The evidence continues to unfold. As retailers look to evolve from initial reaction to long-term business model shifts in response to COVID-19, scale, empowerment, and control are critical for sustainable execution. Retailers face challenges to start and stay operable in what is becoming the fast-changing ‘next’ normal. We are reflecting on why different approaches to tackling retail challenges are yielding different results.
Seeds of the Future Normal
Nearly a decade ago, we started working with retailers who envisioned impending shifts and wanted to be in a position to respond. Focus evolved from what was next for critical systems like POS to omnichannel, omnichannel and POS, digital and POS, and more.
Innovators who focused on “Next Generation Store” didn’t have a specific set of requirements or a picture in mind. Instead, they looked at how to arm themselves with control of technology and systems that would empower them to develop customer experiences in a highly agile try-test-learn-respond environment and embrace modern infrastructure to achieve scale on-demand.
This view of the next-gen store was a significant departure from the existing technology approach that remains the backbone of most retail landscapes. Not unique to retail, legacy systems have never been about yielding control. Their value has always centered on maintaining a “tight ship” of well-defined features that don’t change very much or very rapidly. This structure, stability, and safety served retailers well for decades.
Slow Adoption Catches Retail Off Guard
Then the world changed. The arrival of the digital age suddenly meant shoppers had access to much more information than ever before. Millennials shunned brand loyalty and shifted purchases to e-commerce. The “anything everywhere” digital natives followed and dramatically gravitated expectations toward experiential shopping and immediate availability.
Retail pundits dubbed this the retail apocalypse, the death of retail as we knew it. New retail juggernauts were on their way to totally redefining shopping (frictionless). Too many retailers ignored the signals and let their silos—technical, functional, personnel—dictate their response and snubbed shopper’s fast-changing behaviors.
And when COVID-19 gut-punched retail, immediate priorities became servicing, protecting, and surviving never-before-seen repercussions. At the onset of this crisis in the U.S., the unthinkable happened when industry leader Amazon failed to deliver on the Prime promise that 150 million of us had started to think was our inalienable right—instant gratification. With prime delivery timelines strung out, its supply chain broken, instant gratification evaporated. It was the first opening to recapture lost customers, and Kroger, Walmart and Nike leveraged investments in innovation and digital engagement to respond with effective strategy and execution.
Taking Control to Remove Risk
How are leaders in challenging segments like grocery able to mount an effective response to this crisis? No crystal ball told them what was coming. Instead, leaders appear to share a common understanding: control would unlock speed to innovation. Recognizing that legacy technology restricted their response to customers and dramatically slowed innovation, Kroger focused their definition of next-gen store technology on a platform that put them squarely in control of store and customer experiences. While they couldn’t have predicted that curbside and contactless shopping would become a primary need with explosive growth within a matter of weeks, their decisions on innovation and technology positioned them to execute, learn, and evolve to quickly serve in new ways.
Even Kroger’s selection of a next-gen store platform was centered on test-and-learn. To test drive the platform and validate the agility of a new, headless store approach, they expanded their pickup-at-curb function to Walgreens locations. With a modern transaction engine to manage all core commerce functions, their teams were free to focus on agile delivery of their user experience that streamlined operations for associates and customers.
Bringing the headless commerce concept into the store, retailers find that within weeks they gain insights on how this level of control on a modern tech stack improves their ability to respond and react as business demands. And perhaps even more critical today, untethering from the legacy pricing model means that investments are incrementally and iteratively managed to outcomes and quickly shifted to areas yielding the greatest business impact and return.
Focus on Scale to Achieve Business Return
While gaining control is a significant step, learnings from the COVID-19 crisis show that control plus scale for staying power in the new normal. Retailers already focused on scaling their initial crisis response from test-and-learn to full rollout are significantly ahead of peers and better positioned to exit crisis mode. Today getting to the curb is critical to serve customers, and many retailers have found ways to do so quickly. With the rapid acceleration of behavior changes and long-term implementation of some form of social distancing, a retailer’s curbside strategy has to be capable of supporting the scale of store transactions to be a truly viable business strategy.
Most retailers saw close to 90% of pre-COVID-19 sales still taking place in-store. Today every retailer is concerned about building an informed strategy that protects business and customers. As we proceed from crisis response to business strategy, empowerment to respond, control to own their experiences, and capability to scale fast will be primary differentiators for retailers who successfully execute, rapidly deliver innovation, and survive.
Learn how leaders are becoming empowered with scale, agility, and economy to create experiences that deliver value to customers and ROI to the bottom line.