Retail trend 2: The boundaries between digital and physical are blurring
Through the pandemic, most retail brands mobilized their resources and rebuilt processes to reach their customers through innovative mechanisms. For example, buy online, pickup in store (BOPIS) models, which were earlier preferred by customers to avoid exposure to the virus, are now preferred by them in order to skip long queues. In fact, 33% will continue to pick items in person after shopping online in the US . While omnichannel was used to refer to a mix of digital channels until before the pandemic, it now encompasses physical stores and facilities too – they have turned into yet another channel, and customers now exhibit greater agility across all channels.
These factors point to an evolving paradigm in the retail value chain: the convergence of the digital and the physical, not only from the perspective of the shopper, but the seller too. Consider that 61% shoppers are willing to pay more for same-day delivery , and that 65% retailers plan to offer it in the next two years . Such propositions require retailers to orchestrate workflows with greater agility, which calls for a digital-first approach to rethinking long-established first principles, like hub-and-spoke distribution logistics. Goods must be brought closer to the customer, digital systems must anticipate what buyers want, when, and where, before they want it. How should retailers play to this evolving digital-physical convergence in retail?
Learning from evolving retail operating models
Retailers have operated with a fixed set of assumptions which will lead them to a downhill trajectory in today’s dynamic and digitally-orchestrated markets. In fact, each assumption must be tested, and each strategy must be revisited with a focus on examining its relevance in today’s markets. For example, pop-up stores, which were historically leveraged to generate product awareness, are now being used by established brands like Nordstrom to accelerate returns, offer alterations, and augment the convenience offered by its digital channels .
Similarly, retail giants like Amazon are offering checkout-free store shopping, completely eliminating long queues and friction from the payments experience. A single strategy will not work for all retail segments; this is the time for retailers to experiment, innovate, and rebuild their operating model in alignment with what their shoppers are looking for today. From livestream selling to virtual shopping appointments, retailers are thoroughly reinventing their organizations from the inside-out to support new and innovative experiences.