SHIFT HAPPENS: Retail Executives Share Post COVID-19 Insights
We asked top retail executives and industry thought leaders to share their expert insights on the state of retail as stores re-open post COVID-19. You’ll hear from:
Alex Genov, Head of Customer Research at Zappos
John Boline, VP of Store Design at Starbucks
Jason McNary, CEO – Americas of UNOde50
Dan Goldman, Global Head of Strategy at The North Face
Liz Alessi, VP of Sourcing at Coach
Eric Toda, Former Head of Marketing and Co-Founder at Hill City (GAP Inc.)
Annemarie Dillard Jazic, VP of Online Experience and Digital Marketing at Dillard’s
Phillip Raub, Founder of b8ta
Alex Genov: One of the most obvious and dramatic changes has to do with the closing of physical stores and the shift of behavior of consumers more toward online shopping.
John Boline: The consumer has always evolved quite quickly but with COVID-19, the rate of change has gone warp speed with distancing and safety protocol.
Our customers’ demand for channels of contactless, drive through, mobile order, curbside, and walk-up has accelerated the need to more rapidly innovate in real-time. These channels, most of which were peripheral, are now front and center to the vitality of serving our customers and keeping our employees safe.
We expect to see big advancements in customer adaptation of mobile order technology and contactless payment as their preferred way forward. How we differentiate in our unique connection to our customers (digitally and in-person at distance) will be the success factor that sets us apart and onward toward the new horizon.
Our customers’ demand for channels of contactless, drive through, mobile order, curbside, and walk-up has accelerated the need to more rapidly innovate in real-time — John Boline, VP of Store Design at Starbucks
Jason McNary: The most dramatic change has been a shift from being reliant on brick and mortar to drive demand to now the focus and reliance being on digital, as well as how the “new normal” is shifting how mindful consumers are when making purchases and their psychology on the shopping experience.
Brands are more than ever forced to innovate their in-store experience to new and different personalized offerings and their communication to get traffic into stores.
Dan Goldman: COVID-19 fundamentally transformed consumer behavior in the matter of days unlike anything we’ve likely seen since World War II. Over the last several decades, the majority of discretionary spending growth was driven by consumers trying to satisfy their higher-order emotional needs (think Maslow’s hierarchy of needs). But in a blink of an eye, the necessity to fulfill needs defined by self-actualization, esteem, and belonging evaporated, even for many in the middle- and upper classes, as consumers focused on more immediate physiological and safety needs. Despite stay at home restrictions starting to lift, it’s difficult to imagine a rapid reversion given high unemployment, economic uncertainty, and unknown rate of future infections. For the foreseeable future, highly mindful consumerism and a shift away from conspicuous consumption are the new normal.
Annemarie Dillard Jazic: The world of retail has never moved so rapidly. Clearly, the most dramatic change through this pandemic has been the speed at which companies have been able to roll out new processes and technologies that otherwise would have taken many months to implement. We saw in Texas companies that had no curbside delivery option roll out this service within a matter of days in response to their governor’s announcement that it would be a route to reopen retail stores amid the outbreak. Additionally, merchants have reacted in partnership with vendors to embrace viewing new offerings exclusively via video conferencing versus in-person appointments.
Customers are now relying more heavily on virtual selling opportunities to communicate with associates. Augmented reality is rapidly being adopted by retailers hoping to translate traditional in-store experiences like makeup try-ons to a contactless world. POS systems are being updated to accept new payment options. Physical stores are re-opening with an extensive laundry list of new safety measures.
The list of quick reactions necessitated by the Coronavirus presents immense challenges to retailers, but those that survive will likely be at least five years into the future from what their rollout plans were pre-crisis and in a way, it is exciting and energizing to experience the future evolve so rapidly before our eyes.
Phillip Raub: The rate of which companies have adopted new technology and embraced change. It was never a matter of whether or not a company (and leadership) could, but if they wanted to make dramatic changes.
Alex Genov: Innovations in retail stores that ensure a safer and more healthy physical shopping experience.
A more integrated and customer-centric blend of in-store and online shopping. A continuation and acceleration of slow fashion, focus on sustainability, and “purpose over profit” retail movements.
