Executive Brief: How to Lead Your Retail Team Towards a Better Normal
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Executive Brief: How to Lead Your Retail Team Towards a Better Normal

How can retailers enter the post-pandemic retail era more resilient than before it?

Historically, retailers have relied on mall foot traffic, high barriers to entry, and ongoing consumer loyalty. However, as we documented in our analysis of the 2020 retail landscape, these are no longer viable competitive advantages. 

The ripple effects of the pandemic include closed stores, rapid digitization, and more conscious consumer spending. These effects are expected to continue well into “the new normal.” 

Thus, retailers can no longer plant their flags on steady ground. Instead, they must accept and adapt along with the shifting sands beneath their feet. 

In this article retail leaders and players will learn how they can enter 2021, stronger and better prepared for the ongoing trends buffeting retail. We chart a path for retailers to follow towards a “better normal” scenario for themselves, their partners, and ultimately, their customers.

High touch digital channels 

According to a survey McKinsey conducted, over 30% of US consumers now make most, if not all, of their purchases online. This includes categories like footwear, apparel, and home furnishings where customers historically want to try the product first before they buy.

As a result of the pandemic, however, most consumers expect social engagement – as personal a touch as possible – even when making digital purchases. Thus, retailers must build their online channels in a way that integrates the best of in-person and digital experiences.

For example, premium Canadian menswear retailer Harry Rosen, built a digital experience around its highly trained staff. They created a white glove experience that allowed their customers to to coordinate with their advisors via text, receive personalized and curated digital ‘lay downs’, and decide on their purchases before ever setting foot in a store.

Consumer behaviour will likely stay consistent with a bias towards online channels and social media, even after stores reopen. Retailers who offer 1-2 day shipping, order visibility, and seamless returns will lengthen their lead from their competitors.

Values-based marketplace differentiation

Brand differentiation drives the strategy for both customer acquisition and retention. 

When making a purchase decision, consumers pay attention to the congruence of a brand’s mission, values, and sentiment towards sustainability with their own. This sentiment for conscious consumption is predicted to carry on even after consumers have the freedom to physically shop wherever and with whom they want. 

At a tactical level, advertising, SEO, and social media drive customer acquisition. The customer experience, including order fulfillment and demand fulfillment drive customer retention. 

Brands must stay honest and authentic to their values all throughout the funnel. 

In an interview, luxury marketplace Farfetch’s chief customer officer Stephanie Phairm said, “What works is that people want authentic communication from the company. They want to buy from companies that have a mission.”

Both strategic and tactical decisions must demonstrate how the brand’s values line up with the customer’s. Stephanie says, “Fashion is the product, but it also takes the curator—by which I mean boutiques and brands (the creators)—to give the product meaning. The key points are storytelling, meaning, purpose.”

Deep partnerships with brands who share similar values

Just as retailers are embracing the value of like-minded, mutually beneficial relationships with their customers, retail players should also move towards deeper partnerships with their sellers and suppliers. This allows them to secure a resilient supply chain, in the event of a future crisis.

Retail experts recommend asking three key questions in the quest for these partnerships:

  • Are there ways we can integrate our value chain vertically, perhaps with new technology partners that we didn’t consider before?
  • Are there brands, companies, or individuals we can partner with that allows for business-critical resilience and allows us to expand our product line or market penetration?
  • Are there brands we can acquire that address a gap in our portfolio?

How does a retailer attract like-minded sellers to its digital marketplace?

Sellers are attracted to marketplaces by the availability of a customer base, of aggregated demand. According to Marketplace Pulse, “The most valuable asset is shoppers, not the supply of products. In that light, the efforts marketplaces spend on attracting sellers and growing the assortment is table stakes. A much more important effort - perhaps the only important effort - is fostering demand. Marketplaces do not compete for sellers - they compete for shoppers.”

The marketplaces that attract sellers, and as a consequence, are able to offer consumers a broad product selection, have market potential — overall and niche-specific GMV — and predictability — the availability and accessibility of tools to manage and understand the channel. 

If a vertical marketplace controls the attention of a significant slice of their category’s total addressable market, they can offer more growth potential and inventory liquidity for niche, value-conscious sellers. 

These sellers will prefer an exclusive partnership that is in line with their customers’ values, rather than being lumpied into a generic third-party marketplace.

2021: The possibility of a better normal for retail marketplaces

The damage done to physical retailers and marketplaces in 2020 cannot be undone. However, there is hope for a more sustainable, mutually aligned future for both retailers and their customers. 

In our report on the state of retail marketplaces, we predicted that order fulfillment will be one of the ongoing issues retailers face post-pandemic. Visionary partnerships, particularly in last-mile fulfillment, can help address these industry-wide challenges around production reliability, fulfillment, and even returns.

Along with relational partnerships with customers and brands, retailers should invest in its digital and social channels, looking to create a “better normal” for its partnerships and stores.

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Roxine Kee

Growth Engineer

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