For many retailers, the pandemic has been a nightmare. The staff at Consumer Goods Technology (CGT) explains, “If 2020 was a Dickens novel about consumer goods, it might be called a tale of two categories: essential and non-essential. The former saw the better of times in which the belief in their products gave consumers hope. For the latter, it was, indeed, an ‘epoch of incredulity’ with what seemed like no end.”[1] Fortunately, there does appear to be an end in sight. In Part 1 of this article, I discussed signs that the brick-and-mortar retail sector is recovering. In part 2 of this three-part article, I discuss what some experts are saying about how the retail sector must change in the post-pandemic world — the so-called “new normal.” The CGT staff notes that during the pandemic retailers had to deal with disruptions and other supply chain issues, such as, “unpredictable consumer behavior and increased pressure from competition.” Coming out of the pandemic, the staff notes, “Amid what’s commonly becoming known as the ‘next normal,’ retail execution (REX) is still in flux.” Not only will retailers have to reevaluate their operations, they will have to reacquaint themselves with their customers. As journalist Anne D’Innocenzio (@ADInnocenzio) explains, “Post-pandemic shoppers will be even more demanding: After being forced to stay close to home, they’re looking for better and convenient services and experiences.”[2]
Retail in the New Normal
One of the big questions facing brick-and-mortar retailers is whether foot traffic will return to their stores. D’Innocenzio indicates there are positive signs. She reports, “Customer counts at overall stores surged 43.2% for the week starting May 10 compared to the year-ago period, but that number was still down 5.6% for that same period in 2019, says mobile-device location data from foot-traffic analytics firm Placer.ai. In clothing, customer counts soared more than two-fold for the same timeframe, but it was down 11.2% on a two-year basis. For big-box stores like Target, customer counts were up 5.3% for the same period but down 4.9% on a two-year basis.” Even if foot traffic reaches pre-pandemic levels, more consumers have discovered the convenience of the digital path to purchase. As a result, almost every retailer now focuses on omnichannel operations. Even so, Craig Lennie, Creative Director Rebel & Co, insists the new normal will witness “the end of omnichannel as we know it.”[3]
Lennie explains, “COVID-19 flipped the balance of power between online and physical retail after the greatest and most accelerated digital transformation in history. The new default of digital discovery and purchase, as well as expectations around delivery, and the trend toward buy online, pickup in-store and curbside, are here to stay. Despite this, it’s not time to abandon physical locations, since 91% of shoppers say they miss shopping in stores, according to a McKinsey report. Moving forward, retailers will need to offer specialized, not seamless experiences, creating clear differentiation, and use cases, for each point in their customer experience and sales cycle.” Like most observers of the retail sector, Anil Kaul (@anil_kaul), co-founder and CEO of Absolutdata, believes changed consumer behavior is going to drive the new normal. He elaborates, “Retail leaders understand that consumer buying patterns have changed in ways that are likely to persist once the virus is under control. Retailers know they’ll need to adapt to stay a step ahead of competitors and increase profits in the months and years to come.”[4]
In order to adapt profitably, Kaul insists retailers must fully embrace the Digital Age. He writes, “Forward-thinking company leaders see this time as an opportunity to invest in digital transformation now so they can optimize operations going forward. Leaders are looking for ways to implement better revenue growth management practices that leverage data and advanced technology like artificial intelligence (AI) and machine learning so they can get ahead — and stay ahead — in the future.” Kaul joins numerous other voices calling for retail to digitize more fully. The CGT staff suggests three ways retailers, and the manufacturers supplying them, can adapt to the new normal. They are:
#1. Be nimble and flexible to shift strategies quickly. “Agile” seems to be the buzzword of the day in both retail and supply chain operations. The CGT staff writes, “REX teams are still focused on growth, velocity, positive in-stock positions and closing the SKU gaps — all through the lens of agility now. Applying this attribute to teams, assortment, merchandising and promotions will allow for quicker response to market fluctuations.” For manufacturers, the staff writes, “[This means] creating products that consumers want, [which] requires deep insight. Field teams are often first in line to see what’s changing, and given the right structure and tools, can identify areas of opportunity.” In concluding part of this article, I will discuss how cognitive technologies can help retailers and manufacturers generate actionable insights and optimize operations. As the CGT staff notes, “Another way to uncover potential is through competitive intelligence.”
#2. Digitize. Digitize. Digitize. Like Kaul, the CGT staff believes success in the Digital Age requires both manufacturers and retailers to transform into digital enterprises. The staff explains, “Agility, insight and intelligence will be out of reach without the right technology. … A REX platform that can integrate data comprehensively and meaningfully will provide … insights into opportunities.”
#3. Serve retailers better, for better results. The CGT staff asserts, “For successful REX, no matter the times, the strength of the manufacturer/retailer [relationship] can’t be overstated. And, speaking of data, trust and transparency remain critical to the relationship, but data sharing needs to improve.” While dealing with our clients, the Enterra Solutions® team has found that data sharing is critical to better outcomes. As the CGT staff states, “Common pain points call for common solutions, and given all that’s changed over the last year, CGs and retailers should consider expanding their work together across the value chain.”
No one can say for certain what the new normal is going to look like. Even before the pandemic, what people called “normal” was constantly changing and change will continue to occur in the months and years ahead. The best manufacturers and retailers can do is monitor current trends, analyze historical and real-time data, and leverage advanced analytics to help plan for the future. Without advanced analytics, most enterprises will be blind to both opportunities and risks.
Concluding Thoughts
Oliver Wright (@owright001), senior managing director and head of Accenture’s global consumer goods industry group, predicts, “The ripple effects of the pandemic will be felt for some time and serve as a powerful illustration of the need for consumer-facing companies to be agile, resilient, and responsive to change. Born out of disaster and necessity comes opportunity; the pandemic has sparked a new wave of innovation.”[5] The CGT staff adds, “Despite plenty of news to the contrary, stores aren’t going away anytime soon. In fact, RIS News research shows that nearly 87% of all retail sales still have a store component. This means that agility, digitization and partnership must be top priorities for REX in 2021 and beyond, as CGs move forward even wiser from this experience. Solidifying these capabilities will also ensure they’re better prepared for any future consumer behavior shifts as retail evolves into the post-pandemic environment.”
Footnotes
[1] Staff, “3 Retail Execution Rules for the Next Normal,” Consumer Goods Technology, 24 March 2021.
[2] Anne D’Innocenzio, “As shoppers return to stores, retailers are facing challenges of their own,” Fortune, 27 May 2021.
[3] Craig Lennie, “For Retail, Expect Reboot, Not Return To Usual,” The Marketing Insider, 14 May 2021.
[4] Anil Kaul, “5 Ways AI Helps Retailers Get Ready for the Post-Pandemic Economy,” Total Retail, 12 April 2021.
[5] Daphne Howland, “5 signs that retail is going to be OK,” Retail Dive, 12 May 2021.
