PSFK’s Future of Retail 2021 Report Provides Key Levers for Building Business Resilience
Excerpted from PSFK’s annual flagship report, the following three macro strategies will help businesses assess their resilience as well as provide actionable guidance for not only surviving but thriving in a new era of commerce
Without a doubt, 2020 was a year of unprecedented retail reckoning. While many businesses were forced to temporarily or permanently close shop, there were some who found opportunities within the challenges of this year’s unique circumstances. The most successful retailers and brands of 2020 were those who invested well ahead of the year to build resilience, focusing on securing the infrastructure and culture to pivot at a moment’s notice and respond to changes affecting consumers and the market.
This year, PSFK’s annual flagship Future of Retail Report has surveyed the top techniques successful businesses have implemented to surmount and ride the waves of challenges in a mercurial landscape. The report is designed not only to help brands & retailers respond to 2020, but also to honestly assess their company’s resilience in an effort to take a longer-range view and begin planning for a forever-altered and exciting new era of commerce. Below, we share three macro strategies that form the backbone of our deep dive, providing actionable insights and steps to build agile business fit for a dynamic world.
Lever 1: Creating Sustained Awareness
For retailers, it’s no longer sufficient to have specialized analytics programs or AI tools; instead of unifying operations and engagements, one-off softwares can silo learnings between your teams and provide a false sense of security. Data is your company’s most important utility; real-time consumer and operational insights should flow between each department at a constant rate. Retail winners in 2020 not only excelled in data management, but also invested in ongoing data infrastructure innovation, constantly improving speed of analysis, scope of awareness, and data management ethics.
One way that top retailers are maintaining and continually refining their awareness of consumer sentiment and needs is by crowd-sourcing their analytics. In fact, 90% of consumers say that they would share behavioral data with brands if doing so resulted in a more economical and convenient shopping experience. Accordingly, companies are increasingly tapping into their existing customer communities to know how shoppers are feeling, crowdsource new product ideas, solicit feedback and invite product inspiration. Reebok is doing so with its First Pitch platform for product proposals, which solicits input from consumers regarding new shoe designs over a period of 72 hours to 30 days. During that time, consumers can put money (starting at $1) toward the shoe until it hits retail price, and if 500 people put money toward it, Reebok makes it. Not only does this type of crowd analysis collect valuable primary data to validate market trends, but it also fosters customer loyalty and increases engagement.
Lever 2: Enabling Adaptive Decision-Making
Among the many things that COVID-19 has taught us, perhaps that the most important for retailers is that you must be prepared to respond to the unexpected. In a situation such as this pandemic, retail innovation cycles last hours or perhaps days, rather than months or quarters. Centering agility at the core of your work process as a response will create a culture that can flex to accommodate disruptive shifts and take part in constant testing and refinement of market assumptions.
For truly resilient companies, the customer never witnesses your internal adjustments; instead, they see a brand that they can always count on to deliver. A key strategy that brands and retailers are deploying to achieve this kind of resilience is iterative innovation, which our researchers define as taking dynamic approaches to project planning rather than a long-term view—that is, implementing, testing and refining processes across the entire organization to respond to nuanced marketplace needs and opportunities in real time. Iterative innovation involves launching different projects at once, A/B testing alternative strategies, and learning from in-the-moment marketplace feedback. Adore Me, a direct-to-consumer lingerie startup, has incorporated such an approach by marshaling its subscription-based business model to test multiple satellite brands, each with its own site and personality. Doing so allows Adore Me to continually fine-tune and experiment with every line as it scales, improving its processes in a low-cost and time-effective manner, rather than perfecting ideas in a vacuum without customer buy-in.
Lever 3: Implementing Modular Infrastructure
Having a flagship was once considered a retailer's crown jewel: a hallmark store in a busy part of town, modeling innovations for other store locations. However, large and rigid retail channels saddle companies with outsized fixed and overhead costs, drastically constraining capacity to respond to consumer or market shifts in a timely fashion. Rather than investing in rigid coordinations of physical stores, supply chains, and distribution channels, invest in a flexible infrastructure approach that allows you to extend, repurpose, and reconfigure your asset portfolio in the most efficient way.
A top approach for enabling more malleable infrastructure is deconstructing the point of sale in order to reduce lines and customer frustrations in the queue—and for good reason: 35% of global consumers report that to ‘be able to immediately walk out of store with purchase executed’ is a key feature they desire from their brick-and-mortar experience. As a response, retailers are leveraging self-service transactions (checkouts, returns, order placement) from different parts of the store ecosystem, including drive thrus, shopping carts, store shelving, wearables and mobile apps. Amazon has taken this route with its Fresh grocery retail stores with the Dash cart, which marshals computer vision algorithms in conjunction with sensor tech to recognize what’s in shoppers' carts. When customers exit the store via a special Amazon Dash Cart lane, the order in their carts is automatically charged to the credit card associated with their Amazon account.
For the full deep-dive report, check out our Future of Retail 2021 report, where PSFK researchers explore and define these three macro strategies with top industry trends and innovation insights to power your next-gen business intelligence.