The COVID-19 pandemic has forced many business processes to go virtual and has drastically transformed consumer demands and behaviors. These disruptions have exposed retailers to new vulnerabilities and the impact they can have on their overall success moving forward. Retail companies spent 2020 and a considerable amount of this year either putting out fires in response to increased demand or taking the necessary (but often costly) measures to deploy new services to retain and acquire customers. The organizations that have risen to the challenge have done so by covering ‘a decade in days’ in terms of adopting and ramping up new digital solutions – and they’ve been rewarded with immense growth.
According to IBM’s 2020 U.S. Retail Index report, the pandemic has accelerated the shift to digital shopping by roughly five years. Retail survival is dependent on making smarter decisions with the resources and data you have right now.
As a result of these factors, companies are being forced to consider change. Digital transformation is the key to moving forward, and some retailers are beginning to partner with businesses that offer AI and machine learning capabilities in order to accelerate innovation. So as businesses are still feeling the impacts of the pandemic, and we brace for the unknowns of a fourth surge, it’s imperative that retailers get smarter with the data they have and start streamlining processes and systems to help employees make better informed decisions in the moment.
Here are a few areas we are seeing leading retailers focus on when it comes to leveraging their data to better run their business:
With shortages impacting supply chains and consumer demands quickly changing, being able to keep track of inventory is imperative for retail organizations. The problem lies in the fact that retailers rarely have a clear picture of a specific product’s journey from production to the distributor, to the store, to the hands of the consumer. When things go wrong, in most cases it’s these same retailers who are then held accountable for missing inventory when they may not have had the inventory in their store to begin with – whether as a result of miscounting from a supplier or it went missing during delivery. The answer to the problem is better, smarter inventory intelligence.
Without inventory intelligence, retailers must have excess inventory on hand to meet customer demand. As BOPIS (buy online pickup in store) has become table stakes in the last year, the amount of redundant inventory has only increased. Having proper inventory intelligence can reduce holding costs while supporting an accurate omni-channel fulfillment. Macy’s has seen huge success through their “Pick to the Last Unit” program, and having confidence in their inventory data.
A record number of people left the retail industry in the past year — 649,000 employees quit this April alone. That's the largest exodus seen in a single month in more than twenty years.
In light of this labor shortage, retail businesses need to get more out of who they have. And many employees base their decision to leave the industry on lack of growth and flexibility in their role. To address this, companies need to work to provide better insights and tools to employees, to empower them to make decisions in the moment and improve interactions with consumers.
Quick adoption of in-store tools for employees can act as a jumpstart for this process, as successful adoption often leads to workers feeling more accomplished and valued in their roles — while improving store productivity.
With the strain the pandemic put on the retail industry, initially, substitutions were rampant and replenishment was slow and disjointed. Companies that have largely ironed out these issues have done so by making critical investments and advancements in their supply chain management.
Bed Bath & Beyond Inc. is slated to open two new regional distribution centers as part of a larger $250 million investment in supply chain transformation as they pivot towards a modernized distribution system in direct response to the market. With the two new regional hubs, the retailer intends to reduce product replenishment times from their current 35 days to less than 10.
With these advancements, the retailer has real-time visibility into the supply chain, from raw input to sale of the product. They can be alerted to potential demand shortages and forecast product replenishment to improve in-stock positions and speed to market. Developing this interconnectivity between a CPG manufacturer and supplier allows business to gain a better understanding of the issues at hand and increase productivity when they are addressed. But all of this can only happen with a comprehensive data management strategy.
At the outset of the pandemic, there were a lot of challenges around omnichannel, BOPIS, and curbside orders that have largely been fixed. Retailers are now putting more focus into their omnichannel technology, and the ones who have mastered it are now leveraging it further. With the help of its omnichannel services, Walmart's revenue for the year rose 6.7% to $559.2 billion, with e-commerce up 79%. Instead of gatekeeping the technology, Walmart will soon offer its omnichannel technology to thousands of small and mid-sized businesses starting in 2022.
But for others, some questions still need to be answered to address the new ways things work.
For one, BOPIS may not be the best solution for every retailer. Companies need to ensure they have the proper inventory intelligence in place to navigate the issues of increases to redundant inventory that BOPIS can cause. Additionally, they should be making a concerted effort to gather customer data to further tailor all shopping experiences to them to further support omni-channel fulfillment.
Once companies have the necessary data and understand how consumer behavior has changed, there are a plethora of new questions retailers are seeking to answer in an effort to nail down the best shopping experience that suits their customers. What if a company were to offer WIFI in order to gather customer data and monitor in-store product browsing to provide better price matching on the products being reviewed and a better overall shopping experience? If the consumer no longer has an in-store experience, what will be the “free cookie” to set your business apart?
What if they considered alternatives to BOPIS like Research Online, Purchase Offline (ROPO) or Browse In-Store, on Mobile, Buy Online (BIMBO)? More on those here. While BOPIS is the most widely adopted digital engagement option according to an Alliance Data study, ideas like these are gaining traction as a result of changes in consumer behavior. BIMBO, for example, is popular with online-only, direct-to-consumer brands like Casper, who often run pop-ups that cater to this shopping style.
Surfacing valuable data and empowering frontline teams are true competitive advantages within the retail industry. But a retailer's challenge often isn't that they lack the right data, it's leveraging that data across the entire retail value chain from supplier to shelf. Data transformation across each supply chain touchpoint will take investment, but it will continue to make or break a retailer’s success. Empowering employees, lowering costs, and creating more transparent, effective retail operations are all things retailers need to consider in the coming year.
Need help getting started? Our teams have worked with retailers like Walmart, H-E-B, Zappos, and Tyson to get insights into the hands of their employees, faster. Learn More.