What’s next for retail? For many companies, COVID-19 made bad situations worse. The retail landscape has been transformed due to changing buying habits, the growth of e-commerce, and store closings in malls across the country. However, the industry is resilient and continues to rebound and adapt to the emerging new reality. Sajal Kohli, a senior partner at McKinsey & Company, said, “the arrival of COVID-19 in March 2020, which shut down retailers across the country and forced consumers to change buying behaviors, rapidly accelerated the trajectory of the retail evolution, leading to more transformation in a year than has been seen in the industry in the last few decades.”
Recently, the Retail Leaders Association (RILA), in partnership with McKinsey & Company, shared research results based on industry leaders’ insights. The participants were comprised of CEOs and industry leaders who discuss seven requirements to build the future of retail. “While the fundamentals are largely unchanged, customers’ expectations are now exponentially higher, and retailers are rising to the challenge,” said RILA President Brian Dodge. “Leading retailers are embracing the opportunity to win new customers by leveraging lessons learned from the past year and investing in strategies to serve customers well wherever and whenever they shop.”
- Consumers reward retailers who can offer them a stress-free omnichannel experience that is easy to navigate and keeps them engaged throughout the buying process from start to finish.
- Although providing personalized is a fundamental step on the purchase journey, most retailers fail to deliver. The research indicates that 100 percent of retailers in the top-quartile cited omnichannel personalization as one of their top 5 priorities. However, only 15 percent have implemented personalization across all platforms.
- Ramp up e-commerce delivery. More than 90 percent of consumers believe two to three days is the maximum time for delivery. Thirty percent of shoppers expect same-day delivery. Meeting these high expectations requires retailers to become more efficient and agile and make significant investments in their supply chain’s fulfillment capabilities.
- Fully Commit to Environmental, Social, and Governance (ESG) Standards. Consumers are buying from companies that have a higher purpose than making money. One-third of participants stopped buying brands in response to their social actions. Seventy-one percent would not trust a brand that placed profits over people. Additionally, people are willing to pay a higher price for products that reflect their values.
- Reimagine Strategies to Recruit Talent. In a digital world, retailers need to expand their teams’ capabilities by closing the skills gap. Accomplishing this objective requires devising new strategies for recruiting talent and increasing the training of the current workforce. Options include upgrading skills, using different recruitment techniques, and selecting from a diverse pool of talent.
- Understand the impact of ecosystems and partnerships. In a competitive retail environment, the number of companies who explore opportunities that create partnerships and ecosystems will significantly increase. A McKinsey analysis predicts that ecosystems have the potential to become a $60 trillion economy by 2025.
- Accelerate productivity to optimize gains. Retail has experienced a tremendous rate of growth during the past decade. Achieving transformative change takes productivity to the next level and depends on prioritizing investments in analytics and automation.
These findings are based on surveys conducted with executives from 30 companies in the U.S. Participants included chief financial officers, chief supply chain officers, chief digital officers, chief marketing officers, and interviews with top Chief executive officers. Additionally, the report incorporated customer research conducted by McKinsey & Company.