It was only a year ago I was calling for new metrics in retail: NRF to retailers, and Wall Street - we need better metrics to assess retail health.
Well, forget about those new metrics. Now we need even newer metrics, of the pandemic economy variety.
That's not entirely true - the modern metrics cited last year, e.g. "Customer Lifetime Value," are still an important contrast with attempts to measure, say, traffic-per-square-foot. How's that metric going lately?
We need pandemic economy retail metrics
So what's an example of a pandemic economy retail metric? That's what retailers are pushing to figure out. One example could be: tracking the percentage of customers whose order wasn't fulfilled on time, due to inventory shortage. And yes, BOPIS is an obvious push (Buy Online, Pick Up In Store) - but what about a metric to track the percentage of customers who not only try BOPIS, but become repeat users?
And with these digital options, is there a way to incent store employees who go above and beyond to ensure the "last mile" of a digital order goes smoothly? Waiting thirty minutes in a parking lot for your pickup order is BOPIS-gone-wrong.
These potent topics took center stage at NRF's three day NXT Retail e-commerce and digital marketing event, which finished today. Like most virtual events of 2020, there were high points and slog points. Some of the sessions I attended veered too far into the "Here's a retail expert to tell you all about AI" vibe, rather than opening up a dialogue with attendees on the real-world challenges. But overall there was meat on the bone here.
My perception is that retail attendees are eager to move beyond the pandemic obvious, e.g. "If you don't have an omni-strategy, you're screwed," and "Consumers are focused on essentials; fashion and luxury brands are struggling."
I'm also not interested in futuristic polls about whether consumers will continue to use BOPIS if their perception of store safety ever gets back to pre-pandemic levels. Who the heck knows? Consumers might tell you one thing, and later do another; all we know for certain is their behavior in the current abnormal. Entering NRF NXT, my questions were:
- How has the digital push changed consumer habits, given retail supply chains are still disrupted? Any surprises or sharp insights here?
- What are retailers doing to adapt? What are creative ways to win loyalty with consumers who have a new list of safety expectations?
- What is a smart action plan for retailers going forward?
In no particular order, here's my tips and takeaways from NRF NXT:
1. Disrupted shopping routines create brand loyalty opportunities - several presentations noted how supply chain disruptions give brands a fresh chance. A Forrester presentation discussed how Amazon's on-time delivery struggles, even with Prime, create openings for brands to push their own delivery scenarios (Forrester put their slides on the ultimate copyright lockdown, so I won't share detail on their views).
In a standout presentation from GfK, "The COVID-19 Curveball: How an unparalleled crisis changed the trajectory of major consumer trends – and what that means for retailers," GfK's Joe Beier and Rachel Bonsignore pointed to a similar opportunity, the so-called accidental trial:
When you're compelled to buy brands you wouldn't normally buy, a long-term habit changes. 27 percent of consumers surveyed by GfK indicated this brand switch would continue after the crisis. As Beier put it:
We expect this is going to have a pretty interesting effect on future brand loyalties and buying patterns across competitive brands. And really mixing a lot of that up, because there's a lot of folks that have now been exposed to things that they never would have been, absent the crisis.
2. Safety ranks higher than digital. Shoppers might want a slick app, easy pickup options and fast delivery, but other things rank higher. Via GfK Consumer Life:
This has, in some ways, been kind of a shining moment for some retailers who have been able to stay open, but also innovate and pivot quickly to new ways of operating that have been more appropriate to the crisis, and have helped to soothe concerns of their customer base.
You see just some of those examples here in terms of delivery, special handling of the pizza, all of which are designed to minimize face-to-face human contact, which is, of course, the big boogeyman in the whole crisis... Consumers are watching retailers and brands at extremely high levels of scrutiny.
3. Do we need to incentivize store employees differently? As retailers adjust to a fluid move between store and online activity, do store employees need to be compensated differently? That's a topic retailers are just beginning to grapple with. At NRF NXT, I heard a range of ideas. Forrester Research noted the biggest progress retailers have made is crediting local stores for fulfilling online sales. Whereas under twenty percent of the retailers they recently surveyed were offering any type of incentive to store employees for handling omni-sales for customers.
Example: a "save the sale" scenario where a savvy store associate helps a customer order an online product that is out of stock on the shelves. Or: giving a store employee an incentive for picking-and-packing on online order for in-store pickup. I'm especially interested in the incentives for employees who are interacting with customers in new ways. Example: I had an in-store pickup where the store employee was ill-equipped to replace an item over the phone. Instead he denied the swap I wanted to make - missing an upsell opportunity.
4. New retail metrics must take into account the opportunities - and costs - of the pandemic economy. Retailers have adapted - now they need smart ways to measure their goals against today's normal. Example: an increase in BOPIS sounds desirable, but shoppers that don't go into stores tend to spend less. Should upselling via the app be a key metric/priority instead?
Yes, creating a fluid online/in-store experience is non-negotiable. But as per a Forrester Research survey shared at NRF NXT, 58 percent of retailers that invested in an omni-fulfillment program were spending more money on store labor, not less - and that must be grappled with. Another unpleasant but necessary metric could be abandonment rates for pickups (e.g. "How can we reduce the number of BOPIS orders that are never picked up?")
5. Now is the time to invest in digital/process improvements. It's an awkward time to tell retailers to keep spending, but - if a legacy system or process stands in the way, it's time for action. One point I heard a few different times at NRF NXT: we need to shift that CX conversation away from delighting customers. Delighting customers comes later. Right now, fixing the weak links in the so-called "experience" is what matters. Especially given the drastic changes some retailers had to make with online and call center support.
Recently, CVS squandered most of the loyalty it had built up with me, via a bunch of spammy calls and texts I couldn't opt-out of. One brand's screw up is another brand's opportunity. My favorite coffee shop isn't open. My third favorite, however, integrated online ordering with an outdoor pickup window. Suddenly it jumps from third best to top choice.
It seems like just yesterday I was braving the January New York City streets for NRF 2020. The retail economy has changed drastically since then; NRF NXT was a helpful step towards rebooting these conversations. There was a nice mix of retail practitioners and industry experts. As is almost always the case during this inaugural virtual event season, the interactivity was lacking.
NRF needs to look at a platform that allows video networking rather than aimless group text chats. One painful-but-useful chat with "radical customer service" vendor Gladly took two hours, because neither one of us was getting notifications when we replied to the other (To clear up any potential confusion, as at least one PR person got confused: Gladly was an exhibitor at the event. We were NOT using Gladly's software. Gladly and I were attempting to communicate through whatever event software was in use by NRF.). That's just not good enough for a major online event. That said, the timing of this event was good. Many retailers are struggling, but there is a clearer sense of the specifics now, and the opportunities to seize. We're making progress with the data piece of this also. "How do I measure/analyze this project" is perhaps just as important as the project itself now.