Spring forward: how retail leaders are adapting to win

From lockdown closures to the rapid rise of online shopping and increased demands for sustainability, the retail industry has been confronted with unprecedented change over the past two years.

Agility is now a top priority. It’s key to helping retailers continuously reinvent their businesses, and adapt to whatever’s around the corner. This will include overcoming new challenges in the post-pandemic landscape, such as:

• Stay-at-home consumers who expect seamless online shopping experiences with prompt, reliable deliveries.  
• Existing systems and processes that struggle to cope with large spikes in traffic across supply chain, inventory control and site stability.  
• Sluggish organizational cultures and lack of technological maturity that prevent them from quickly resetting and flexing their operations to handle fast-changing demands.

Critical to success in this environment? Focusing on continuous reinvention to drive sustainable growth and being sufficiently fluid to navigate the fast-changing dynamics of the retail industry.

A new reset for a new agenda

Retailers need to shift their priorities across the retail value chain. The new agenda has to include:

• A 360° view of customers to understand buying behavior, enable hyper-personalization and foster loyalty. To offer personalized experiences and drive loyalty, retailers must be able to analyze and understand customer behaviors. The challenge? Existing technology silos which lead to decentralized data, creating a fragmented view of each customer. The goal has to be developing cloud-based, integrated, data-rich environments that can power highly differentiated, relevant and localized experiences for every customer. 
• Omnichannel presence to deliver seamless, personalized customer experiences. In 2020 alone, we saw 10+ years of growth in ecommerce sales over just three months. Online purchase rocketed by almost 170% and use of omnichannel services increased 54%. It’s a new world in which customers expect seamless, personalized experiences wherever/however they’re shopping. Retailers have to respond by providing compelling, connected digital experiences across the entire customer journey. In particular, they must tackle search abandonment, which costs retailers more than $300 billion a year in the US alone.
• Insight-driven merchandising. As the focus shifts towards delivering joined-up omnichannel experiences, merchandising has to keep pace by adopting an insights-driven approach that takes account of customer buying behaviors. By capitalizing on advanced data, AI and analytics capabilities, retailers can introduce new agility into decision-making, with real-time, dynamic pricing and promotions, improved shelf-space optimization and enhanced demand forecasting. 
• Integrated supply chain on cloud. Today’s supply chains have to be flexible, resilient, and continuously evolving. Flexibility starts with visibility, not just into parts and products, but also into asset and supplier performance, and fluctuations in demand. The solution? Developing an integrated supply chain in the cloud, taking advantage of cloud-based technologies to process huge volumes of data at unprecedented speed. 
• Reimagining physical spaces. We expect 35-45% of the pandemic’s boost to online shopping to be permanent. So retailers must reimagine their real estate to deliver memorable experiences and enable omnichannel engagement. This might mean providing enhanced in-store experiences and/or turning sites into “dark stores” (fulfilment centres supporting online orders).

Key technologies to support this transformation will include video analytics, image recognition, augmented reality and digital shelves.

These are all essential capabilities in today’s marketplace. But making them happen will be challenging. How should retailers prepare? By aligning all business functions to unlock agility. By upskilling employees to help them become excellent brand ambassadors. By taking a digital-first approach. And by improving data maturity and data literacy to enable optimal decision-making at speed and scale.

Pillars for success

Most retailers still find it challenging to move fast, because their hands are tied by cultural, process and technology constraints. They must break free from these shackles and bravely transform their businesses. This is key to capturing growth in such a challenging climate.

As they move ahead, we believe that three underlying qualities will drive future success:

1. Adaptable – building scalable capabilities and an adaptable organization, with versatile but stable structures, such as integrated supply chains, that prepare retailers to respond and capitalize on new opportunities and rapid shifts in market dynamics. It all starts with a data-led value obsession, taking a data-centric approach to support important business decisions, like merchandising and personalized communications with customers.
2. Boundaryless – replacing technology siloes with cloud-first, flexible architectures that support seamless customer journeys and new business models. With decoupled IT, interoperable systems and a willingness to explore new business models and ecosystem relationships, retailers will be ready to embrace new, agile futures.  
3. Radically human – creating advantage through systems that truly work for people (contact-center AI, for example). By adopting “radically human” design principles, retailers can develop a seamless interface between humans, machines, and systems – keeping people at the center and building systems that conform to what people want, instead of asking people to conform to what systems can do. One great example? Our “Retail Store of Tomorrow,” which we presented in a recent webinar with Google Cloud. This uses digital technology to save space for the retailer, dematerializing commodity products in an “Aisle” section so they do not need to be displayed, while extending the possibilities for interaction between customers and brands in a “Promenade” section. Meanwhile, an automated “Dark Store” processes orders, matching deliveries to customer preferences.

A focus on these three qualities can guide retailers’ transformations as they reset their businesses to thrive in this new era. Naturally, real change won’t happen overnight. But these qualities should help companies to capitalize on their strengths. And most importantly, they’ll empower retailers to craft resilient new futures in a brighter, more sustainable tomorrow.