4 New Rules for Retail
While the grocery and home improvement sectors benefited from changes in consumer behavior during the pandemic, apparel and department stores struggled. Consequently, the following new rules will come into play for retailers in 2021, says a Deloitte report:
1. Digital investment should go beyond differentiation. Many retailers have jumped on the digital bandwagon (see chart), and rightfully so. Retailers can create connection and convenience with the right portfolio of digital assets. They will have to improve on anticipating demand to deliver true value. To safeguard shoppers, retailers should be transparent about their data strategy and able to rapidly resolve problems. They need to look beyond on-premises talent plans, which are mostly suited for stores and warehouses, and invest in attracting digitally savvy talent.
2. Supply chain, inventory, and digital experience can't operate in silos. The ideal inventory system is integrated end to end from production to last-mile delivery. Retailers should have clear visibility across their workforce, vendors, suppliers, distributors, warehouse operators, and delivery partners. Every stakeholder should have incentives for identifying issues early on and responding promptly. Blending in-store and digital inventory systems will require better digital platforms and technology.
3. Continue to prioritize health and safety. Retailers need to infuse health and safety throughout their operations. It is critical for retailers to go beyond standard sanitation practices to make shoppers and employees feel safe in the physical space. This could include alternating work shifts or using dark stores to pull buy online, pick up in store purchases. Virtual showrooms, mobile returns, and cashierless stores may seem temporary or futuristic, but could be key in beating out the competition in the long run.
4. Couple cost realignment with fresh takes on profitability. While typical cost cuts, such as reducing travel, are a good start, they are part of the old retail model. New rules of profitability will require new ideas. Retailers should explore alternative ways to engage customers, such as using showrooms instead of stores. Developing alliances for store-in-store models can hedge against being nonessential. Work-from-home platforms offer an opportunity to rethink talent acquisition, opening the opportunity to attract a more diverse set of leaders who reflect geographical, ethnic, racial, and other societal differences and lead to increased profitability.