Publication: RIS News
By: Joe Skorupa – May 27, 2020
Retailers have a unique opportunity to shoot for the moon and re-engineer their businesses after coronavirus. Smart retailers won’t let the opportunity go to waste.
Retail is recovering after the coronavirus lockdown but it isn’t the same because a pandemic crisis is much different than other economic freefalls. Covid-19 forced booming businesses to halt in a matter of days. Non-essential workers were sent home, the general public sheltered in place, and state governments assumed regulatory control.
During the last two months, a new kind of retailing emerged and with it a new set of winners and losers. Essential retailers learned more about their supply chains in a matter of days than they had in the previous two or three decades. The same hard lessons were learned about omni-commerce, employee engagement, and the newfound ability to launch new initiatives on a daily basis.
Non-essential retailers learned hard lessons, too, especially about the necessity of operating in a contactless and digital environment.
Today, as retailers re-ignite their businesses, there is no better time for a top-to-bottom assessment of business models, organizational structures, and strategic missions.
It is an ideal time to take a hard look at who you are, what you do, and why you do it. And then take the next step – create a plan to feed everything that drives success, starve everything that drives mediocrity, fill in gaps, launch new initiatives, invest in innovation, and, yes, shoot for the moon.
Why is this important? Neiman Marcus, J. Crew and Pier 1 had their own opportunities to plan moonshots and for short-sighted reasons chose to let them pass. As Darwin has pointed out, not everyone survives, only those who are most adaptable to change.
Moonshot Recommendations
I was a guest speaker on a webinar last week that covered this topic and was joined by experts from Cisco and Theatro. We discussed overcoming big challengers that came to light in the lockdown such as friction in omni-commerce execution, scaling off-premises transactions at stores, digital transformation, contactless retailing, and flexing the enterprise to accelerate innovation and change.
Here are some of our key recommendations to shape your moonshot plans.
- Leaders will step on the gas. Amazon and grocery retailers boomed during the lockdown, but even more importantly Walmart and Target flexed the omni-commerce muscles they had built over the past few years and boomed as well. Other big winners include Home Depot, Lowe’s, Instacart and Shopify. Even Best Buy minimized what could have been massive losses by pivoting to curbside pickup. These retailers will use the coronavirus boost to invest and re-invest in omni-commerce and the supply chain to extend their marketplace dominance.
- Non-essential retailers will invest in technology and capital improvements. Typically, retailers tap cash-on-hand and profits to fund capital investment plans. Not this time. To regain their former growth trajectories, successful retailers such as Ulta Beauty, Sephora, lululemon, Nike, Tractor Supply and others will draw down profits to make major investments in technologies for order management, omnichannel services, customer analytics, store systems, human resources, labor training, and web and mobile platforms. These investments, along with upgrades to store operations (including curbside pickup, pop-up store capabilities, contactless retailing, and micro-fulfillment), will be high priorities for aggressive retailers even in an era of depressed profits.
- Omni-commerce investment will become a top priority. One of retail’s greatest mysteries has been the stubbornness of some retailers to develop online sales capabilities. These include TJX, Ross Stores, Burlington, Aldi, Lidl, Family Dollar, and Dollar General. The massive shift to online shopping during the lockdown will have long-lasting effects on consumer behavior. Store-centric retailers without strong online capabilities suffered far more during the lockdown than their omnichannel competitors. This is a lesson that will not be lost on lagging retailers as well as on other retailers who will seize this opportunity to upgrade their digital shopping capabilities.
- New technologies have become must-haves. Remember experiential retailing? This concept included technologies that were frequently called bright, shiny objects (i.e. non-essential). They included such things as digital signage, kiosks, scan-and-go, shopper tracking, mobile POS, video analytics, voice recognition, chatbots, and even in-store robots. The world has now changed and these technologies are being used to ensure shopper and employee safety.
- Digital transformation accelerates. A great cartoon recently appeared on social media that featured a question and four multiple choice answers. The question was, who is driving your digital transformation? The four answers were all C-words: Chief Executive Officer, Chief Information Officer, Chief Digital Officer, and the fourth option, also a C-word, was Covid-19. Retailer confidence has grown in gradually shifting their online commerce applications to standards-based, cloud platforms. Some have even moved parts of their ERP systems to the cloud. But store applications and platforms have lagged behind until now. In the post-Covid-19 world, the 30 to 40 essential applications that connect to the store will increasingly become cloud based. Retailers have learned their legacy applications and software suites are costly to maintain, inflexible to change, and sources of friction for both consumers and the IT department. Smart retailers will use post-pandemic investing to shift to a standards-based, API-driven architecture that is the cornerstone of a broader digital transformation plan.
A smart moonshot goal is not just a plan to drive growth. It is a plan to accelerate change. Charles Darwin famously underscored the importance of this goal when he said: “It is not the strongest of the species that survives, nor the most intelligent; it is the one most adaptable to change.”