The ‘new normal’ is here and Retail is already adjusting to it

Hello everyone. Ever since the outset of the global pandemic, there has been a lot of discussion and points of view on how such “unprecedented times” would accelerate business innovation to adapt to the changing circumstances and consumer behaviours. And while there have been indeed quite a few examples of quick solutions being deployed to keep businesses afloat, there was somehow a feeling of overestimation on how quickly business can react to the turbulence. However with peak period knocking on the door, many retailers have decided to finally start unveiling what they have been working on throughout the year – the “aces up their sleeves” to ensure their businesses remain profitable and to set the foundation for success in 2021, which still seems to hold a lot of uncertainty. Let’s have a look at some examples of what these “aces” are.

First up is IKEA which has firmly set its sights on a profound digital overhaul of how it does business and engages with customers under the leadership of its CDO Barbara Martin Coppola. With the explosion of online shopping, the furniture giant has upgraded its ecommerce and fulfilment capabilities almost overnight to meet the increased demand. Flexibility of store ops and supply chain powered by Google Cloud technology at the customer front-end has allowed it to adapt to the changes in customer behaviour and set a solid foundation for the future. Moreover, it is exploring new ways of engaging with customers like remote room planning enabled by augmented reality technology. Its omnichannel efforts are further supported by machine learning using the increase in data accumulation to help marketers understand better what customers want and need. IKEA is a great example of how digital transformation needs to be underpinned by the right leadership capabilities in order to deliver value to the customer and the business (and at pace!).

Great news for those of you that have a sweet tooth – Hotel Chocolat is launching a subscription service delivering its products to the doors of their biggest fans. The options allow customers to receive different “genres” of chocolate boxes every month with the selections changing every time. Subscriptions have been quite the buzz in the world of retail for a while now. However, it has proven challenging to get the right mix of compelling customer offer and viable economics to make it profitable for the business in order to launch subscription propositions that stick around. With the proliferation of online and contactless shopping and with the streamlining of ordering and fulfilment operations, it seems that Hotel Chocolat has come up with the right subscription recipe to be able to deliver its chocolaty goodness to members while also locking in fresh sales and profit.

Other retailers have taken a different approach to preserving the profitable ways of their businesses. Following Debenhams, John Lewis has announced it will be converting some of its store space into offices for rent as an additional revenue source. Another hot topic in the world of retail even before the pandemic has been the future of the physical space. While most expectations are to transform brick-and-mortar into a more experiential and service oriented environment moving away from the traditional transactional mechanics, it seems that the strain Covid-19 has put on retail footfall and profitability have forced businesses to explore other venues of how physical spaces could be used.

Speaking of in-store experiences, L’Oréal luxury cosmetics brand Lancôme has started employing touchless technology to deliver a new level of “retail-tainment” as the ‘new normal’ way to engage with customers and provide ease of mind when it comes to safety. Employing solutions such as contactless payment, augmented reality and artificial intelligence, Lancôme has piloted pop-up stores merging physical and digital experiences to allow customers to try and shop its products while limiting physical contact. The mix of tailored in-store customer service and technology ensuring memorable experience while catering for Covid proves to be working miracles for the beauty brand and comes to show that neither physical nor digital retail can fully thrive on their own in the current environment. Retailers should work with their tried and tested channels and offers while augmenting and testing new more cutting edge ideas to set themselves up for success now and in the future.

Hope the stories this week have been insightful. Stay safe everyone and until next time!

Author

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Stoyan Petrov

Senior Consultant,  Customer Engagement