Strategies for the new consumer behavior pattern in a post-COVID-19 shopping environment.
Retailers are facing a rapidly evolving marketplace shaped by the COVID-19 pandemic and changing consumer behaviours. To thrive in this new environment, the Retail Industry Leaders Association (RILA) and McKinsey have outlined seven imperatives for retailers to follow.
- Embrace Digital and Omnichannel: Retailers must accelerate their digital transformation to meet customers wherever they are, seamlessly integrating online and offline channels. This shift has been evident in the actions of big names like Walmart, Target, and Best Buy, who started preparing for the digital shift years ago.
- Reimagine the Store Experience: Physical stores are being transformed to serve multiple roles, such as fulfillment centers, experience hubs, and convenient pick-up points. Walmart, for instance, is using inventory within stores to fulfill online orders, limiting markdowns. Curbside pickup has also become a prominent option for low-contact fulfillment.
- Optimize Supply Chains: Retailers need to increase their supply chain resilience and flexibility to respond quickly to demand and disruptions. This is crucial in a time when consumer behaviour can change rapidly.
- Focus on Health and Safety: Maintaining and communicating strong health, safety, and cleanliness standards is essential to build customer trust. Retailers have focused on safety measures due to COVID-19.
- Enhance Customer Engagement and Personalization: Data and analytics can be used to provide personalized experiences and targeted marketing. Gen Z consumers are willing to pay more for products that support their values, indicating a growing demand for personalized offerings.
- Drive Sustainability and Social Responsibility: Integrating sustainable practices and demonstrating social responsibility as core business values is increasingly important. Social issues came to the fore in a major way during 2020, according to RILA President Brian Dodge.
- Invest in Workforce and Culture: Developing workforce capabilities and fostering an agile, inclusive corporate culture is essential to support ongoing change. Retailers should be aware of the risks associated with on-demand labor and gig models, advises the RILA report.
These imperatives underscore the need for retailers to be agile, customer-centric, and digitally savvy to thrive post-pandemic. The sales shift to digital could help retailers solve capital conundrums, as many consumers began shopping online during the pandemic. Executives expect post-pandemic e-commerce penetration to significantly increase to 25% to 40% of sales across categories.
The Retail Industry Leaders Association and McKinsey's report also identifies growth areas: workforce, productivity, costs, and the role in an integrated, data-collecting set of services. Retailers that embrace these imperatives are well-positioned to navigate the evolving retail landscape and succeed in the post-pandemic world.
- Beyond traditional brick-and-mortar stores, retailers are leveraging technology to create AI-powered customer service agents, aiming to provide a more personalized shopping experience.
- As consumer interest in ethical purchasing grows, fashion retailers are partnering with labor organizations to ensure fair labor practices throughout their supply chains.
- The pandemic has accelerated the trend of online commerce, prompting governments to reevaluate trade policies to adapt to this new reality.
- On TV, we've seen a surge in content centered around sustainability and the environment, reflecting the increased public concern and demand for climate-friendly practices.
- In the sports world, professional leagues have used technology to simulate games during restrictions, creating a unique blend of traditional competition with digital innovation.
- Looking ahead, policy makers should prioritize measures that promote economic recovery while also addressing ongoing issues like health disparities exposed by the pandemic.
- Culturally, we're witnessing a shift towards valuing local businesses, as consumers increasingly appreciate the benefits of shopping from independent sellers and fostering community ties.
