COVID-19 introduced a unique set of challenges that forced retailers to squeeze years’ worth of digital transformation into a matter of weeks. Advanced capabilities like buy online pick up in-store (BOPIS), ecommerce, apps that help navigate stores and outdoor pop-up shops that used to get pushed back for budgetary reasons suddenly became imperatives for stores to stay afloat.
But unbeknownst to customers, there was something else going on behind the scenes that was enabling all this to happen. At the start of the pandemic, retailers did the hard work of rethinking and redesigning their underlying IT infrastructure to ensure these initiatives could be rolled out in a timely and effective manner.
The good news is, now retailers can leverage the hard work and backend investments made in the early months of the pandemic and use it to play offense. Here are three reasons why I believe retailers’ new digital prowess will allow them to come out of COVID-19 stronger than before.
The pandemic drove a rapid digitization of customer relationships across most retail sectors. As consumers around the world have minimized the amount of time they spend outside their homes, many created digital accounts to conveniently shop online. Even traditionally non-digitized categories like food and household retail grew their online customer base by an average of over 30%.
This represents a massive opportunity for retailers that had always wanted to move their customer base to digital platforms but often fell short since these initiatives came second to more immediate operational needs. The surge in digital interactions means retailers suddenly have access to significantly more data. This data can now be used to help retailers better understand consumer needs, capitalize on digital commerce and track customer shopping patterns over time. Additionally, they can use it to help drive loyalty, trust and engagement through personalized experiences such as targeted mobile promotions and campaigns.
The pandemic turned customer behavior on its head, eroding long-standing relationships that took brands years to build. COVID-19 shook customer loyalty, with 73% of U.S. consumers in a study by research firm McKinsey & Company saying they are actively shopping at new stores and trying out new brands since the pandemic started.
The same study by McKinsey found convenience and product availability are the top drivers of consumers’ decisions about where to shop, giving retailers an opportunity to significantly expand their customer base by leaning into the operational efficiencies they developed during the pandemic.
For example, many leading retailers made investments into underlying IT infrastructure, such as outdoor access points or branch connectivity, in the early months of the pandemic. Those advancements enabled stores to offer extended services like BOPIS and curbside pickup to drive greater convenience and flexibility to customers that did not want to shop in-store.
More importantly, it allowed forward-looking stores to improve their logistics and distribution. Stores could maintain appropriate stock levels and delivery times via digitally enabled supply chains, helping them build a loyal customer base while their competitors were scrambling to meet the unexpected demand.
While these developments were a direct reaction to COVID-19, customers become accustomed to these new ways of shopping and will expect them even after the pandemic is over. It is therefore crucial for retailers to incorporate those services into their long-term strategies in order to meet evolving customer expectations.
Not only did consumers change where they shop, but also what they shop for. For example, categories like cosmetics and sun care declined by double digits, whereas sales of household items such as soap jumped up 74%. While these changes happen regularly for a variety of reasons, including unpredictable weather, product recalls or unanticipated sales spikes, the scale of the shift during the pandemic demonstrated the importance of being able to quickly recognize these changes and adapt accordingly.
With every visit, shoppers provide tons of data, such as in-store engagement behaviors and purchase decisions: information that can and should inform how stores are run. But retailers need the right tools in order to collect and analyze this information. Fortunately, at the beginning of the pandemic, many brands invested in centralized, cloud-based IT infrastructure with analytics capabilities that allow them to do just that.
Moving forward, these cloud technologies will help retailers more quickly recognize shifting patterns and make informed decisions to create differentiated customer experiences that will strengthen traditional brick-and-mortar stores.
The pandemic delivered incredible obstacles to the retail sector this year, but it also generated a sense of urgency and kickstarted necessary technology changes that will change the future of brick-and-mortar retail for the better.
While the COVID-19 pandemic is a Black Swan event, other less extreme surprises like changing consumer purchasing habits are inevitable. Retailers that used this pandemic as a learning opportunity are better positioned to succeed in the long run. My hope is they will look at the investments they’ve made into their IT infrastructure and leverage it to provide digitally enabled experiences, improve operational efficiencies and become increasingly more agile to usher in the next generation of retail.
This article was originally published to Retail TouchPoints on December 2, 2020.
