Pandemic Drives Digital Transformation in Retail
The COVID-19 pandemic has sent shockwaves through our world as we know it, changing just about every facet of how business is done. One area that was immediately hit due to stay-at-home orders was the retail industry. Revenue in clothing stores was down 78 percent in April, leading J.C. Penney, Neiman Marcus, and J.Crew to file for bankruptcy. May retail sales showed a positive uptick, but the long-term COVID impacts are still highly uncertain.
With shutdowns occurring, much of the retail business rapidly moved online. Those companies with scalable digital capabilities and infrastructures adjusted relatively well, while those without them were left scrambling to not just figure out immediate actions, but also to figure out their online and digital commerce strategies in the post-COVID world. Even with the country opening up, it's unclear how much demand there will be for brick-and-mortar retail. COVID has accelerated the move to e-commerce, which will continue to take a much larger share of consumer dollars on an ongoing basis.
Organizations are taking stock of the channels needed to conduct digital commerce. This not only includes websites’ e-commerce capabilities, but also sales through partnership channels, social platforms to engage and inform customers, chatbots to help when customers get stymied, and digital coupons to replace the paper coupons no one wants to handle. Retailers that lacked a strong social media presence before the pandemic are playing catch-up. They lack the data and expertise to know how to identify, segment, target and intercept consumers on digital platforms.
Reacting Quickly is Now a Survival Skill
Going primarily online so rapidly and unexpectedly has stressed a lot of businesses’ capabilities, both technically and logistically. Companies now realize they lack the scalability and agility to respond quickly enough to today’s ever-changing environment and consumer demands.
A retail organization's ability to react quickly to changes in consumer behavior has become a key survival skill. Regardless of how good their business contingency plans were, once the pandemic hit, many retailers found they were in a difficult spot and simply couldn’t move at the pace their customers needed them to.
Executives and boards still face the key questions: Can you fulfill orders on a timely basis? How much of your business process requires human interaction? Are there ways to rework what you do so that the customer experience is contactless? How do you make the consumer have a positive experience with your brand?
The Way Forward
Even consumers who are laggards in the adoption curve have been forced to change their behaviors in the COVID era, and many of these changes are likely to stick due to the transactional convenience and ease. Past economic downturns have taught us that the world never goes back to exactly the way it was before, and this time will be no exception.
Retailers must be prepared to meet customers in the ways they want to be met, whether that be online, in person, curbside, or some combination. Utilizing data to gain customer insights — through segmenting and targeting — and providing the most seamless customer experience are the main areas where retailers have to differentiate themselves from the competition. The days of the organization owning the customer journey from beginning to end are no longer. Retailers have to be prepared for a consumer to:
- have their interest sparked by customer segment social influencers and channels;
- look for relevant details about the product based on their beliefs and behaviors; and
- transact on the platform of their choice.
For undifferentiated areas (e.g., shipping, payment, etc.), companies need to look at parity, rather than proprietary. Exploring partnerships and integration with third-party providers (e.g., Amazon Fulfillment, PayPal, etc.) will satisfy customer needs, reduce complexity and customization, and enable rapid scalability — all while strengthening brand image.
If they haven't done so previously, most retailers have been forced to move at least part of their business online. Retail companies need to move quickly to respond to the challenges and opportunities in the post-COVID world to meet rapidly evolving customer expectations. Using data insights, scalable architectures, and integrated solutions that meet consumers where they want to transact, retailers can be prepared for what comes next.
Ryan Talbott is chief transformation officer, business unit head, U.S. Central and Europe at Altimetrik, a leading digital transformation and IT consulting company.
Ryan Talbott is Chief Transformation Officer, Business Unit Head U.S. Central and Europe at Altimetrik, a leading digital transformation and IT consulting company.
In his role as CTO at Altimetrik, Ryan is responsible for driving business and technology transformation at clients using digital solutions and data in order to drive their business outcomes. Over the course of his career, he has built a track record of developing business and IT strategies, leading high-performance teams, and managing change in large, complex global organizations. Prior to joining Altimetrik, Talbott served in various executive and technology leadership roles at Fiat Chrysler Automobiles and Accenture.
Ryan holds a bachelor's degree in Business Administration from the University of Illinois and an MBA from Michigan State University.