Retail and consumer goods post-COVID-19

Brick-and-mortar retail has been under attack for a while. At least in the media. Marketing and retail experts Kim Whitler and Steve Dennis share their views of the path forward.

Three competencies companies need right now for an uncertain post-COVID future.

Kimberly A. Whitler, Ph.D.

Frank M. Sands Sr. Associate Professor of Business Administration,

Darden School of Business,

University of Virginia

As we begin to envision our post-COVID-19 lives, many of us are anxious to see how the world changes or in what ways it stays the same.

的全球冲击COVID-19是前所未有的。的fluid nature its impact on consumer beliefs, habits, and practices makes it nearly impossible to predict the next normal. We don’t have enough prior experience to have confidence in any prediction; many people have conjectured about what will happen, but these are just hypotheses.

Because of the uncertainty, it will be crucial for companies to develop the capability to identify customer trends and make quick and accurate decisions about supply chain and other resource deployments based on those trends.

Why is making an accurate prediction about the next normal so difficult?

Here is an example of how changes in consumer priorities impacted consumption habits. Because of the pandemic, people couldn’t travel and were forced to spend nearly all their time in their homes, so the importance of home and family went up. Some people decided that they didn’t want to live in an 800 square foot cramped flat in New York City when that same money could buy a beautiful, 2400 square foot house on a lake in a smaller city. With money saved from putting travel plans on hold, others invested in redecorating their homes or adding an extension. Others didn’t want to live alone and moved closer to family and friends. The forced focus on “the home” led to individuals shifting consumption decisions, but this impacted people differently. And this won’t continue forever as we will resume travel and consumption, and priorities shift again for some people. In reality, there are many more unknowns:

  • COVID caused supply chain issues that forced brand experimentation. This “forced trial” inevitably will change some consumer habits. For example, I have a relative who was a loyal LaCroix sparkling water consumer for many years. She couldn’t find it in the earlier days of the pandemic and started buying the store brand. She felt that it was almost as good as her favorite brand, at a much lower price point.
  • Some consumption opportunities are temporarily eliminated. Entertainment (movies, musicals, theme parks, concerts, etc.), travel, sports (professional events, NCAA events, etc.) have been closed or significantly reduced. Consumers have shifted these dollars into other areas, creating new patterns of behavior. What has changed? What will stick, and what might go back to pre-COVID behavior? How does this impact specific brands? We don’t entirely know.
  • 的shopping and buying process has undergone a seismic shift. Retail was essentially two-dimensional with bricks and mortar and online shopping. Now we have greater usage of hybrid shopping models such as ordering online and picking up curbside. Uber Eats and Door Dash -two companies with apps that allow you to order from home and have food delivered -were some of the big advertisers during this year’s Superbowl. Even delivery of medical care has shifted as online consultations became the norm, replacing in-person visits to clinics for routine appointments. Not only consumption habits but channels of delivery have changed with consumers prioritizing different methods.
  • 的anxiety associated with COVID has caused people to question, challenge, and rethink core beliefs, values, and vision for their lives. Some people are moving closer to family or changing jobs to restructure how they spend their time. Some are retiring or going back to school. For me, I had an “aha” moment where I realized I had spent most of my life prioritizing work and now needed to put family above my job.

At a macro level, how COVID shapes and shifts society is in flux, and ongoing research will be needed to capture how it changes over time. And while companies investigate purchasing habits, they often don’t explore more profound, endemic human shifts; it’s left to academics who, because of the time to conduct more rigorous research, won’t start identifying and publishing more longitudinal trends for some time.

All of these changes mean that predicting what happens next is largely guesswork. So how would you know if your company can thrive in the next normal? Rather than trying to make predictions, it’s interesting to think about which companies will be in the best position to adapt to market changes rapidly. I see companies with three key competencies having a clear advantage.

  1. Real-time market/consumer understanding engines:Companies that have developed multiple sources for understanding consumers, such as integrating first party, second party, and third-party data, will be better equipped to react to consumer behavior shifts in real-time. They will be able to generate more relevant data faster.
  2. Sophisticated, contemporary, and proven methods for converting consumer patterns and trends into successful business strategies and plans:Acquiring the right data (the first bullet point) is essential and challenging for many companies. But having data doesn’t produce insight or drive better strategies. That takes analytical and strategic thinking capabilities. And this is where many firms often struggle. They have a lot of data but not much useful, strategy-enhancing insight. Converting data into smarter strategies and plans is critical to activate the potential of data.
  3. Responding quickly to the changing consumer, marketplace, and competitive landscape:Getting real-time data and rapid data analysis is essential. But those that can effectively respond up and down their supply chains and adjust other resource deployments rapidly will be better positioned to take advantage of the insight and knowledge.

Having all three competencies – a sophisticated system to “listen and learn” about the consumer and market, an ability to convert data into useful insight, and an enterprise-level ability to act on the insight – is complicated. But the only prediction I’ll make is that these are the firms that have the best chance of winning.

Dr. Whitler’s new book,Positioning for Advantage: Techniques and Strategies to Grow Brand Value, will be available in September 2021.

“In reality, there are a lot of unknowns. COVID-19 caused supply chain issues, which forced brand experimentation.”

Post-COVID retailing will experience more of the same disruptions.

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Steve Dennis

Founder of SafeBerry Consulting, Forbes Senior Contributor

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.

的marketer needs to say: how can I redesign the bundle to support the behaviors that I want and discourage those that I don’t?

Anaplan knows how to help you navigate these uncertain times.

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