Retail industry trends data set preview

Christmas in July: New Powerpoint Deck Exploring Retail in the New Normal

Welcome back to Christmas in July. Nearly at the end of our “holiday”, we’ve covered just about everything, from new CSDM resources to Returning to Work.

Today, we’re back to focus on one more industry, Retail. If you want to jump straight to the giveaway, download today’s Retail Industry PowerPoint deck here to get exclusive stats and perspective from our annual Insight and Vision Report.

The savviest retailers have spent years creating multi-channel strategies that blend physical and online retail spaces to engage consumers. As we continue to see E-commerce sales rise for apparel, department stores, and beauty products, we must confront the fact that COVID-19’s impact on customer behavior has reshuffled the deck. Now, in-person interaction has dramatically changed or been supplanted by digital engagement, and early indications suggest that much of this shift may endure in the long term.

Analytics, consumer insights, and Customer Service systems play a central role in delivering impact through commercial levers. In the wake of this crisis, you will almost certainly need to enhance current tools and build new capabilities, such as automated reporting to track consumer responses and sentiment and systems that can deploy localized store-level promotions.

Looking forward, we believe retailers should focus on these four actions to build more resilience in their customer experience and to emerge even stronger in the recovery.

1. Double down on digital

COVID-19 has dramatically and suddenly shifted more customer traffic to digital channels. Consider that online sales, which increased at a 14 percent compound annual growth rate over the past four years, grew by 25 percent in a two-week period in March 2020—led by grocery purchases. The pandemic’s profound impact on consumer shopping habits has increased the urgency for retailers to expand their digital presence quickly; make sure to take the following actions to address this shift:

Extend digital-channel presence and engagement.

Shelter-in-place orders have led companies to test new methods of customer engagement. App downloads increased 11 percent from January to April 2020 compared with the same period last year. Many retailers with established mobile apps have cited record downloads, while others sought to make up ground quickly. Around 45 to 50 percent of retailers had plans to prioritize a mobile app or point-of-sale experience this year, and several companies have accelerated their efforts in response to the pandemic.

In addition, while building and nurturing online communities are not new ideas, they have gained momentum. Retailers are augmenting direct customer interactions with engagement in apps and other relevant channels. Nike China, for example, activated its digital community by offering virtual workouts and saw an increase in weekly active users of its app.

Ensure that the digital experience is truly frictionless. 

Customer expectations are rising for digital channels along measures such as site speed, stability, and delivery times. To keep pace, retailers should start by designing web pages that are optimized for digital shopping. For example, making the highest-selling (and ideally highest-margin) products easy to find helps to make the customer journey more seamless.

2. Inject innovation into digital

To adapt to new customer behaviors and preferences, retailers will need to evaluate their current digital offerings and find opportunities to innovate and fill gaps. Align any additions with emerging customer needs and integrate with existing channels to support a consistent experience.

Bring an in-store feel to the digital experience. 

The inability to engage customers in a physical environment has pushed some retailers to bring more of the in-store experience online. 

First, leading retailers have substituted in-store personalized interaction with offerings such as virtual appointments, where sales associates use videoconferencing platforms to offer personalized attention to customers. Sales agents can help individuals find products that meet their needs while learning ways to better serve customers online. Similarly, retailers are using live streaming to engage with customers and increase revenue and loyalty by sharing experiential content.

 Second, retailers have been developing alternative engagement models to de-risk digital-purchasing decisions. For clothing, one of the main impediments to online purchasing has historically been the inability for customers to see how items would look on them. Jewelry brand Kendra Scott is tackling that problem by launching a new platform that uses augmented reality, machine learning, and computer-vision techniques to allow shoppers to see items as they move in front of the camera, enjoying the experience of a retail setting in the comfort of their home. Shopify, which allows its merchants to add 3-D models to their product pages, found that conversion rates increased by 250 percent when consumers viewed 3-D products in AR.

3. Transform store operations and focus on safety

The pandemic has cramped traditional store operations, with a new preference for self-service altering the formula for customer experience. The priority for many customers today is to get in and out of a store as quickly and safely as possible. Providing safe(r) experiences will be critical to alleviating customers’ anxieties and enabling a return to in-person interactions. Retailers must implement policies and processes to enable safe distances, sanitize surfaces and products, and communicate proactively, clearly, and empathetically with both their customers and their team members.

Beyond managing safety considerations, retailers must dramatically reduce costs and improve operational efficiency in their stores to offset revenues that are increasingly shifting to online channels. Done properly, this effort will help companies enhance customer experience and safety while trimming operating expenses.

Retailers can start by establishing a set of service and experience elements that are non-negotiable. New safety requirements for both customers and associates will be a core part of these non-negotiables and could include no-contact payment methods or cleaning and employee-hygiene processes. Leadership will need to redirect the workforce from less-relevant activities to priority areas. Many of the opportunities can be captured quickly by changing store hours, improving scheduling, and altering the mix of full- and part-time employees.

4. Embrace an agile operating model

This approach requires more real-time insights on customers, as well as a new agile operating model to harness these insights and put them into action.

Before the pandemic, leaders were using data to optimize customer experience, gauge satisfaction, identify foot traffic, and generate purchase recommendations. Now, retailers are moving beyond surveys as a mechanism for customer input and toward real-time tracking of consumer behavior shifts. With the rise of digital in recent months, companies will have even more dynamic data at their fingertips, and they can use these data to extract immediate insights.

In addition, as retailers reformulate their customer experience, they should bring customers into the design process to share feedback as ideas develop, ensure new offerings are meeting actual needs, and de-risk initiatives along the way. Qualitative feedback can be gathered through online tools or in-person concept sprints so ideas can be assessed and iteratively improved.

By adopting agile practices alongside the generation of real-time consumer insights, retailers can more quickly recalibrate their business model and offerings to meet consumer expectations. Retailers need to raise their metabolic rate—that is, the speed at which they process information and develop new offerings. A rapid approach to tests and trials can enable retailers to launch offerings at scale more quickly and avoid losing share in the face of shifting consumer behavior. Senior leaders must empower junior colleagues to make decisions rapidly.

Retailers have much ground to cover, and time is of the essence. They should start by establishing a North Star to guide their aspirations for customer experience, with clear objectives. A cross-functional team should take the lead in assessing the starting point, quickly developing the path forward, and driving implementation.

The next normal is still taking shape, and customer expectations will continue to shift in response. Retailers that focus on customer experience and respond with agility and innovation in their omnichannel experience will fare better and strengthen their ties to customers.

Looking for even more data and insights into challenges and strategies in the retail industry? Download our complete industry deck to find more answers.

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