The worldwide coronavirus lockdown has wreaked havoc among brick-and-mortar retailers. We've all heard the gloomy predictions for the retail industry; legacy businesses like J.Crew, Hertz, and J.C. Penney are now filing for bankruptcy protection and many retailers have shuttered indefinitely. Studies show that a hybrid online and in-person retail model reliant on social media can help retailers survive. Many businesses are working to adapt digital transformation strategies quickly, but without a comprehensive data strategy the "the store is everywhere" ethos may prove to be disastrous.
From vendor to customer, why is data infrastructure imperative to ensuring a positive retail experience? Vendors use data strategy to target and retain customers, streamline operations, optimize supply chain, improve business decisions, handle peak levels of online traffic, and save money. All-out holiday buying frenzies can put great demands on a company's resources, especially if inventory data is incorrect, resulting in many operational headaches.
In terms of customers, businesses that adapt their predictive models with advanced data analysis technology are better able to assess consumer behaviors. Doing so helps them identify trends, secure and protect customer information, erase inefficiencies in the online purchase experience, and ultimately ensure shopper loyalty. Companies that implement good data habits can better understand and protect their entire holiday supply chain ecosystem.
Why most retailers aren't doing digital transformation
Independent of a retailer's size, adopting a culture of change and flexibility and a strong data strategy can provide in-depth insights about consumer purchases and engagement. The 2020 holiday season is one of the best times for this adoption, as it will set a new precedent and help retailers prepare for uncertain environments of the future.
What's happening in the retail industry isn't total apocalypse. It's massive, rapid change. And the secret for retailers to surviving that change will be how fast they can detect societal trends and then super-serve those trends to their customers.
So why aren't most retailers engaging in digital transformation? Most retailers aren't set up to think this way. Digital transformation has come slowly to retail — mostly because retailers never needed to think about their digital capabilities before.
Laurent Letourmy, CEO of retail consulting firm Ysance — with clients like Sephora, Decathlon, Zadig and Voltaire, and Yves Rocher — notes that the best retailers have only about 20% of their revenue coming from e-commerce, and the worst, just 2%. "Imagine if your business has a thousand stores and hundreds of thousands of employees in your brick-and-mortar operation, and a couple of hundred in your e-commerce operation. What are you going to think about every morning? What is going to be most on your mind?"
The coronavirus crisis has exposed just how flat-footed most retailers have been when it comes to digitizing their sales operations and taking advantage of e-commerce data. "Adopting a customer-centric outlook and data-driven decisions is difficult when you're in a difficult position," says Letourmy. "But we live in a different world now, and now retailers are going to have to be digitized by force."
What are the ingredients for a successful retail digital transformation?
The first step, says Letourmy, is improving retailers' websites to provide a good customer experience. "Retailers don't want to lose customers," he says. "The online experience has to be a good one." But, he notes, just as important is a global view of available stock and where it is. "You need to have a global view of the products in store, even if they are not in the central warehouse. Optimizing your supply chain can have a dramatic effect. When I have a full view of product stocks, whether it's online, in warehouses, or in stores, if I optimize my supply chain, I can upgrade my revenue by 5%. And being able to do that is all in my data."
There are other considerations as well. In a globalized world with a globalized supply chain, how are retailers going to use data to control production and logistics? The big issue that retailers face is A-to-Z control. Amazon is one of the few retailers that haven't seen massive changes and delays because of their delivery infrastructure, but even it is facing some problems. Today, with most online retailers, consumers can't get a single view of their purchase order; if they want to see where a parcel is, they have to connect to the delivery company website and hopefully find accurate data. It's the same for stock and production data.
Many online retailers lack an accurate view of their production data — in-house or third-party — which causes long delays for processing orders. Most retailers have used data to transform the customer experience, which is an important piece; the next step in transforming retail for the post-COVID era is erasing inefficiencies in the online purchase experience.
The biggest advantage that retailers have, Letourmy says, is a culture of testing. "Retailers already have very good habits to compare the revenue every day, every hour, to the day the same day one year before. And the best ones use data to get real-time analysis of what and how much is being sold at every POS everywhere. But for this year, comparisons don't work. COVID has changed what the expectations of good sales should be. And one thing that I find quite interesting is when we talk to retailers about data and digital transformation, it's the CEO who's taking the call, not just the operational team. The CEO wants to do everything to make sure the business doesn't die."
The future of the retail store
Letourmy is bullish in the short term on online sales with curbside pickup because at heart, human beings are social animals. "After being locked down in flats and apartments and homes, people want to go out and pick up something and use that opportunity to meet people. So, it's a way to go out."
In the longer term, however, it's difficult to imagine the continuation of shopping as it is today. For example, is it really worth a long line to wait (six feet apart) to enter a clothing store where you might not be able to try an item on?
Letourmy imagines that the store of the future will be a brick-and-mortar and digital hybrid that relies on social media for buzz and promotion. "Operations that were offline are going to need to move 100% online," he says. "But the actual store, rather than a place where people go to gather to look at merchandise, will become a social opportunity, and digital and social networks will be crucial to getting people to interact."
The key to retail survival
During the global lockdown people are still holiday shopping, just not for items they may have bought before, and their purchasing is shifting frequently. Consumers are making purchasing decisions that make their housebound lives more tolerable. Whether they are seeking pasta or bread machines, waffle irons, rice cookers, comfort food, hard-to-find grocery items, exercise equipment, or games and stay-at-home products that address family boredom, consumers are turning to merchandise that helps them make the most of their at-home situations.
To succeed over this holiday season and in a post-pandemic world, businesses need to make digital transformation and an across-the-board data strategy a priority, or they will be at a huge disadvantage. This is not the era to be slow to change; businesses that will thrive will use data to pivot quickly. "Ultimately, I think this change will be good for retailers," says Letourmy, "and this forced digital transformation will be extremely successful for both customers and healthy businesses."
Sourced from Retail Customer Experience