people, especially when you've got loyal consumers, where you want to make sure that you maintain their loyalty and that they don't discover something else…Retailers really need to get on board with making sure that they don't give the space up to new brands. I would implore those who are traditionally in-store retailers to really think about how do you get your brand in front of people that are shopping…Don’t let the smaller newer brands take over that space that's your space. You've put a lot of time and energy into creating loyalty with your customers.
In many cases, and particularly in the fashion and speciality retail spaces, tapping into social media platforms, such as Facebook, Instagram and TikTok, could be a very worthwhile investment in this respect, she argues.
Knowing your back from your front and how they connect
With the enormous surge of customers moving online, there’s a need for a robust and scalable platform to support and execute on demand. According to Nuno Pedro, Head of Commerce, SAP Customer Experience:
With the the omni-channel nature of commerce nowadays, I think there's a very important connection to make between the the back end and the front end, being able to stitch together the customer journey between customer buying and ordering online and the fulfilment and delivery of that order, as well as the manufacturing, the planning, the inventory management. Connecting all those dots is really of paramount importance for all companies.
This has been a year in which supply chain has come to the fore, agrees Carrie Tharp, VP Retail and Consumer for Google Cloud:
I think supply chain and how we thought about supply chain will be forever changed. For [those] that are focused on supply chain, you may have felt for the last couple of years you were in the shadow of your digital counterparts, but I think  is the year we brought supply chain to the forefront. Everybody was thinking about the Amazon dynamic - do I need two day, do I need one day, do I need same day shipping? But really it's the whole supply chain.
Let's see what you got
Given Tharp’s last point, there’s an obvious next conclusion to be taken into consideration:
Consumers want visibility to the inventory. They want to understand how much of a specific product you have at what location. They want to know how fast they can get it.
This is crucial, agrees Oracle’s Spicer, because if customers give a retailer their business and then there’s an inventory issue and the goods don’t arrive as expected, it’s the retailer who gets the blame:
No matter where you are in the world, if you are out of stock, people are going to consider trying an alternate store. Some will wait for the items to be back in stock, but is that really a risk that you can take? Again, think about that private label, but also think about what are you doing to really control and improve your supply chain as you as you walk along your continuum for 2021. What are the things that you can do to better forecast, to better execute and to better distribute your inventory closer to that consumer?
Love the store...differently
One inventory option is to repurpose physical stores into distribution hubs, closer to the customers than giant centralised warehouses can be. This is just common sense, suggests Spicer:
I live in California. Why would I source something from a New York location when there's a warehouse just down the street from me?…We are very very passionate about inventory, because once you do get that customer, whether it be on your website or in-store, if you do not deliver the inventory, that is the ultimate experience for consumers.
That all ties back into the changed role of the store, again accentuated by COVID closures, says Google Cloud’s Tharp:
What everybody has seen is the role of the store has certainly changed for forever. It's still going to be very important in the coming years, but you've seen a lot of retailers really quickly pivot and set up capabilities for curbside and in-store pick-up at a much bigger scale than they were contemplating before. So a lot of retailers are already thinking about how does this change store design in the future?
Don’t chase every bright shiny thing
While there’s a lot of uncertainty about what comes next for retail, organizations need to find a balance between what tech spend can genuinely deliver for them vs chasing the ‘next big thing’. This is probably the most important thing to bear in mind once the COVID crisis lefts and we emerge into a Vaccine Economy.
Tharp’s advice is to begin and end with a simple question - what is the experience that you’re trying to enable with your tech? She says:
I'm not a fan of bright shiny objects or something you're gonna plug in and solve the problem, but it's really the technology team and the marketers and the merchants and everybody coming together and saying, 'What are we trying to build here?' and then stepping back from that and understanding what are the pieces and parts that are needed to do that. There's a lot of people talking about headless e-commerce. What does that mean? Is it right for me?
The answer is there's no one size fits fits all for every brand and company. You know what is your product catalog and complexity, how complex is the journey that you're trying to enable. Is it something really simple, intuitive? Maybe you only sell one product and it's very simple and straightforward. As a team, [you need to be] breaking that down and saying, 'Which of these technologies and infrastructure architecture choices make the most sense for where I'm trying to go, not just a year from now, but two three years from now?. So, building into that great unknown, knowing you can't tick off everything there.
Things can only get better...can't they?
One last comment from Oracle’s Spicer who speaks for so many of us:
With the vaccinations coming along, I'm hopeful that we can get back in the store. I'm personally a huge shopper and I've been missing my retail experience.