It seems like we’ve been talking about reimagining retail for at least a decade. It’s always tough to imagine what the future will look like. Case in point: could we have ever imagined where we are now?
Even if you could accurately imagine the future, it’s tough to tear up a playbook that’s more or less working and take a risk on something new. And so, we’ve continued along, hedging our bets, dipping our toes in the water and making incremental changes–until COVID tore up the playbook.
Since COVID, retailers have made dramatic changes faster than anyone could have imagined. McKinsey estimates that in three months’ time, the pandemic accelerated consumer adoption of e-commerce to a level not expected to be seen until about 2030. Almost every brand now offers contactless transactions, curbside pick-up, and delivery services. Each of these have become table stakes[A1] . In addition, there’s a lot of creativity bubbling up such as window displays shoppable by QR code; sales associates broadcasting from inside stores or virtual showrooms, and supermarkets adding augmented reality (AR) to shelf displays.
We don’t know yet which innovations will prove to be profitable and sustainable, because we don’t know what the world will look like and what customers will want when the pandemic is over. Which behaviors will stick? What further changes might we see?
How can we reimagine retail when so much about the future is still unknown? The answer: by asking more questions and using more data. As Brian Solis writes in CIO, retailers must develop a culture of cross-functional, real-time data and analytics so that we can stay in lockstep with evolving customer behaviors, preferences and expectations; respond quickly to changing conditions; and do rapid fire testing and learning. This requires new tools, and a new approach.
Reimagine your dashboard
Now that the playbook has been torn up, maybe it’s time to tear up our dashboards too. I think companies get stuck in a routine where they look at the same dashboard week after week, month after month. They add a metric, delete a metric, add a metric, delete a metric. Everything is green. Everything looks good, and sometimes underneath it’s really not.
Now, when so much of your historical data is no longer relevant, is the perfect time to forget about what you’ve done before and focus on the data you need to drive growth and profitability now. Gather your cross-functional teams, and dig in.
There are so many questions about how shoppers are behaving and what they’re experiencing now. Where is the customer shopping? When are they shopping? What’s the frequency? What is the delta between your promised and actual delivery times? Why have they lapsed? Have they become repeat customers? What products are they returning and why? Are they searching for product not in your assortment or not in stock?
Figure out what those burning questions are for your business. And then ask yourself, “Do we have the data and insights readily available to answer those questions and make decisions?” If not, it may be time to overhaul your dashboard, making sure to include exception reporting on all your key metrics. Companies have their standard dashboards, but there’s so much data and metrics to sort through, and exception reporting can show you where you need to respond immediately.
Here’s a good example. After COVID hit, a client noticed their women’s business picked up significantly. We’ve since heard this from a number of retailers. Who would have guessed that? We’re not totally sure why, but that is still actionable information. You can adjust your marketing to support additional initiatives to connect with that customer segment, to try to increase basket or frequency of purchases, with the ultimate goal of retaining this customer into the future.
Another example: bike sales. When everybody started working from home, obviously home office was big. What few saw coming was that as gyms closed and people were spending more time in their neighborhood they wanted bikes, and they completely sold out in many places.
To be able to find exceptions in the data and uncover the unexpected spurs new thinking and is part of how you reimagine.
Use outside data
Using outside data sources also fuels reimagining. To me, it’s just as important as using internal data. Your internal data shows you how customer shopping behavior is changing. External data—industry, demographic, weather, gas prices, and COVID data–can show you what’s driving these changes, so you can get out ahead of them.
For example, when COVID first hit New York hard, business completely stopped. People weren’t shopping at all. To continue to message product offers to those customers during that trying time was probably not a good idea. Adjusting your messaging, product offers, even pricing, by market or location, allows you to more effectively connect with your customers based on what is happening in their communities and lives. COVID is just one example of data that retailers can use to more effectively connect with customers at the right time. Or take the recent wildfires in California. That would have been a good time to promote air purifiers, and drop ads for your new activewear line in violet haze.
Location data is important, even as we shift more to online. Weather has an impact on what people buy, whether in apparel or hard goods. Here’s a good example: outerwear in Florida vs. the Midwest. When the temperature in FL drops below 50 degrees the cold weather outerwear business takes off because people think it’s freezing cold. In the Midwest, if it’s 50 degrees, they might still be buying shorts. Every single market or location reacts differently to different conditions.
Gasoline price data is increasingly important. There’s a direct correlation between outdoor activities and gas prices, and between demographic data and sensitivity to gas prices. If you align your demographic data, gas price data and sports activities, there are some interesting correlations that can guide sporting goods inventory decisions. But gas prices have even broader impact, because they impact delivery costs, and that is something every retailer has to pay much more attention to now.
The only constant is change
I’ve been in retail for 25 years and I’ve seen a lot of change, but nothing like what we’ve experienced in 2020. As painful as it’s been, it’s also opened up the opportunity to fast track that reimagination of retail we’ve been talking about for so long.
If we knew for certain what the future would bring, it would be a lot easier, but then it wouldn’t really be imagining, would it? What we can do is forget for a while about what we’ve done in the past and imagine what you would do if you had to start your company from scratch right now. What questions would you need answered to drive customer success, sales success, and profitability? Do you have the right data and the right tools to be able to answer those questions at the pace of change today? Imagine what you could do if you did.
Originally posted by Incorta