New Retail Dimensions
When I write this, most brick and mortar retail locations we serve are closed and we, like our clients, are having to deal with a significant drop in monthly revenue and have taken necessary steps to reduce expenses and preserve cash positions. At Retailisation, we renamed ‘customer success’ to ‘customer care’ and are preparing for life beyond Corona.
What will that look like? We don’t have a crystal ball, but we already know that the retail world will have new dimensions, imposed by law or not, and we make the following assumptions:
‘Cash is king’. Capital expenditure of most companies in our industry will have ceased. A significant part – if not all cash allocated for investment – will have been spent on survival and new investments requiring capex will likely not be approved for a while. Only solutions that make a real difference to the top or bottom line – ideally both – will be considered by any business to help their cash to cash cycle. And they must be mostly self-funding, with ‘time to real value’ measured in days and weeks; not months and years. A requirement for brands and retailers if there is no cash to invest anyway.
Reduced traffic. Part of the sudden, forced shift to online buying will stay as some people (how many is a guess) may not venture outside much for a while for fear of contamination, let alone go shopping in brick and mortar retail. This will in turn require much higher conversion rates (of visitors to shoppers) than ever before. The longer that takes, the more sustainable the channel shift.
Dynamic assortments. To achieve such high productivity with less stock (capital) invested, markdowns from redundant inventory must decrease significantly and the distribution of products to any retail location, physical or virtual, must be driven by predictive analytics with only one goal: make every unit of every item count toward profitable, speedy conversion of product to cash. This takes location-specific assortments, tailored to local buying behaviour, using transactional data and any other relevant input, from local weather to social media sentiments.
Agility rules: To continuously optimise the merchandise offer and include decisions upstream from allocation and replenishment, in-season inventory management processes will need to merge with pre-seasonal planning processes into one workflow. Decisions on what to buy when and where to ship what will be fed by unified data, led by strategic direction and constrained by lead-times, pack sizes and minimum order quantities.
Home offices. It will not become the new norm quickly but working from home has become a lot more common. This will favour providers of cloud solutions that can be accessed anywhere, securely and on any device.
User Experience. Regardless of the place of work, intuitive screens, with seamless navigation between reporting and execution will be favoured, so merchants can soon be up to speed with retail performance to make good decisions quickly. Risks and opportunities are escalated automatically, and merchant actions can be executed easily – even via a mobile screen.
Platforms for flow. When retail demand finally returns, it will be fickle and start slow. For retailers to survive this ‘new normal’, each link in the supply chain to retail must learn from consumer demand all the time. And while brands don’t have to be vertical, they do have to act like they are. Platform technology will be used to help supply meet demand everywhere and all the time, regardless of the business model.
None of these shifts are new. They will now just happen at an accelerated pace.