Retail and consumer goods post-COVID-19

Retail disruption is hardly new. Retail has been, is, and will continue to be, an incredibly dynamic industry. As digital technology began taking hold more than 20 years ago now, shopping started being transformed in once unimaginable ways. Product options, information, convenience—and so much more—gave way to a world of abundant choice and 24/7 access. Once dominant retailers (think Sears, Blockbuster, Radio Shack) and preferred ways to shop (think regional malls and bookstores) yielded share and profits to insurgent brands and more compelling formats, both online and offline.

的COVID-19 crisis is not the driving force in determining the winners and losers in retail today. A growing web of connection, rapidly evolving consumer preferences, and the blurring of the lines between digital and brick-and-mortar commerce have been reshaping brands’ fortunes for quite some time. Rampant overbuilding of retail real estate created an ever-growing misalignment between consumer demand and physical capacity. A harsh reckoning was inevitable. Yet, as I go into in my recently released bookRemarkable Retail: How to Win & Keep Customers in the Age of Disruption, the pandemic brought new forces into play while amplifying others that have been with us for years.

It’s become increasingly difficult for retailers stuck in the unremarkable middle, that is, offering neither great value and convenience, nor anything genuinely memorable from a product, service, and experience standpoint, to carve out a sustainable position. In turn, the gulf between retail’s haves and have nots continues to widen in a phenomenon I call“retail’s great bifurcation.”

的COVID-19 crisis accelerated some significant trends, and the spike in online shopping is the most obvious. A close second is a dramatic increase in the role of physical stores in e-commerce fulfillment, most clearly seen in the rapid adoption of curbside pick-up. Nascent technologies such as virtual personal shopping, live-streaming, contactless payment, and appointment all gained significant traction.

尽管流行的恶劣影响某些sectors of the economy—and the disproportionate unemployment among lower-income households generally–aggregate consumer spending has remained strong, mainly owing to significant government stimulus. Yet how we are spending is radically different. As we do more things from home, either by virtue of lockdowns or safety concerns, we are buying far more groceries, upgrading our home environments, work-from-home-related equipment, supplies, and spending more on entertainment streaming services. Along with an empty social calendar, the lack of travel opportunities has cut deeply into higher-end apparel, beauty, and accessories. There’s no point getting all dressed up when there’s been no place to go.

As the world recovers from the pandemic, the reallocation of spending we saw during the height of the crisis will begin to moderate. The dramatic effects of government stimulus will lose steam, and a material shift away from eating at home to going out more seems inevitable. And most folks aren’t likely to buy more than one Peloton or sofa, nor upgrade their home office, every year or two. Time will tell the degree to which the pandemic will alter the retail playing field and reshape customers’ long-term needs, wants, and expectations. Among the forces that have been in play for more than a year now, the work-from-home trends look to be one with the greatest chance for persistence and material impact. Large numbers of folks continuing to work from home–even a couple of days per week–will affect how and where spending is directed. The impact on many vibrant urban cores could prove substantial.

One trend that came into sharper relief is what I refer to as the “hybridization” of retail. Commerce is becoming increasingly hybrid, as the lines between online and in-store shopping continue to blur. Indeed, a blend of digital and physical interactions is relatively commonplace in any given customer’s shopping journey. It is not about e-commerce or brick-and-mortar; it is about how brands break down the silos in their business model and bring the disparate elements of modern retail together into one harmonized experience.

Individual brick-and-mortar locations are becoming hybrids themselves. Once primarily places to go and buy stuff to take home, stores now have expanding and diverse roles. Most sites now act as service centers for online purchases in some way—a place to pick up or return an e-commerce order, for example, or to have a store associate help resolve a customer service issue. Many are also becoming distribution centers, as more retailers are fulfilling e-commerce orders from store stock or performing home deliveries from stores rather than dedicated facilities. Physical stores are increasingly part of a brand’s advertising strategy, serving in some ways as a billboard for the brand, as a product showroom, or as a place for customer acquisition — digital drives physical and vice versa.

的re is also a rise in hybrid physical retail real estate deployment. Whole Foods and Walmart are creating “dark stores” to serve as fulfillment hubs, complementing their “regular” stores. Taco Bell has opened a digital order fulfillment only location. Nordstrom is expanding their Local concept, a merchandise-free satellite format that is essentially a service center in support of their full-line department stores and e-commerce operations.

Hybrid models are increasingly familiar these days, whether we’re talking about how education is delivered, movies are released, or how industry conferences are hosted. Supporting a healthy lifestyle is also moving to a hybrid world, with tangible products and fitness membership bundled together, as seen from Peloton, Equinox, Lululemon, and more.

This reality favors those organizations that see the customer as the channel and have made, or are willing to make, the investments that reflect the brave new world of retail. Again, none of this is totally (or even primarily) the result of the pandemic. For retailers that watched the last 20 years happen to them, the COVID-19 has exposed their shortcomings. To paraphrase Warren Buffett: “when the tide goes out, it becomes obvious who’s been swimming naked.”

的fact is that the retail industry is very different from how it was a decade ago, much less last year. In today’s retail world, just about everything is in flux all the time. And that demands we approach how we operate in fundamentally new ways.

VUCA is an acronym that stands for volatility, uncertainty, complexity, and ambiguity. It originated more than thirty years ago as part of military education at the US Army War College. More recently, the term has been used in business strategy discussions to help describe the increasingly challenging and ever-changing circumstances most organizations encounter.

的overall framework and its components can certainly be applied to retailing today, and particular types of responses can help guide us forward:

VOLATILITY:的speed and magnitude of change are high and often unpredictable. A robust overallvisionis needed not to be distracted by the bumps along the road.

UNCERTAINTY:的reliability of information is suspect, the environment is prone to surprises, and potential outcomes are hard to predict. Our strategies need to push for deeper and broaderunderstanding, take in different, often contrary, perspectives, and contemplate a range of possibilities. Uncertainly cannot cause organizational paralysis.

COMPLEXITY:A growing number of forces can come into play, and cause-and-effect relationships become harder to glean, frequently leading to false narratives. Our job is to provide as muchclarity当阿宝ssible while building flexibility and creativity to respond.

歧义:Confusion or differing interpretations of conditions is expected. Reality seems hazy, and we might take the wrong step based on a misread. The key here is to become highlyagile, ready to respond quickly to new information and its implications.

没有人可以知道未来,as the pandemic made plain. This VUCA world is here to stay–and that demands that we build both resiliency and agility into our business models. It also means that building and maintaining a culture of experimentation is essential to becoming more remarkable and staying that way.

Avoiding turbulent waters is impossible. Fighting the power of ever-shifting tides is an exercise in futility. Waves are inevitable. Sometimes they come at us faster than usual. Sometimes they come at us higher than we’re used to.

Whatever the case, one thing is certain: We’re going to have to learn to surf.