Five ways retailers can prepare for the post-Covid reality

The Covid-19 pandemic has reset consumer behaviour. A combination of wide-ranging social distancing rules and economies in lockdown has forced consumers worldwide to rethink how they shop for both necessities and luxuries. Online ordering, home delivery and click & collect are not new phenomena by any means: these channels were all growing in popularity long before anyone had ever heard of Covid-19. But the closure of stores during the crisis has put these trends into overdrive.

Consumers who would never have previously considered anything other than in-store shopping are adapting quickly to digital commerce, whether they want to or not. New Accenture research found that one in five respondents who said their most-recent grocery purchase was done online were first-time online grocery shoppers. And while 32% of current purchases of all products and services have been online, that figure is expected to rise to 37% going forward.

The big question for retailers is how much of this new behaviour sticks. For many people, browsing the stores on the high street or at the shopping centre already seems like a distant memory. Will they return after the healthcare emergency passes? The reality is, once consumers get used to the convenience of digital channels, they’re unlikely to abandon them altogether.

So online retail will likely see a permanent step up in popularity. For instance, the number of consumers we recently surveyed who said they’re interested in buying or increasing their use of technology has increased dramatically. More than half of respondents said they are likely to increase their usage of voice-enabled digital assistants, online recommendation apps, self-service apps, intelligent home devices and wearables. This is, of course, a huge opportunity for retailers to grow the business through digital commerce. But making the leap from a traditional store focus is not an easy thing to do, especially when it needs to happen so quickly to meet rapidly growing but volatile and hard-to-predict consumer demand.

Some smaller retailers will only be part of the way through their journey to digital commerce. Many will need to revise their operating models as they pivot from their traditional revenue centres to new online services. Plus launching those services will likely incur a higher operating cost structure in the short term and will typically dilute profitability unless the broader cost base can be reduced.

Five questions to ask the business about post-Covid retail

There are some steps that all retailers can take now to get ready for a permanent shift to more digital commerce. By carefully assessing five core parts of the business: marketing, the digital ecosystem, the product line, the supply chain network, and bricks-and-mortar stores, retailers can identify the strengths of each as well as the areas for improvement. In doing so, there are five questions they should be asking themselves:

  • How strong is our digital commerce marketing strategy? Optimising a retail business for digital commerce needs an integrated and customer-centric approach to marketing. This strategy needs to treat marketing as a driver of growth with a central role in creating a seamless end-to-end customer journey. Automation and artificial intelligence can play an important part in delivering these kinds of hyper-relevant campaigns across channels.
  • Will our digital touchpoints scale? Digital will be an integral part of a brand’s post-Covid channel mix and central to driving future customer lifetime value. But to do this right, digital consumer touchpoints (mobile channels, social channels, visual search and voice shopping) need to be configured to support intuitive and seamless experiences at a much greater scale.
  • Is our product range ‘liquid’? Omnichannel merchandising and assortment planning increases the need to understand product availability across channels. A diversified supplier network, combined with advanced demand forecasting analytics, will help retailers in building a holistic view of customer needs, tailoring assortments to individual segments, and managing inventory across channels and locations.
  • Can the supply chain support the pivot to digital? Future retail will require a multichannel supply chain network with different facilities for different product segments (including regional centres and metro hubs as well as third-party solutions). Last-mile delivery platforms that can optimise routing and re-routing while providing real-time tracking will also become a baseline requirement.
  • Are our stores prepared to play a different kind of role? During and after the Covid-19 pandemic, the physical retail store network needs to be tightly integrated into digital fulfilment capabilities. Dark stores should be used for click & collect as well as hubs for same-day or next-day deliveries.

This will require careful resource allocation across the network, so retailers should be looking to use advanced analytics and put strategic partnerships in place with third parties and other retailers.

Retailers are used to hearing about how their industry has changed forever. However, there’s little doubt the massive changes this pandemic has forced on consumers will have significant and permanent effects on their purchasing behaviour. Once the immediate crisis passes, some shoppers will return to bricks and mortar for some segments. But the fact is, digital platforms are set to become a major driver of growth for all retailers, large and small. This was true before the pandemic, of course. It has now been accelerated to a degree few could have predicted. Adapting to the post-Covid digital reality is an imperative no retailer can ignore.

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