The future of retail, and the CPG brands that fill its shelves, has already arrived. If you're not yet omnichannel, your chances of survival are slim. If you're not working with data in real time, your decision making will be restrained and ill-informed. If you're not adopting a platform-centric orchestration mindset, your growth will be stunted.
One of the most noticeable business accelerations of the last 18 months has come in e-commerce, which saw 10 years’ of growth in just three months in 2020, according to a McKinsey report. What’s more, 75 percent of consumers tried new stores, websites and brands since the pandemic began, and 60 percent of them are likely to keep those newcomers in their lives post-COVID-19.
Yet only 36 percent of retailers are implementing a digital transformation strategy, with others that have a plan (25 percent), are currently creating a plan (24 percent), or want to create a plan (15 percent). What's their data strategy? Analytics strategy? Transformation strategy? All of these touch sales, marketing, operations, supply chain, IT, and talent within the enterprise environment. They support consumer demand for connection, convenience and trust. There's still much work to be done.
Here's a look at five post-pandemic shifts in the retail and CPG universe to watch for, and the role of digital and data in the new normal.
1. Acceleration of Direct-to-Consumer and E-Commerce Models
E-commerce has nearly tripled in the decade-plus since the first direct-to-consumer (D-to-C) brands like Warby Parker and Dollar Shave Club came on the scene, and COVID-19 has only accelerated these business models.
Before pursuing online D-to-C sales, major craft brew player Beavertown Brewery lost 85 percent of its business to the pandemic. Now, it has quadrupled its e-commerce staff and increased online sales 1,000 percent. Bigger, more well-known players are also finding success. Adidas announced earlier this year it aims to have 50 percent of its sales come from D-to-C by 2025, and more than triple its loyalty program membership to 500,000 over the same timeframe. Unilever also announced an upgrade to its D-to-C operation — one of its five strategic pillars for growth — which builds the channel on the back of consumer insights.
Owning the online consumer journey is one of the biggest keys to D-to-C success. To capitalize on this shift, retailers and brands must invest in building platforms with consumer 360 and digitized product information capabilities. Infusing real-time analytics to offer personalized and contextual experiences will enable them to stay relevant in consumers’ eyes.
2. Digital Stores of the Future
One study found more than half of internet users surveyed had purchased groceries online last year, and 72 percent of online shoppers prefer getting items delivered instead of picking them up. However, 92 percent of consumers miss shopping in stores. This tells us that stores and other forms of retail locations aren’t going away. Instead, they're becoming part of a seamless retail experience that's completely digitized. Amazon.com, Lacoste, RH, and Warby Parker have all done their part to push the boundaries of retail and set the bar for these new digital shopping experiences.
The stores of the future will move beyond four walls for shoppers and vendors alike, and will include contextual shopper-associate interactions, personalized in-store recommendations, dynamic pricing paradigms, seamless checkouts, contactless payments, frictionless returns, and more. Adoption of automation, real-time analytics, and artificial intelligence (AI) will drive their success.
3. Expansion of Fulfillment Paradigms
Sixty-six percent of online shoppers want items shipped for free, and some 68 percent of consumers cited fast shipping as a motivating factor in placing an online order. The consumer now expects speed at cost, putting an even larger premium on fulfilment efficiency. This is why Walmart is making major supply chain technology investments in 2021, with particular emphasis on order forecasting, transportation, and replenishment.
It's also clear that shortened delivery cycles are here to stay, with retail stores functioning more like fulfillment centers for nearby neighborhoods. Retailers and brands are investing in last-mile fulfilment and order tracking capabilities. In fact, some 74 percent of retailers plan on using real-time inventory technology in 2021 to gain that insight. Inventory visibility is more important than ever as annual revenue losses in the hundreds of billions continue to rise, retail shifts to seamless, and supply chain management gains renewed importance in the face of global disruptions.
4. Convergent and Intelligent Ecosystems
Data is foundational to all an enterprise wishes to achieve, and the first step in an organization’s data journey is to create a single source of truth (SSOT) to enable harmonious working across business functions. Intelligence follows from there.
Simplification in the ways of working, synthesis of disparate data elements, and convergence onto a common platform drive unified understanding of associated processes, streamline operations, and enable superior experiences. As brands and retailers get better at using data to become more intelligent about their market, operations and consumers, true collaboration becomes possible. For example, brands can incorporate the voice of consumers on social media to design better products. The voice of store associates and partners can help retailers perform better demand forecasting. Drawing insights from information shared between brands and retailers can facilitate effective demand-supply synchronization.
5. Focus on Trust and Safety
Retailers and brands should be more concerned with security and data privacy than ever. As data breaches create more victims, damage, and headlines, enterprise security will not only play a major role in future-proofing, but in establishing trustworthiness as well.
More than half of consumers (54 percent) surveyed by KPMG last year don’t trust companies to handle their data ethically, and 50 percent don’t trust companies to protect their data. Brands and retailers that can avoid major security breaches are more likely to sustain trust with consumers for the long haul. Enterprises can achieve truly personalized marketing if they can successfully navigate new or incoming data privacy regulations and create trust around data collection, use and sharing at every step of the consumer journey. This kind of trust demands transparency and is hard won, but also long lasting.
Focusing on these five post-pandemic shifts and developing pathways toward each will enable retailers and brands to step fully into the future with strong relationships with consumers, new revenue opportunities, and a more secure business environment — no matter what the world throws at them next.
Arun Kumar is head of product and platform engineering at Altimetrik, a business and technology transformation accelerator.
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