Shoppers Return to Stores: How Can Retailers Capitalize on Pent Up Demand?

It’s no surprise that COVID-19 hit the apparel industry especially hard. An industry where purchase decisions are heavily influenced by the try-before-you-buy trend, apparel retailers were unable to welcome customers to their stores and into their fitting rooms for nearly three months.

However, with stores beginning to reopen in many regions, apparel and department stores are seeing some serious gains. Sales at clothing stores alone rose 188 percent from the prior month, according to the Commerce Department's report from May. While this is a positive sign, sales from clothing and department stores are still down year-over-year by 63 percent and 26 percent, respectively.

As apparel retailers continue to find their footing in this new reality, and with a possible second wave of the COVID-19 pandemic on the horizon, they'll need to properly address shifts in demand. With consumers able to potentially shop in stores, their purchase preferences may have shifted due to the new reality. Some may not feel comfortable shopping in-store, and prefer to use curbside services exclusively. Others may not be ready to leave the house and continue to rely on e-commerce ship-to-home services.

As retailers continue to think about their strategies for the remainder of 2020 and look toward the holidays, here are three ways retailers are putting themselves in the best position to capitalize on pent up demand:

Gain Visibility Into 'Saleable' Inventory

As an extra safety precaution, retailers are quarantining returns for up to 72 hours. This creates several operational challenges because they need to change tasking in stores to rotate and manage their returns by time frame.

Many retailers have exposed inventory visibility across channels through their e-commerce presence and need to figure out how to systematically block returns inventory from appearing available for cross-channel fulfillment. With e-commerce booming and cross-channel fulfillment gaining traction, the challenge will be ensuring inventory is truly available for sale.

Returns account for a large amount of online sales, so those with true visibility into their "salable" inventory are in a better position to take advantage of the e-commerce boom.

Operationalize Final-Mile Capabilities

Middle-of-the-mall retailers are combating several other concerns, including nonmature omnichannel capabilities and, most of all, little or no access to operationalize the latest trend of curbside pickup.

Stores that have external curbside pickup options will perform better than ones that have no externally facing real estate. However, this is a double-edged sword for department stores because they have so many external doors and will need to inform customers where to pick up products.

Apparel retailers that turn toward showrooms with robust multichannel fulfillment will be able to better serve their customers. Additionally, those who invest early in final-mile capabilities, like grocery stores and restaurants did with Instacart and DoorDash, will garner market share as well.

Customers still want products, and they want them in a frictionless way that keeps them safe. Delivering exceptional final-mile experiences is one way to do this.

Move Product Fulfillment Closer to Customers

Lastly, top retailers are moving e-commerce product fulfillment closer to their customers to cut down on shipping times.

If retailers can’t fulfill an online order in a timely manner or a product is out of stock, the consumer will find a way to get it somewhere else. In fact, according to a recent survey from Blue Yonder, consumers have very little loyalty when shopping in the new COVID-19 reality. According to the survey, three-quarters of consumers were more likely to buy the same product from a different retailer if their desired product was out of stock. To keep up with Amazon.com and the general shift toward e-commerce due to COVID-19, moving fulfillment closer to consumers means they have more readily available assortment and inventory choices.

The advent of artificial intelligence (AI) and machine learning (ML) is also helping retailers better forecast demand of products based on outside factors (e.g., weather, social media trends) to predict sales at extremely granular levels. These tools are agile and able to quickly adjust to shifts in consumer demand, ultimately helping retailers position the optimal amount of inventory near consumers for timely fulfillment.

Fail Fast and Recover Quickly

Optimizing inventory visibility, operationalizing final-mile capabilities, and moving fulfillment closer to the consumer are just a few ways top apparel retailers and department stores are handling the post-COVID-19 world. As these businesses continue to adapt to the new reality, “fail fast and recover quickly” will be the new deployment methodology. Ultimately, those that prioritize agile solutions — powered by AI and ML — will be in the best position to weather the storm.

JoAnn Martin is vice president of industry strategy and market development at Blue Yonder, which empowers world-leading companies through a seamless end-to-end commerce experience enabled through AI and ML, providing companies the ability to predict, plan and fulfill demand through a modern, responsive and synchronized supply chain.