Much has been written and discussed about the impact of the pandemic on retail. Given we’re only one year into the pandemic, we’ve come a very long way in reacting to and evolving retail strategies to fulfill consumer needs and changing customer behaviors. Research now is starting to surface that offers a more academic look at the evolution of retail.
One such study was just released by the Retail Industry Leaders Association (RILA) in partnership McKinsey & Company. C-suite executives at over 30 US companies completed a benchmarking survey that covered more than 100 metrics and explored consumer outlook, digital acceleration, and future supply chain. The survey was augmented by in-depth interviews with top retail CEOs as well as proprietary McKinsey & Company customer research.
Titled Retail Speaks: Seven Imperatives for the Retail Industry, here is a summary of the report conclusions.
- Consumers now demand a seamless omnichannel experience. Consumers will choose retailers based on ease and richness of end-to-end experience.
- Personalized shopping experience is now table stakes. Most retailers fall short of these expectations today. While 100 per cent of top-quartile retailers cited omnichannel personalization as a top five priority, only 15 per cent of retailers have fully implemented personalization across all channels.
- Turbocharge e-commerce delivery. The vast majority of consumers—over 90 percent—see two to three days as the baseline, and 30 percent expect same-day delivery. Retailers are setting ambitious targets for delivery times that will require significant investments to propel their supply chain fulfillment capabilities.
- Purpose-driven approach to ESG is essential. Consumers are voting with their wallets for sustainability and broader purpose. One-third of survey respondents reported they had stopped using a brand based on its social actions, and 71 per cent indicated they would lose trust in a brand forever if it placed profits over people. At the same time, consumers are willing to pay more for products that meet their values.
- Recalibrate talent strategies. Retailers typically need to augment their workforce and capabilities to thrive in the digital-dominated world. To close the skills gap, companies will need to reimagine their strategies for sourcing and deploying talent—focusing on upskilling, new recruitment models, and diverse talent pools.
- Explore the role of partnerships and ecosystems. The development of partnerships and ecosystems, especially those convened by retailers, will accelerate. McKinsey analysis suggests that ecosystems could collectively function as a $60 trillion (USD) economy by 2025. That makes developing an engagement strategy an imperative for survival; even if retailers aren’t positioned to establish their own ecosystem, they will have to figure out how to compete, participate, or coexist.
- Seek transformational productivity gains. Retail as a sector has achieved outsized productivity growth over the past ten years. The next phase will involve deploying analytics and automation across P&L. Retailers will need to prioritize investments that are truly transformational.
The full report is available on the RILA website by clicking here.
While change is often fueled by necessity, likely nothing in recent times has provided an accelerant like the COVID pandemic. It behooves retailers and all the various professionals within the retail enterprise to take this opportunity to move our industry forward to better serve customers and retail associates.