The retail industry was massively disrupted with the onset of the COVID-19 pandemic in 2020. Stores were shuttered and consumers had no choice but to make online purchases for items deemed non-essential. For primarily store-based retailers, this seismic shift was a major reality check, and in the most extreme cases, led to permanent closures and bankruptcies.
As we look to 2021, we will see a continued acceleration of online shopping, which will result in retailers having to embrace digital initiatives at scale. The retailers that will win in the new year are those that focus on developing a differentiated omnichannel experience and reimagine the store experience. They will be powered by a self-learning digital ecosystem and algorithmic supply chains, while leveraging data and insights to drive decisions. Retailers will need to evolve into platform companies by building a value-enhancing ecosystem of products and services to strengthen customer loyalty.
In 2021, building robust digital shopping experiences will be paramount as shopping transaction volume continues to shift to online channels. Retailers will have to rationalize their store footprint, create more dark stores that serve as pure fulfillment channels, and reimagine stores as digitally enabled to provide for true omnichannel experiences. The profitability of online channels will be critical, and retailers will have to drive a sustained improvement of financials in these channels.
Data at the Center
To drive higher profitability in the new year, retailers must aim to monetize their data assets by investing in sophisticated customer data platforms (CDPs), data platforms, and in-house ad platforms, which will provide a new profitable revenue stream. Retailers will need to break down data silos across the enterprise and democratize access to data to allow for business leaders to make data-driven decisions that enhance business performance. The top impacted areas will include marketing, merchandising, supply chain and store operations.
Retail Digital Ecosystem Modernization
Retailers must integrate their e-commerce, supply chain, data hubs (customer, product and orders), machine learning repository, and in-store technology into a unified, self-learning ecosystem that constantly optimizes and curates personalized experiences based on customer and operational data insights. This will be the backbone of retailers’ transformation in this new age of retail.
Digital Enablement of Stores Goes From Important to Existential
The store of the future will heavily rely on technology — from outdoor displays showing next pick-up times to dedicated BOPIS lines and self-checkout using mobile-based scan-and-go apps. In-store technology like point of sale (POS) will have to evolve quickly, with more checkouts being omni-functional (working both with a cashier but also self-checkout) and more stores adopting flexible digital solutions, such as enabling sale of products and services by leveraging shoppers’ personal devices in-store. Retailers will have to turn to digital technologies to ensure they're providing safe, frictionless experiences in-store. Contactless returns, curbside pickup, seamless checkout, store appointment scheduling, and more will all be key solutions for retailers to consider to be competitive in 2021.
Algorithmic Supply Chain
The shift to digital will continue to pressure test supply chains and challenge retailers’ ability to keep up with consumer demands and expectations while enhancing profitability. In 2021, retailers will need to focus on creating high-performing supply chains that are measurable, connected, agile, pre-emptive and continually optimizing, while leveraging data as an asset. Key focus areas will include demand planning, inventory visibility and optimization across the ecosystem, supply predictability, fulfillment optimization, store operations optimization (e.g., picking, dynamic slots, workforce planning), returns optimization, among others.
Retailers as Platforms
Retailers, especially specialty retailers, will need to focus on creating value-enhancing differentiated ecosystems which will drive customers' perception of value and increase loyalty. The ecosystems should include an evolving list of digital products and services, and must supply daily inspiration, utility, convenience, and increase the share of wallet, which will drive lock in effect. One recent example is Walgreens reinventing the United States’ largest health and wellbeing-centered loyalty program with myWalgreens, which enabled members to stay well, shop conveniently, and save money and time seamlessly across all channels.
2021 will reveal the clear long-term winners that can compete with the retail behemoths like Walmart and Amazon.com. These winners will have one thing in common — they have all used the pandemic as an opportunity to transform themselves rapidly, leveraging digital as a key enabler in service of their customers.
Sudip Mazumder is head of retail, North America at digital consultancy Publicis Sapient.
Sudip Mazumder is Head of Retail, North America at digital consultancy Publicis Sapient.
Sudip leads the Publicis Sapient’s Retail business in North America. He advises clients on growth and go-to-market strategies, consumer experience and commercial effectiveness programs in the digital business transformation space.
For over two decades at Publicis Sapient, Sudip has delivered multi-million-dollar digital transformation engagements for multiple Fortune 500 clients. For these clients, Sudip helped in developing and employing agility-at-scale techniques to improve productivity, quality, morale and time-to-market.
Sudip holds a degree in Mechanical Engineering from Indian Institute of Technology Kanpur and an MBA in General Management from Chicago Booth.