Succeeding in retail next year will hinge on store owners’ ability to make the most of consumers’ in-store visits as well as digital touchpoints, said McMillanDolittle analysts during last week’s Gift and Home Trade Association virtual conference.
“We are telling all retailers to prepare for headwinds,” said senior partner Mara DeVitt. Foot traffic has been returning to retail stores, but it still lags across many retail categories, she said. That data was gathered just as COVID cases began to rise at record rates across the country and since then there has been talk of possible consequent shutdowns in national news reports.
Consumers are trying to limit the amount of time they spend shopping indoors, and DeVitt encouraged retailers to leverage digital tools and brands to promote up-to-date and relevant content on their digital platforms. Curbside and in-store pickups of digital product orders have been popular with consumers, she also said, and provide a great opportunity for retailers to engage with customers.
Neil Stern, partner emeritus at McMillanDoolittle and CEO of Good Food Holdings said that retail overall has moved to three extremes: extreme value, extreme convenience and extreme experience.
Extreme value has been promoted through price, the appeal of the treasure hunt and private label merchandise, Stern said. He noted that Costco, which employs all three value components, derives one-third of its business through private label, and that grocer Aldi’s sustainable model is based on low-cost business driven by private-label brands. He also noted that Dollar General is experimenting with new ways to drive value, such as the recent roll-out of its Popshelf concept designed to appeal to higher income households.
Extreme convenience can be offered by removing friction from the retail process through technology, new delivery and pickup methods, and other initiatives, Stern said.
Extreme experiences could undergo the most change as retailers attempt to balance getting consumers to linger in their stores through engaging marketing and merchandising efforts, which were growing pre-pandemic, with attending to their safety during a pandemic. What will be critical for customer experience in the post-COVID world, Stern said, will be getting fewer people to make bigger transactions; moving from commodities to curated product assortments, switching from lingering to learning (in terms of more one-on-one attention); moving from the “touch and feel” experience to touchless buying; and evolving from in-store experiences to enabling experience anywhere through augmented and virtual reality tools.
Small companies, meanwhile, can win customers through engagement within social commerce such as Instagram, finding customers by targeting them digitally and following through with product curation. DeVitt said.