Winning the future in Non-Grocery Retail
Covid-19 has chucked everything up in the air for retail and everyone is waiting to see where the pieces will land
We’ve already seen the news that Dixons Carphone Warehouse has chosen to mothball its standalone stores, and luxury brands are coming to Amazon. Questions about what markets will have irrevocably shifted online, what new consumer needs will emerge and which retailers will survive are all under speculation.
As we brace for a return to ‘business as unusual’, it is important to focus on the learnings of past recessions – namely that “successful businesses out of a recession reduce costs selectively by focusing more on operational efficiency than their rivals do, even as they invest relatively comprehensively in the future” (HBR, 2010).
History has shown that every great category and culture defining innovation has come from a place of empathy. The best innovations in purpose, proposition and profit model all instil the same empathetic principles of simplicity, accessibility & affordability. This framework builds on the ideas first laid out by Clayton Christensen. It is these three conditions which - when combined – will always result in market transformation.
Bearing this model in mind, I expect the post-covid highstreet will see an acceleration of BOPIS – buy online, pick up in-store. Already the signals are pretty clear: BOPIS user growth is up 45% since Covid-19 and intent to use after Covid-19 is up 54% (McKinsey, 2020). It’s easy to see why:
· It is a simple proposition that gives the user more control and choice over where and when to collect – as opposed to being at the mercy of a delivery that inevitably arrives when you’ve popped out (some data even shows that 49% of consumers find in-store pickup is quicker than at-home delivery)
· It increases accessibility for the consumer, giving them another fulfilment channel to transact in
· It is cheaper than delivery as it falls within the retailers existing logistics operation and thus incurs no additional shipping fees; so it fulfils our affordability criteria for both consumer and business
As a case in point, we’ve already seen Walmart sharpen its BOPIS offering with ‘pick-up towers’ - a quasi-vending-machine that further automates – and speeds up – the process. These pick-up towers are in over 1,700 stores across the US, covering just over one third of Walmarts retail estate.
With a greater emphasis on BOPIS, this then presents new questions and opportunities about the wider role of the retail experience. Will this result in smaller store formats but greater store penetration? Will this result in a focus on showrooming with more space dedicated to experiencing (as opposed to stocking) the product? Or will it result in a merging of logistics and experience in to an autonomous show-rooming delivery store?!
The answers will depend a lot on how much you’re a logistics retailer (e.g. grocery) vs. an experience retailer (e.g. jewellery) as to your future trajectory, simplicity, accessibility and affordability will – I guarantee you – be the pillars of your retail strategy to win the future.
Matt Rebeiro is a Future Strategist at Iris