E-commerce received a huge boost during the pandemic. Retailers adapted to the new world with online ordering and curbside pickup. Brands with clever storytelling and direct-to-consumer selling strategies capitalized on consumers’ emotional dependence appeared to fill any void left by the pandemic. Many local stores had to shut down or adapt to changing conditions by re-inventing as dark stores-stores with no front that are used as warehouses or distribution centers. Local stores implemented online point-of-sale systems to promote touchless operation-all boosting the omnichannel importance. The post-Covid landscape provides 3 major opportunities to embrace digital transformation:
Emergence of the Endless Aisle
The pandemic transformed retail stores, taking on a new role with the “ship-from-store”and “ship to-store”trends. For example, Best Buy started piloting a ship-from-store model with 250 stores being remodeled as hubs. According to UPS, “ship-from-store” and “ship-to-store” are here to stay. UPS says “this fulfillment model reflects the growing convergence of e-commerce with brick-and-mortar stores”. Retailers are embracing this trend, promoting what’s called “endless aisle”-a seamless shopping experience that helps you to start the journey online and complete in-store or vice-versa and keep the shopping loop going on endlessly. Endless aisle also combats the “empty shelf” problem, allowing the customer to order directly from the aisle using kiosks, tablets, and mobile devices. For many retailers, the pandemic was the tipping point to adopt digital transformation focused on data driven strategies to efficiently implement the endless aisle concept.
AI Goes Mainstream
Online retailers have been employing micro targeting by virtue of tracking browsing behavior and purchase history. The omnichannel shift brings micro-targeting to traditional retail space at a more heightened level of detail, aided by disruptive technologies. For example, car salesmen start tracking you before you set foot in the showroom. They already know what car you drove in, who you came in with and what you are wearing. For the car salesman, the prediction models are kicking in high gear the moment you pull into their parking lot.
Data privacy remains a top concern. Brands, especially ones with a global footprint, are embracing “privacy first” and “privacy by default” strategies -another digital transformation lane that promotes transparency and enhanced privacy for consumer data. Data-driven insights combining traffic analysis from in-store IoT systems and e-commerce provide a leading indicator of purchase trends. Predictive analytics from captured insights drive inventory and business efficiencies better than ever. AI has gone from hype to mainstream in retail. Digital transformation, emboldened by artificial Intelligence is helping retailers to stay competitive, as was evident during Covid-19.
Co-opetition -Frenemies Unite.
Even with clear financial benefits, co-opetition was tough to pull off because of mistrust and integration issues when sharing data between disparate systems. Loyalty programs are in the frontline of co-opetition strategies. Blockchain, combined with big data strategies, can now create a loyalty program that retailers can seamlessly share while analyzing the trade-offs. With blockchain, loyalty sharing is now achievable in retail space with simple sign-on programs.Direct-to-consumer brands filled a space that was left void when many local shops shuttered. With the consumer abandoning computer screens and moving back to street buying, direct-to-consumer brands are finding partnerships with local stores to continue their success story.
The post-Covid-19 world is shaping up for an explosion of digital transformation in retail. After the dot-com bubble and age of Amazon, it took a pandemic to pave the way for a customer-centric paradigm shift that addresses the shortcomings in online retail. Companies that made the pandemic crisis a catalyst to embrace digital transformation are driving this change at lightspeed. To be successful adopters and standard bearers, retail organizations should commit from the chief executive level to embrace this paradigm shift.