During the pandemic, customers are rapidly exhibiting the very behaviors retailers desire, including contactless payments, curbside pickup, ecommerce and buy online, pick-up in store (BOPIS), which saw a 208% uptick in April according to Adobe Analytics.
Retailers, in turn, are innovating – Panera is delivering groceries, Walgreens is expanding the drive-thru, and malls are designating parking for curbside.
Things aren’t exactly as they seem, however, because this is really the story of two groups — retailers and consumers — moving in opposite directions, promising to be even further apart when the dust settles.
During the pandemic, a common theme has been emerging on podcasts, in webinars and via an influx of daily articles that shopping is going to change … for the better.
Many talk about open and airy stores where associates can provide a higher level of service with fewer distractions. Others see a new reality where shoppers can convert fully to curbside and ecommerce, eliminating stores completely.
On the surface this sentiment rings true, as most of these prognostications rely heavily on consumers using the exact tools that have seen the strongest adoption. Initially, it seems to signal that retailers should rejoice, but a deeper analysis indicates something different at work.
To better understand this, we need to examine the pre-pandemic landscape, where retailers wanted to combat Amazon by creating value in services like BOPIS and curbside. These were born of a world where two-day Prime shipping was eating into store visits and profit. They were meant to supplement regular trips and win back commodity purchases. In conjunction, retailers wanted ecommerce because of its power to drive growth and store traffic.
Now, there is a notion that these new behaviors are here to stay, and they may well be, but if true, that would be another signal of the increasing distance between retail and its consumers.
First, BOPIS, curbside and ecommerce are expensive and logistically difficult. Target tried curbside pickup multiple times unsuccessfully before buying Shipt. Malls are configuring curbside, but their retailers face additional cost and complexities. Additionally, these things take time, years of time, to get right.
Next, ecommerce has seen 10 years’ worth of growth in two months according to the Commerce Department, but only a small percentage of retailers currently use stores as distribution points, and its value still eludes others. Burlington actually turned off their capability earlier this year to focus on stores, despite data showing that the two form a symbiotic pair in today’s retail landscape.
If shoppers come out of the pandemic having permanently switched to more complicated and expensive behaviors AND they are buying more via ecommerce, retailers will struggle. In addition, smaller store revenues due to fewer shoppers, less merchandising and modified hours will compound the reality.
Finally, the overhead for those stores isn’t going away, which means they also face the reality of fewer employees doing more cleaning, picking and restocking, threatening the promise of increased service.
So, while retailers are getting what they asked for, it isn’t playing out exactly as planned. In the end, without robust store sales, they will be upside down. This can already be seen at Target, which lost revenue in Q1 even after 11% growth, all because of more than $500 million in additional costs, according to CEO Brian Cornell.
This is proof that retailers are currently doing whatever it takes, and shoppers are willing to be patient as everyone learns together. Post-pandemic, however, the math doesn’t seem like it is going to work, and shoppers are fickle.
So how can retailers bring back the momentum for in-store shopping that carried them into 2020? Here are some answers, rooted in many of the things that were already building pre-pandemic.
Start Offering and Connecting Experiences
Retailers are going to have to act decisively to shift the momentum as they try to drive more volume in stores with fewer shoppers, while simultaneously offsetting costs and complexities. This means offering what customers expect, even if they haven’t in the past, and following the lead of those who already do.
Those making the largest strides are relying heavily on branded digital experiences that connect all their disparate services, providing value for customers. These experiences will require rapid application of people, process and technology. Fortunately, many of the parts and pieces to assemble this flexible digital infrastructure have been rapidly evolving in the marketplace … even before the pandemic.
Embrace the Notion that Touchless Equals Mobile
In-store shoppers are still going to need to interact with products, discover new items and perform tasks such as returns. In addition, the store will still be the best place to get items immediately, and mobile will be at the heart of it all.
Unlocking mobile’s full potential is already happening, and items which used to be experimental now serve important roles. Digital wallets, QR codes, augmented reality (AR) experiences and unlocking self-service areas with a shopper’s device are now mandatory in providing a touchless customer journey.
Every Size Retailer Can Thrive
To offer all of these new services is not an overnight affair and some retailers may think they are out of reach, but aside from custom solutions, there are a number of off-the-shelf products and third-party services, from micro-distribution centers to white-labeled applications, that can get a retailer up and running quickly.
For the bigger guys, all their investments can really start to pay off with the addition of these connected experiences. An excellent example is the revamped Walmart app, which is already in sync with new store procedures and service offerings.
Fees and Higher Prices May be Required
Consumers will also have to participate in recouping retailer investments and offsetting the higher costs of their lofty expectations.
For some, it will come in the form of additional fees, subscriptions, or longer shipping windows. For others, higher prices may be reflected for items available through ecommerce or BOPIS. Again, Walmart is leading the way in testing this notion with a new 2-hour delivery for $10.
Overall, retailers are in a tougher spot than many have recognized, and they may lose for a while during this transition, but forced evolution should set them up for future success. As for shoppers, this pandemic has required them to re-evaluate the importance of safety and convenience and will eventually force them to reveal what all of it is worth.