January is always a key time for retail. The holidays are over, a new year has begun, budgets are open, and people start taking new approaches to their businesses and technology investments.
Or, said another way, January is the time when retailers can once again breathe. It is the time when the entire industry can take a pause and reflect upon what the heck it is that they could and should be doing for the next 12 months.
However, this January is also nothing like the past.
Traditionally, the big January exhale has always occurred at the National Retail Federation’s Big Show in New York. Every year throngs of retailers and retail technology companies would venture to an overcrowded Javits Center to rub elbows and talk shop with each other. But, this year, the coronavirus made that impossible, and virtual meetings and presentations have had to suffice.
Those wanting to use the traditional January headspace to transform have had to take a more active role in their learning. They have had to make their dialog faster, sharper, and more intentional by way of coordinated meetings, presentations, and article readings across their computer screens as opposed to anything live and in-person.
All of which is no easy feat. So, to help, here then is a quick primer of what will most likely shape nearly every retailer’s decisions, especially when it comes to branding and technology in the coming year, in one easy-to-read synopsis.
The biggest takeaway of all being — Holy Hanna are things starting to converge:
#1 — Social Commerce
One looming question facing a large swath of the retail industry in 2021, particularly mall-based retailers, but also everyone’s favorite consumer packaged goods companies, too, is what to do about the fact that the mall, or better yet, the act of inspiration, is now going online by way of Instagram, Facebook, and TikTok.
Prior to the rise of social media and e-commerce, physical stores were the only game in town for inspiration.
Inspiration and product discovery are now better done online through social media because digital commerce experiences are 100% tailored to individuals. No one person’s shopping experience online looks the same, and that is not something one can say about physical stores, which have traditionally been rinse and repeat across locales for decades.
Social networks know everything people like, every event they attend, and everything on which they comment as well, meaning social networks know more about people than they even know about themselves. It is this implicit understanding of consumers as individuals that makes their inspirational power so provocative.
As a result, social media isn’t just a marketing tool. It is now the commercial real estate shopping mall development of the 21st century. Retail companies that invest in getting people from inspiration to click on Instagram in seconds will be the ones who still have stores standing in the future, not the other way around.
#2 — Third-Party Delivery Marketplaces
Inspiration plus fulfillment is the future frontier. Anyone who buys into the social commerce trend just outlined above should also be able to see what is coming around the next corner — namely, that fulfillment is now a merchandisable event in the minds of many American consumers.
Look no further than Walmart’s mobile app, for example. What’s the first thing Walmart asks on its homescreen? It’s how do you want to shop, not what do you want to buy (see here). And, that difference puts the importance of the products within a retailer’s four walls in a very different light.
2-Day Delivery, Express Delivery, Curbside pickup, etc. are all now first-order conditions way up in the sales funnel, and so the question then becomes — what’s next?
Well, what’s next is that third-party marketplaces start to spring up with the capabilities to get goods to consumers as quickly as they want them. DoorDash set itself up as a retailer in 2020, Instacart appears to be amassing every category of product under its purview, too, and, of course, Amazon already exists as well.
There soon will be nothing to stop any of the above from interceding right at the point of inspiration, agnostic to end retailer, and as the preferred partner for every social media transaction to come.
Walmart may be duking it out with Amazon, but it is the possibility of an Instacart marketplace that brokers these types of transactions across social media that should also keep Walmart up at night, not to mention how Target and Shipt are also positioned to do something quite similar as well.
And, don’t even bring SNAP benefits into the discussion, either, because right then and there, Instacart and DoorDash would have a whole other inroad into new groups of customers for whom they could provide SNAP benefits across many grocers within their marketplaces online, simply by acting as middle men for the transaction.
Retailers would be wise to see around this corner and to keep their unique product inspiration within their own controls and within their own logistical networks.
At the end of the day, last-mile delivery is no more than a white label good, and, yet, the industry has been so desperate that it has not treated it as such.
Instead, third-party delivery marketplaces are on the precipice of usurping inspiration at the point of purchase right from under many retailers’ noses, slowly over time and to the point where they may not even need their retailer partners in the long-run anymore.
#3 — Hyperlocal Microfulfillment
So, what’s the answer? It is simple. Retailers need to create better pick and pack efficiency, closer to the consumer.
Enter hyperlocal microfulfillment.
Hyperlocal fulfillment at the store level has exploded of late. It was already growing fast prior to the pandemic, and the virus has only accelerated the trend.
The rationale is straightforward — retailers’ stores are closer to their customers from a last-mile cost standpoint, so it makes sense to use tried and true automation techniques to make picking and packing more efficient as well.