Dan Goldman: There is no doubt COVID-19 has fundamentally change the consumer journey. To adapt, retailers need to understand the role their physical stores versus e-commerce plays in this new world and innovate in order to remove as many friction points as possible so they can best meet their consumers’ needs. Some of these innovations may be as simple as optimizing store layout and rolling out new sales associate processes, while others may be digitizing a larger part of the store experience so consumers can complete their journey without ever stepping a foot into a physical store.
Jason McNary: Trends to recover retail post-COVID-19 will include reaching a larger online audience and growing an online presence. As well as virtual appointments, live talks, influencer engagement, and a genuine point of view around giving back.
Fashion will shift from being a vain profession to a humanitarian profession — Jason McNary, CEO Americas of UNOde50
(Editor’s note: Many luxury brands including LVMH, Gucci and, for example, Christian Siriano as shown below, have stepped in to support the global fight against COVID-19.)
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“70% of retailers believe that at least 40% of shoppers who moved from in-store to online will stay online.”
“79% of retailers expect consumers to wear masks and 68% expect them to continue using e-commerce as their primary channel, even if more adopt curbside pick-up and virtual clienteling.”
Phillip Raub: Without a question online shopping has accelerated and will continue to outpace in-store sales growth. However, e-commerce isn’t without its own challenges (e.g. lower margins, strained supply chain, and high rate of returns). For most consumers, e-commerce is their only option, but once people head back to work, the process of receiving and returning goods will once again be an obstacle for many consumers.
Dan Goldman: COVID-19 has fundamentally changed the consumer journey and led to an acceleration of e-commerce. Retailers need to quickly react to this new paradigm in order to meet their consumer expectations and preferences by investing in digital commerce and evolving the store experience to win. Curbside pick-up and virtual clienteling may work for some retailers, but not all. The key is determining what role your store needs to play in the consumer journey and innovating to remove as many friction points as possible.
Retailers need to quickly react to this new paradigm in order to meet their consumer expectations and preferences by investing in digital commerce and evolving the store experience to win — Dan Goldman, Global Head of Strategy at The North Face
Liz Alessi: This is indeed an interesting and unexpected experience for all of us. The best-laid plans… If it is any solace for us, no one knows the right answer or the best direction to go no matter what level of fashion you are participating in. There are too many unknowns and questions, but the momentum of company profitability is propelling us to taking chances. Financial liquidity is coming to the fore and sexy branding is losing power. One of my mentors once said, “You haven’t truly managed until you sweat payroll.” I think today, that’s where we are.
Product segmentation is another big question. With less revenue and resources, what will drive sales in a COVID-19 world which resonates with the customer now? In a product development timeframe of one year, how can we be more flexible in responding to demand with a global supply chain?
Most of the answers to the below questions have been answered already in consultants’ reports.
- The accessories business, more resilient than other products, will return but will be smaller than pre-virus by 30-40% for the foreseeable future.
- Online sales will be stronger and potentially 30% of brands’ total sales.
- Stand-alone and wholesale revenue will not return to pre-virus numbers any time soon.
- Customer experience needs to be taken to a whole new level – real-time feedback and cultivating brand loyalty through personalization.
- Sustainability through longevity of product, biodegradability, and recyclability—connecting to what she wants to pay for now.
We don’t always land where we envisioned but we are all in this together.
Financial liquidity is coming to the fore and sexy branding is losing power — Liz Alessi, VP of Sourcing at Coach
Eric Toda: I think the majority of retail companies are finally coming to terms that they didn’t evolve quick enough; they didn’t invest in digital infrastructure, e-commerce or even workplace solutions, use social media as their primary form of marketing (like DTC brands), and built an engine powered by data.
They continued to put off these necessary evolutionary changes in an effort to protect their status quo, because nothing was forcing them to change. They’re now left with underfunded digital teams, and a social team that has to hit above their weight because they’ve never answered to the highest levers. Within the past few weeks more job openings for heads of social were posted; normally these companies require 8-10 years of experience, but many now require 10-15 years of experience – executive-level experience.
In short, I believe the reliance to provide more immersive digital retail experiences will be a growing trend in the next year; how can the brand merchandise its brand storytelling as it does with its product so it can stand out? This will be done through social, through the website, and likely even over video conferencing. ♦