Supply chain bottlenecks caused by inclement weather, accidents and work stoppages for example, are to be expected in the normal course of importing goods. However, this time it's different due to the pandemic and importers who do not have the necessary clout with the shipping lines/forwarders will find themselves without stock to sell. The way forward is to diversify the base of manufacturing from a single country to multiple countries in different parts of the world, sourcing locally and ordering early to ensure stock arrives on time. Unfortunately, this solution is not simple but will be critical to ensuring business continuity in the face of future disruptions to the supply chain.
Once people feel safe to go out again (through vaccinations, herd immunity, etc.) we will likely see a huge surge in mall and store traffic. This will be due to pent up demand and need for experiences. Eventually when things get back to normal, this will subside and unless malls and stores offer something new and exciting to shoppers, store traffic will continue to decline.
With the price of retail real-estate down and the cost of shipping surging, now is a great time for DTCs to build their physical footprint. Doing this will not only open the brand to a much larger shopping audience, through micro-fulfillment and click and collect, it will help reduce delivery costs for online orders.
Shopping cart abandonment due to shipping fees is a symptom of a much larger problem: customers are buying the price of the item. Unless a retailer is able to differentiate the product, the shopping or the brand experience from mass merchandisers like Amazon and Walmart, it will be a race to the bottom on pricing to compete, a race they will ultimately lose.
It is likely that all of these trends will continue, but with varying degrees depending on the type of retailer, location, customer profile etc. What's important for retailers is to understand which (if any) of these trends will build their customer base and instill customer loyalty, and then weave them into the brand experience.
I suggest a "customer-first" approach, where digital, physical and everything in between exists for the sole reason of building customer loyalty. Retailers should be weary of falling into a "digital for the sake of digital" spiral that doesn't relate back to their customer strategy.
This is a great idea that can drive down delivery costs and expand the brand experience into the last mile. The critical piece is that the associates doing the deliveries live and breathe the brand values.
It seems that for retailers it was necessity that drove innovation. If not for the pandemic, we probably would not have seen as many resources dedicated to building omnichannel infrastructure. As an industry traditionally averse to innovation, a strong lesson for retailers should be that digital transformation in retail is essential to growth and longevity.
While going online is a necessity in a locked-down world, it will be important for these independent retailers to have a strong grasp of the e-commerce CX, which even major retailers need to regularly tweak/perfect, especially when it comes to inventory visibility and fulfillment.
The pandemic caused many retailers to be caught on the back foot when it came to omnichannel options such as BOPIS, BOPAC, and delivery. Instacart and other third-party delivery services have been a stop-gap measure for retailers to allow business continuation in the face of limited options including capacity crunches from major couriers. The issue with outsourcing the last mile is that it means relinquishing control of your brand at a crucial step in the customer experience to companies that don't live your brand values or want to impose their own. Once the market stabilizes, it would be in the retailer's best interest to review the costs/benefits of owning their last-mile delivery.
If a retailer decides (or has decided) that sustainability is core to their brand values, they'll need to be true to these values in all aspects of their operations, including product sourcing, corporate travel and of course, order fulfillment. When a customer chooses a retailer whose sustainability values align to their own, these customers should be willing to make concessions on speed, format and cost of delivery if it means promoting sustainability. As sustainability becomes more important to different customer groups/generations, retailers who were leaders in the area will have an advantage.
Growing customers by expanding into underserved markets (e.g. the suburbs) is a great idea if expansion costs can be kept in check. Starbucks seems to have that covered with their cost-effective drive-thru/small format locations.
As we've already seen anxious customers lining up to enter their favorite fast fashion or electronics retailers over the past few months, the appetite for in-person shopping and "retail therapy" is still very much alive. Once customers feel safe about shopping again (if they are vaccinated, cases subside etc.) stores will start to see increased foot traffic. However if retailers and malls want to really activate to drive foot traffic, they'll need to incentivize customers. Malls will need to make themselves destinations that offer experiences beyond just shopping (and eating) with activities, exhibitions, shows, etc. For stores, beyond the easy draw of discounts and promotions, retailers will also need to make the in-store experience worthwhile by fusing digital and physical experiences.
Retailers who've invested in omnichannel technology have the ability to offer click and collect options (BOPIS and BOPAC), which increase customer convenience (reduce time in store) and speed up delivery (same-day pickup). To wean customers off home delivery, retailers need to introduce incentives that promote store pickup options (order discounts, loyalty programs, vouchers etc.) and also educate customers on the environmental impacts of home delivery.
In the commoditized world of consumer electronics, competitive pricing and convenience are key drivers in the purchasing decision. So it makes perfect sense for Best Buy to pursue a micro-fulfillment strategy and somewhat surprising they haven't done so sooner to compete against DTCs with same-day shipping options. But what works for consumer electronics might not work for luxury or apparel, where a delicate balance must be struck between micro-fulfillment efficiency and the in-store experience.