For some retailers, this idea could mean putting large robotic conveyors right into stores, improving picking processes with other forms of technology, or, for others, it might even mean converting some stores to dark stores or to pickup-only locations, as Starbucks, Kroger, and others have tried throughout the past year.
Whatever the case may be, the reason for the experimentation is rational. Consumers want their goods the same day, and they don’t want to pay any more than necessary for delivery. Instituting these types of operations puts retailers back in control of their own destinies.
If retailers can pick and pack on their own, they then can pretty much decide who they want in their delivery network, send out a request for pickup at the lowest cost that meets their service expectations, and, voila, as mentioned before, last-mile delivery indeed does become a white label service.
The smart retailers will venture down this path.
Best Buy already has, while many other companies like Target and Walmart also continue to push the boundaries of how their stores can act like fulfillment centers, and, as such, investments in order management system upgrades and last-mile delivery marketplaces that coordinate these types of activities and that work alongside microfulfillment will explode in the coming years.
#4 — BOPIS With An Indeterminate “S”
Of course, retailers would still prefer not to do any last-mile deliveries at all. It’s just flat out cheaper.
That’s where the next trend comes in — BOPIS. But, not BOPIS as it is traditionally known, aka Buy Online, Pick Up In Store, but as Buy Online, Pick Up in Somewhere or Something.
The most important announcement already of 2021 is that Albertsons announced plans to rollout automated curbside pickup lockers from Cleveron at one of its Jewel-Osco stores in Chicago. If the idea works, it has a ton of legs.
First, the concept plays right into the argument mentioned above about consumers wanting goods the same day, on their schedules, and at no extra charge. Second, it creates one efficient delivery and staging point for multiple orders that can be either picked up by consumers or by white label last-mile delivery drivers. Third, lockers like these could be placed anywhere . . . in the world.
Which means that, for many communities, the lockers themselves could become new age grocery stores — i.e. people could interact with their favorite brands online and just go to lockers to pick up their goods without ever having to venture into a real store. Rather than having to serve rural communities one expensive delivery route at a time, lockers could instead give retailers one single delivery point for entire communities to come and get what they need. The same rationale holds for apartment buildings, gyms, etc.
The entire construct just means less overall deliveries over time.
Want one final mind blow in this direction? Ask this question — what if Costco wasn’t Costco, but just a warehouse for pickup? Would people still come, Ray?
They most certainly would.
The pandemic has shown that experiment might just work, and especially if prices are even lower, which in theory, they could be. After all, Best Buy retained 70% of its sales volume while closed during the pandemic.
Who is to say a curbside pick up warehouse club couldn’t do the same thing?
#5 — Computer Vision
The final trend that is about to shake retail to its core is computer vision.
It, too, is a technology that has exploded of late. Amazon has its Go stores, its Dash Cart, etc. OTG and Hudson are now licensing Amazon’s “Just Walk Out” technology in some of their airport convenience operations. And, just this past week, Kroger also announced that it plans to debut its own smart cart, called the “KroGO.”
All the above notwithstanding, computer vision is also so much more than just a fancy new way for people to shop. It has as much to do with streamlining retail operations as it does shopping.
Computer vision, at its core, is actually the future platform for physical retailing because it is the one thing that answers the most fundamental question plaguing retailers right now. Cameras on the ceilings, in the shelves, rolling around on robots, whatever the eventual end state may be, are all aimed to do one quite important thing — i.e to better track inventory throughout the store.
This information is critical not only for checkout-free shopping but also to implement and design all the required systems that bring about the on-demand world described above and that the consumer so clearly wants. The last nine months are nothing more than a pandemic house of cards without inventory systems of record that are more precise.
Computer vision is that answer. It is the future platform for both better operations and better consumer experiences all rolled into one, and Amazon already has a 30 plus store head start on everyone else in figuring it out.
Together these trends all outline something profound. Read deep into them and clear patterns start to take shape.
For instance, first new “retailers” will emerge this year. Companies like Facebook, Shopify, and Instacart — i.e. the places one wouldn’t normally think of as retailers — will become the front ends for new digital commerce experiences in previously unseen ways.
Second, how people shop will also change. Whether it be walking through stores and not having to stand in line to pay or simply using one’s mobile phone as a personal concierge device, the traditional purchase journey will morph, and the deviations in these journeys from one retailer to the next will become points of differentiation. Amazon’s new grocery concepts, Amazon Fresh and Go Grocery, could both be on the front side of making this happen.
And, third and finally, technology will become synonymous with brand. Brand will no longer stand alone. With fulfillment as a first-order funnel condition, the two are now forever conjoined. A new set of table stakes expectations has arisen over the last nine-months, and, if a brand isn’t racing to put itself within this new mindset, it won’t stand a chance a chance in the decade ahead.Source: Forbes