Facing Amazon and Covid, Retail is Changing

Fast forward a few years to 2019. Retailers then slowly moved towards their demise, relegated to the status of useless businesses by Amazon and a few digital commerce wannabes in its shadow.

Then, in early 2020, the Covid-19 pandemic hit the world. Physical stores are all closing, with the exception of large areas such as Walmart and Target in the United States. Suddenly, digital transformation becomes a necessity. Digital sales are skyrocketing and new delivery models are emerging, such as pick-up to bring an item to the store, which have become essential elements of the omnichannel for home ordering.

Today, retailers are in a fundamentally different situation. This retail environment is about being digital, unifying experiences, leveraging intelligent analytics and cloud infrastructure, and fighting a real battle against Amazon. The most recent results from the retail sector have highlighted the transformation that has taken place in this sector. What emerged is a transformational guide and model for future technology investments. Here’s how it happened.

Technology spending has accelerated because retailers had no choice. Yes, some retailers were able to anticipate and had already started e-commerce before the arrival of Covid-19. But debt-ridden retailers trying to slow down digital transformation have accelerated the movement.

Omnichannel, a commercial good that has become a necessity

Omnichannel, which used to be an asset to businesses, has now become a necessity. In the United States, Walmart and Target are promoting this strategy.

For Brian Cornell, CEO of large retailer Target, the transformation that accelerated in 2020 has only just begun. “After a year in which digital was the main growth driver, customers are now returning en masse to our stores,” he reports. “As a result, most of our growth in the second quarter came from the retail channel, where sales grew 8.7%, compared to 10.9% last year. In addition, traffic accounted for more than 100% of our growth in the second quarter, as opposed to last year, when customers limited time away from home and most of our growth came from larger transactions. Digital sales grew 10% in the second quarter, building on last year’s record 195% growth. He adds that in-store pickup accounts for more than half of his digital sales.

For Doug McMillon, CEO of Walmart, another US retailer, offering different channels is essential: “Sometimes people want to go to the store, other times they just want to pick up their order and others where they prefer to be delivered. We will continue to innovate and improve in all three areas as our diverse omnichannel model enables us to gain market share in high-growth markets around the world.”

Data, a source of wealth for retailers

What makes Amazon so great? The company has a wealth of data to power models that drive its customers to buy, subscribe, and use its services. Like the e-commerce giant, retailers had to follow suit and get smarter about data science and the analysis of that data.

This is the case, for example, with the American sports brand Dick’s Sporting Goods. The sports brand uses the data to offer more personalized promotions through its ScoreCard loyalty program, explains CEO Lauren Hobart. She adds that one of the company’s main pillars is expanding its database of athletes, with the latter being the board’s main target.

The database has also been enriched with 8.5 million athletes in 2020 and 2 million in the last quarter. “We have extensive data science capabilities, one-to-one marketing capabilities, and we keep those people active in our ecosystem. The omnichannel athlete has other options. We collect data from every athlete who transacts with us in any way, and we are always working to get people to convert the ScoreCard. But even if they don’t, we said our active database has over 30 million active email addresses that we can talk to even if they don’t participate in the program,” said the leader.

Corie Barry, CEO of Best Buy – an American consumer electronics company – explains that his brand uses data to predict purchase intent, train employees to provide the best service and increase Net Promoter Scores (NPS).

“Mobile-first”, smartphone shopping above all else

“We continue to improve our online shopping experience, in particular through our mobile-first strategy, which accounted for more than 50% of our online sales in the first half of 2021, as well as faster delivery times and an improved shopping and payment experience,” says Lauren Hobart, CEO of Dick’s Sporting Goods.

Target has also added a feature called “School List Assist,” which allows partners to find supplies and purchase a list with the click of a button. Another feature, Promo FOMO, displays offers from Target before you checkout.

And Best Buy is working on a mobile payment app.

Invest in technology to future-proof your business model

Retailers have now learned that investing in technology is essential to the sustainability of their current model. Jeff Gennette, CEO of Macy’s, a New York department store, says the company’s recent operating leverage will allow him to continue investing in the company. “We want to maintain a best-in-class digital experience by continuing to invest in fundamental improvements to keep our online platform fresh, and in differentiated digital experiences that deliver better service, better discovery and greater value for our customers. † We have made strides in data and analytics capabilities, across the company, to improve inventory placement, pick-up and delivery options, and increase the speed and convenience of online ordering,” he describes.

Walmart invests in technologies that have the potential to expand into new businesses within the company. “More than 30 applications across five countries leverage cloud cashing capabilities. Several things, such as building a 360° view of the customer using machine learning, are important to our business in the United States, but they are also important in other markets. That’s why we’re now using this technology in Mexico and Central America,” said Doug McMillon, CEO of Walmart.

John Mulligan, Target’s chief operating officer and an engineer by training, believes the company can use automation to increase employee productivity. “As our team works to optimize Target’s operations, now and in the future, we have access to all available tools and technologies, robotics, automation, machine learning, artificial intelligence, etc.”, he explains. “But when we choose to invest in technology, we’re not trying to remove the human element from the Target experience. Rather, we invest to improve the productivity of our team members so they can focus on what matters most, such as serving our customers. †

“It’s another example of the power of ‘and’ and how it permeates every part of our business. You don’t have to choose between people and technology. We can invest in people as well as in their productivity,” he says.

Source: ZDNet.com

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