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Retail faces some big questions in the Vaccine Economy, but Christmas isn't cancelled, says Salesforce's Rob Garf

Stuart Lauchlan Profile picture for user slauchlan October 29, 2021
The Holiday season is underway, a critical time of year for retailers, but what lies beyond in 2022? Salesforce's Rob Garf has some thoughts.

Garf at 17

Christmas is not cancelled.

That’s the good news from Rob Garf, VP and General Manager at Salesforce Retail, as he contemplates what the upcoming, all-important Holiday season will bring for the retail sector. Despite ongoing COVID concerns and the global supply chain crisis, Garf remains confident that Santa will be coming in 2021.

But, speaking exclusively to diginomica, he did have some less good news for those of us who are inherently averse to seeing the first Holiday products appear on shelves in late August:

Christmas is earlier than ever before. This Holiday season we've been really urging anybody we talk to in the media to make sure that consumers are aware. I was asked by a customer of mine in the speciality apparel space, somewhat higher end -  and it's their wholesale division so they're selling into retailers - if our consumers are aware of the supply chain challenges? This was about four weeks ago and at the time my answer was, 'It's a lot different than a year ago'.

A year ago, consumers were aware of the issues with the last mile because we all experienced that in the spring through the summer, with getting products delayed. We had a joke about it being the Bermuda Triangle of Holiday gifts. This season, it's gonna sneak up on consumers because [they’re] probably not having conversations about supply chain around the dinner table. So I think it's going to sneak up on consumers more so than it did last year. We are in this space each year of retailers of wanting to pull demand earlier. This year, coming on the back of last year, will truly do that. Christmas won't be cancelled; it just will be earlier.


The retail sector, as tracked by diginomica, has been massively disrupted by the pandemic over the past nearly two years. It’s seen a sharp rise in online activity. It’s seen retailers pivot to new business models in a matter of weeks. And it’s seen all too many struggle to keep afloat as a result of their inability to escape old operating practices and respond to the unprecedented conditions - (c) every retailer on the planet! - that COVID created. Garf argues that some lessons have been learned across the entire sector:

I think the pandemic has taught retailers that the block and tackling of retail is actually really important. It's not just about the shiny object; it's about helping to solve a problem on behalf of the customer. We just did a global survey, the fourth edition of our Connected Shoppers report, where we surveyed 1000 retailers globally. Most of the investments that retailers made in the course of the pandemic, whether it was on the logistics side or particularly in the store, they were doing these to make the shopping experience easier, more convenient, healthier. Those [investments] are sticky, they’re not going away. So what investments we're seeing over the course of the next couple of years are about scaling. A lot of retail has gone from really scrappy and now they're really focusing on how do they scale that, make it more operationally efficient, thinking about the bottom line?

How operating models have morphed and adapted during the crisis has been interesting to watch, he notes:

It's so funny how these things evolve because the early days of Buy Online Pick-up In Store was about, ‘Let's put the fulfilment area in the way back in the grocery store and hope for that spontaneous purchase’. Then it became, 'Oh boy, if we put it on the out in front of the store or on the curbside, how are we going to get the traffic and how we're going to supplement that?'. I think it's a natural progression.

As an industry we talk about customer centricity, putting the customer in the centre of everything and sometimes that's really ambiguous and ethereal. Here's a very specific example where consumers are clearly buying the product at home, wanting to pick it up at the store because of convenience. To not provide that convenience is kind of going against what the consumers have raised their hands and said they want.

The new normal 

As the Vaccine Economy starts to kick in, there will inevitably be a rebalancing of the online/offline mix as physical retail outlets re-open their doors around the world, albeit at varying paces. That’s going to mean a fresh set of uncertainties that retailers are going to have to confront as they look ahead into 2022 and beyond. Garf argues:

If you look at the last seven quarters, it has created a new baseline for shopping. We might see, particularly in digital, some dips here and there, quarter-over-quarter, based on the dynamics of what happened the year prior. We're not going to see a rubber band [effect]. Shopping behavior and expectations are not going to snap back to pre-COVID levels.

What we have seen is a slower than I anticipated shift from ‘needs’ products and categories [of items] that you needed to survive and thrive during the course of the lockdown and quarantine, shifting to ‘wants’. There's really three categories of ‘wants’ and they're all experiential - adventure, entertainment, and luxury.

The most visible ‘needs’ retail sub-sector at the height of the pandemic was, arguably, seen in the grocery space. In key markets, the move to online food and drink shopping was dramatic, noted Garf:

That shouldn't be a surprise at all. First of all, it was globally a relatively smaller base when you compare it to apparel and footwear, accessories and consumer goods, consumer electronics.  So, the bump was based on a relatively smaller base. The other reason was, we didn't, in many cases, have a choice because of our health and safety, so people turned to digital. It was driven in large part from older demographics - we saw over the course of 2020, a 40% increase in net new digital shoppers and a large portion of those net new digital shoppers were older generations, buying newer categories. Of those newer categories, the big one was food and beverage. We do see a levelling-off of growth for food and beverage, but it's going to continue to go at an accelerated rate, maybe not to the degree that we saw in 2020.

Again, retailers in this sub-sector will have fresh questions to ask themselves as life returns to some form of normality, with Garf citing the issue of the economics around the box as a critical one to address:

For many retailers, if you weren't Walmart or Target or Kroger, you didn't have the infrastructure, you didn't have the processes, you didn't have the staff to necessarily handle it. Many retailers in that segment had to get really scrappy. Now as we're coming out [of COVID] and have, hopefully, an eye for the post-pandemic world, retailers that I'm talking to [are asking] 'How do we get the economics of the box right? How do we make sure we do it efficiently?'.  What becomes really interesting is who gets credit for the order? Online orders picked up in the store are getting credited to online and partly that's why you're seeing big growth [numbers], even though it's being fulfilled from the stores and they're taking on those inventory carrying costs. It's a really good equation for the online channel.

Supply chains

Of course, if you are Walmart or Target, you have the money to invest in supply chain for the last mile. If you’re a ‘Mom & Pop’ store on Main Street, you’re in a different place. You’re not going to be leasing your own cargo ships to get goods to your warehouse. You probably don’t have the capital to create a last mile delivery network. This situation is opening up new market opportunities, says Garf:

That's why we're seeing so much investment going into fulfilment providers who are a combination of technology platforms and intermediaries. In some cases, these are logistics providers, but in most cases, it's actually about creating these interesting ecosystems that have spun up to help 'Mom and Pops' operate on business models that don't either have the buying power or coverage to go the last mile alone. So as an example, obviously, you're seeing at the highest end the Ubers of the world getting into that space, but you're also seeing others here in the US  who are targeting the convenience store space.

Others will also need to examine their operating models, he added:

If it's hard for the 'Mom and Pops’, I think it's equally as challenging for the fast-moving consumer goods manufacturers. P&G, Unilever, Kraft, they know direct store delivery better than anybody. They can get cases, pallets or whatever into the stores and on the shelf in the most profitable way. They're really good at direct store delivery. They don't understand direct home delivery. So I think there's also these platforms will also benefit the fast-moving consumer goods manufacturers who will likely use physical stores, whether convenience stores, drug stores or regular, traditional retail, to actually distribute their products.

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