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The Resiliency of Retail in a Changed Landscape

The Resiliency of Retail in a Changed Landscape

Get an overview of how retail and eCommerce has evolved over the past few years with IDC. Learn how brands create connected customer experiences and how retailers are innovating their CX strategies to adapt.

In a conversation focused on the foundational changes impacting retail business and what is needed to take correct steps for a great CX, Aaron Goldberg, the contributing editor for IDG spoke with Jon Duke, Research Vice President, IDC Retail Insights (former IDC) and our regional customer service director for the America’s Ryan Creamore.

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Jon Duke: If you were to rewind the clock, the story around retail would have been about the ecommerce disruption from digital transformation – from new entrants who have agile business models, innovative concepts that are matching rapidly shifting consumer trends and changing dynamics in the industry.

That’s what we would have been talking about today. And this was a long-term shift in the industry and in retail we would have said it is behind the curve to some degree in terms of digital transformation. Aware, all the other industries would have been, you see, in the graph 46% of companies were farther along the maturity curve and what we would call digitally determined organizations, versus a little over 50% were digitally described in retail.

retail covid trends

That looked a little bit different when approaching two thirds of retailers. Pretend that if we’re among the digitally distraught, so less mature in the digital transformation, and they were trying to respond to all forms of competition that were sort of rapidly shifting. And then the pandemic hit.

And as we all know, that had some dramatic impacts on the industry, especially early on in April-May timeframe of 2020. As we think about the dynamics that were happening before the pandemic, COVID really acted as a catalyst to those changes and, and rapidly accelerated a lot of the shifts that were already impacting retail.

So, as we look to the changes in retail coming out of the pandemic, we can really see the differences among segments, as we think about sort of three primary segments, essential retailers. So, we take grocery stores, drugstore retailers, mass merchants, like the tall targets and Walmarts of the world.

Those are the retailers that remained open throughout the pandemic as opposed to the non-essential segments like footwear and apparel retailers who were forced to shut down for a period and you then you have our non-store retailers or ecommerce pure play retailers.

covid shopping behavior

We’re also seeing some, seeing some benefits there. Growth pre-pandemic was stable across all those segments. And then as the pandemic hit the non-store retailers’ sales spiked as did our essential segments and the non-essential retailers collapsed during those, first couple of months as was widely reported in the media.

Following the spring, we saw recovery across retail, but the overall growth story had some nuance behind that. Essential segments and our ecommerce retailers remained strong with healthy growth. The non-essential retailers recovered to some degree, but certainly continued to be impacted throughout the year.

If you fast forward that into this year, some of the trends are similar. We’ve seen some recovery overall, but that difference between the segments is important to keep in mind. Ecommerce retail in particular saw some outstanding growth and it’s a real success.

What consumers want from retailers

Jon: Consumers not only shifted how much they were spending, but importantly where they spent that their dollars. So pre-COVID consumers were estimating they spent a little less than 40% of their retail dollars that shifted to nearly three quarters of their wallet spent online during COVID. So, consumers expect spends to split their wallet almost evenly between online and in-store. 

Consumers have also told us very clearly that they are changing how they want to interact with the store. Last year brought about a lot of focus on health and safety concerns in the store. 

They want to have options for interacting in ways where they don’t have to touch many objects such as payments and a quarter of consumers are telling us that they will only shop with a retailer that offers contact with options.

For the types of experiences that they’re looking for are specifically around omnichannel experiences, things like buy online and pickup in store or flexible return options where I can buy in store and return online or vice-versa.

Consumers expect to be able to sort of interact in a fluid way across channels. So, 51% of consumers are telling us that without the flexibility to return, they are highly likely to shop at a competitor.  60% are telling us that that ability to buy online pickup in store is essential.

So those omnichannel basics are very clearly becoming table stakes in the consumer’s mind where prior to the pandemic, there was some question marks around investment in these areas around how consumers would respond and how critical these experiences are. 

What we’re hearing a lot about is a focus around consumer experience. So that CX innovation is a top priority for retailers.

Those omnichannel table-stakes are essential and need investment now. 

How retailers can move forward

Ryan: The global leader in cloud communications, we at Infobip had a unique view of this rapid transformation that’s taking place in the retail sector.

Transformations that were multi-year projects were really prioritized. And we were seeing them delivered within months, rather than that three to five-year window that had initially been projected. And at the core of all these accelerated transformations truly remained one thing – and that was the customer experience.

And so, our partnership with customers is focused on delivering a connected customer experience at scale. So, we provide an omnichannel solution that ensures the right message is going out to customers at the right time, but also on the right channel. We’ve grown this deep appreciation for the complexity that can come with adding new channels into your customers.

So, we continue to invest in technology that simplifies the unification of these channels. Really ensuring that our customers can deliver this exceptional experience to not only their customers, but also their employees. As we think about ensuring that we’re not adding complexity into the employee experience by adding new tools and new tools on top of each other, really the aim is to simplify that program both internally and external.

So, whether that’s adding SMS, Instagram or Facebook messages, voice capabilities, or many of the other solutions that we offer, we really want to partner with you to centralize these channels through one or multiple of our smart technology platform. 

Our mission is to reduce the fragmentation, ensure your customers experience hyper-personalization at scale, without increasing the complexity or becoming a cost burden on your technology.

With local teams in over 63 countries, we support our customers wherever they are today and where they wish to be tomorrow. And as we look towards the future of a new era and retail customer experience continues to be a competitive differentiator. And we really hope to partner with you in that digital transformation.

Looking to digitally transform your retail business?

Read our The Resiliency of Retail in a Changed Landscape ebook