At the recent CogX conference, Paul Martin, Chair Global Retail Group & UK Head of Retail at KPMG made an interesting assertion:
Up until about 10 years ago, retail hadn't really changed for 2000 years. If you had the opportunity to build a time machine, and to go back to ancient Rome, or ancient Athens, you would have broadly seen a very similar structure to retail. Curtains have been replaced by glass windows, drawers where money was put in have been replaced by electronic cash registers, but overall, retail has been broadly the same for a long time, until about 10 or 15 years ago when online really became a mainstream channel to significantly change the structure of retail.
That’s all been turned on its head with the onset of COVID-19 as a disruptive enabler of transformation. That includes the shift to digital transactions, but also to the post-pandemic in-store customer experience, now a realm of plexiglass, cashless transactions and social distancing.
As omni-channel retailers re-open their physical outlets around the world, new formats, practices and technologies are playing a critical role in overcoming any lingering nervousness from a demographic dubbed by consultancy EY as the Anxious Consumer.
Top of any retail agenda now has to be health and safety consciousness. As Corrie Barry, CEO at BestBuy, puts it:
We realize that the world has moved from being an essential retailer to a safe retailer.
COVID-19 has definitely changed the way BestBuy operates its physical outlets, she says, a process that began back in March with an operational transformation that was executed in 48 hours:
We pro-actively moved all our stores to a contactless curbside-only model, allowing us to safely serve customers and comply with government orders and recommendations. We also halted all in-home installation, repair and consultation services, choosing to leave the product at or near the doorstep. We did this even in jurisdictions where we were not required to because we believed it was the best way at the time to keep our customers and employees safe.
With the shift now underway to open up stores, more change is on the way. Barry explains:
On May 4th, we began providing a new consultation service to our customers in our stores by appointment only. This service allows customers to schedule an appointment with one of our sales associates at their local Best Buy store and get advice tailored to their specific techniques. Customers can schedule appointments by phone, online or by simply driving or walking up to a store. Customers have been responding very positively to this new way of interacting with us in our stores with 98% of customer surveys indicating we made them feel safe during the experience.
Earlier this [month] we announced that customers will be able to safely and freely shop at most of our stores without an appointment…We will continue to enforce social distancing by limiting the number of customers inside the store to 25% of capacity, which allows 60 or more customers in a store depending on the size. We will continue to offer contactless curbside pickup, and in-store consultation for those who prefer to shop that way. We're also back in customers' homes, providing valuable services, like large product delivery, installations and in-home repairs in approximately 80% of US ZIP codes. We are doing this in a new and innovative way, using safety guidelines before, during and after an in-home visit that meet or exceed Centers for Disease Control and Prevention guidance.
While safety is paramount, other retailers have found that consumer concerns aren’t necessarily taking the shape they were assumed to. Established in 2002, Vince is a luxury apparel and accessories brand which pitches that offers “elevated yet understated pieces for every day” through e-commerce - which accounts for around a third of total business - and 49 full-price retail stores, and 14 outlet stores. The firm has opened up its physical stores carefully and in a phased manner, explains CEO Brendan Hoffman:
We've opened up four stores - three in Texas and one in Atlanta - and we've been we've been pleased so far with the results. They've exceeded our expectations, but it's a very small sample size. More importantly, we're pleased with the way the customers interacting with the space itself, with our associates, with the product. We think we have a better understanding now about what we need to do, how we need to lay out stores, as we start to roll out stores.
We are definitely surprised with the way the customer has interacted with the product and the associates. We have protocols in place for what we do. Clothes are bought brought back to the the dressing room and we steam them and keep it off the floor for a certain amount of time but we were unsure if a customer touched [something] on the racks, would the next customer feel like we need to get something different.
Part of this unexpected behavior might come down to ‘stir crazy’ shoppers just being excited to be allowed back into the stores, but the high end nature of the Vince product offering has also helped with the re-opening of the physical retail estate, argues Hoffman:
Our stores by their very nature, they don't get filled or over run with traffic. We are able to manage the spacing very well and and so far, the stores are reporting back that it's been very close to business as usual, albeit with customers coming in wearing masks.
Overall, the omni-channel mix is working for Vince, concludes Hoffman, with the digital business holding up during the stores shutdown:
In the contemporary/luxury market, consumers have plenty of firepower, but that obviously is distracted right now with bigger problems. But we've still seen [the customer] show up online to shop and and as we open up the stores. I think as long as we continue to provide compelling product and make that emotional connection with the consumer, they'll be there on the other side. We just have to understand that it's going to continue to be a fluid world and environment and we've got to continue to be scrappy.
Away from the high end of the clothing market, Lands End had re-opened around 15 stores (from its very limited physical estate) by the start of June in places like Minnesota, Wisconsin, Pennsylvania, Illinois, Delaware, Virginia and New York State. There is a pattern emerging in terms of consumer behavior, says CEO Jerome Griffith - and again it’s not necessarily conforming to expectations:
What we've seen is [it’s] starting off slow and gradually building every day with traffic. When we opened up the stores, we had closed the fitting rooms because we thought people would not be interested at all in trying on clothes. It's completely the opposite. Customers want to try things on, they wanted to exchange sizes. They have no problems with a fitting room so we'll change a little bit some of the measures that we opened up with as we learn more about what customers feel more comfortable with. I think people have just been shut up and pent up for quite a long time and they're happy to get out and interact with other people or at least that's the feedback that I generally get.
One of the things that people are clamouring for again is, we have a very large school uniform business. So customers in areas where there are schools that are signed up with Lands End want to come in and try on products. We've already been having calls, [asking], 'When are your trying on sessions?’. So there's not the negative connotation that I thought there would be.
But it’s not a case of business as usual, he points out:
I think [one] thing that's going to change going forward is people's comfort level when they're out interacting with other people. I definitely get the sense that people have the message of large crowds could spread disease. I've seen it on both sides between New York City Long Island and Wisconsin. There is a difference, but that understanding of social distancing is important and is sinking in I think everywhere across the states.
An uptick in the digitalization of retail operating model is also likely to become more apparent, at the back end as well as on the shop floor, he adds:
One of the things that we had to do is we had to develop [the Spring collection] remotely, and just having 3D design on our laptops and being able to do the design via computer, review the first samples via computer, was a big plus. Talking to many people out there, I think one of the things that's going to happen is companies that are able to adopt and utilize new technology and really believe in it, will be able to move forward a lot faster. You’re seeing that now in your ability to do things and get things done.
The in-store element of the omni-channel retail experience will be an evolving phenomenon in the coming months. Standing in line for entry will be a norm, not just when there’s a new iPhone on sale; contactless payment methods will dominate as cash becomes something else to try not to touch; personal space will be an issue for everyone, so jumping the line; and retailers will, more than ever before, have to keep on top of tracking consumer behavior patterns (and anxieties). As KPMG’s Martin summed it up:
The retail business that for thousands of years has historically been focused on physical stores is changing. More and more transactions are happening in the online channels so therefore focusing on an omni- or multi channel approach. The key aspect here - a single, unified approach to all customer touch points, channel agnostic, customer-centric, that is where business models need to move.