Retail’s Moonshot Moment: Once-in-a-Lifetime Opportunity
Retailers have a unique opportunity to shoot for the moon and re-engineer their businesses after coronavirus. Smart retailers won’t let the opportunity go to waste.
Retail is recovering after the coronavirus lockdown, but it isn’t business as usual because a pandemic crisis is much different than other economic free falls. Covid-19 forced booming businesses to halt in a matter of days. Non-essential workers were sent home, the general public sheltered in place, and state governments assumed regulatory control.
During the last two months, a new kind of retailing emerged and with it a new set of winners and losers. Essential retailers learned more about their supply chains in a few days than they had in the previous two or three decades. Similar lessons were learned about omni-commerce, employee engagement, and the ability to launch new initiatives on a daily basis.
Non-essential retailers learned lessons, too, especially about the necessity of operating in a contactless and digital environment.
Today, as retailers re-ignite their businesses, there is no better time for a top-to-bottom assessment of business models, organizational structures, and strategic missions.
It is an ideal time to take a hard look at who you are, what you do, and why you do it. And then take the next step – create a plan to feed everything that drives success, starve everything that drives mediocrity, fill in gaps, launch new initiatives, invest in innovation, and, yes, shoot for the moon.
Why is this important? Well, Neiman Marcus, J. Crew and Pier 1 had opportunities of their own to plan moonshots. For short-sighted reasons, they felt constrained and let them pass. As Darwin has pointed out, not everyone survives, only those who are most adaptable to change.
I was a guest speaker on a webinar last week that covered this topic and was joined by experts from Cisco and Theatro. We discussed overcoming big challenges that came to light in the lockdown such as friction in omni-commerce execution, scaling off-premises transactions at stores, digital transformation, contactless retailing, and flexing the enterprise to accelerate innovation and change.
Here are some of our key recommendations to shape your moonshot plans.
- Leaders will step on the gas. Amazon and grocery retailers boomed during the lockdown, but even more importantly Walmart and Target flexed omni-commerce muscles they had built over the past few years and boomed as well. Other big winners include Home Depot, Lowe’s, Instacart, Tractor Supply, and Shopify. Even Best Buy minimized what could have been massive losses by pivoting to curbside pickup. These retailers will use their coronavirus boost to invest and re-invest in supply chain and omni-commerce capabilities to extend their marketplace dominance.
- Non-essential retailers will invest in technology and capital improvements. Typically, retailers tap cash resources and profits to fund capital investment plans. Not this time. To regain their former growth trajectories, successful retailers such as Ulta Beauty, Sephora, lululemon, Nike and others will draw down profits to make major investments in technologies for order management, omni-commerce services, customer analytics, store systems, human resources, labor training, and web and mobile platforms. These investments, along with upgrades to store operations (including curbside pickup, pop-up store capabilities, contactless retailing, and micro-fulfillment), will be high priorities for aggressive retailers even in an era of depressed profits.
- Omni-commerce investment will become a top priority. One of retail’s greatest mysteries has been the stubbornness of some retailers to develop e-commerce capabilities. These include TJX, Ross Stores, Burlington, Aldi, and Lidl. The massive shift to online shopping during the lockdown will have long-lasting effects on consumer behavior. Store-centric retailers without strong e-commerce capabilities suffered far more during the lockdown than their omni-commerce competitors. This lesson will not be lost on e-commerce laggards making moonshot plans.
- New technologies have become must-haves. Remember experiential retailing? This concept included technologies that were frequently called bright, shiny objects (i.e. non-essential). They included such things as digital signage, kiosks, scan-and-go, shopper tracking, mobile POS, video analytics, voice recognition, chatbots, and even in-store robots. The world has now changed and these technologies are being used to ensure shopper and employee safety.
- Digital transformation accelerates. A great cartoon recently appeared on social media that featured a question and four multiple choice answers. The question was, who is driving your digital transformation? The four answers were all C-words: Chief Executive Officer, Chief Information Officer, Chief Digital Officer, and the fourth option, also a C-word, was Covid-19. You get the point. Retailer confidence has grown in shifting online commerce applications to cloud platforms. Some retailers have even moved parts of their ERP systems to the cloud. But store applications have lagged behind. In the post-Covid-19 world, the 30 to 40 applications that connect to the store will become increasingly cloud based. Retailers have learned that legacy, on-premises applications are costly to maintain, inflexible to modify, and sources of friction for consumers and the IT department. Smart retailers will use post-pandemic investments to shift to a standards-based, API-driven, cloud-based architecture, which is the cornerstone of a broader digital transformation plan.
A smart moonshot plan is not just aimed at driving growth. It is a roadmap to kickstart the speed of change. Charles Darwin famously underscored the importance of this goal when he said: “It is not the strongest of the species that survives, nor the most intelligent; it is the one most adaptable to change.”