COVID-19 has accelerated the move to digital, and forced buyers’ hands to fully embrace and adopt e-commerce.
Research from Adobe’s latest Digital Economy Index shows that online shopping during COVID-19 has exceeded 2019 holiday season levels and online spend for April and May is $52 billion more than what retailers typically see during those months.
E-commerce has just aged three years in the span of three months.
The substantial increase in e-commerce transactions has put unprecedented strains and pressures on retail operations and systems. And things aren’t going to go back to “the way they were” either. In fact, most Americans are still skittish about visiting stores and malls, according to a First Insights survey.
For retailers, this means strategy overhauls of how they sell both online and, in their brick and mortar locations. We’re already seeing merchants, both big and small, think out of the box as they digitize their customer interactions and become more experiential.
There are companies that are ahead of the game, going all in on digital even before the pandemic. Below, we take a look at some of their shrewd ideas and how these may become industry standards post COVID-19.
Rethinking Brick and Mortar
Given current conditions, we will likely see many brands rethinking the purpose of their brick and mortar locations. There are already first movers in this space, where their storefront is more about telling the brand story, while the actual transactions take place online.
COVID-19 has taught people that in most cases, buying online can be better, faster, easier, more convenient, and safer. Retailers must make their in-store location worth the trip.
Back in 2019 Tesla made the controversial decision to stop selling its vehicles in showrooms, moving all sales to an online-only model. Their showrooms are experience centers, not sales centers.
If you want to buy a Tesla in a showroom, you can, but it’s a DIY process. You have to pull out your mobile phone, pull up the Tesla website, and order the car. There’s no pushy sales staff who take your order for you.
Instead, the staff are brand ambassadors, there to help you fall in love with the company and its cars.
Focus on direct-to-consumer’s
On a recent earnings call, Jonathan Sinclair, CFO of Canada Goose, explained that the company would be pivoting to focus more on its direct-to-consumer (D2C) business, both through e-commerce and its own branded experience centers.
In its flagship Toronto store, there are no products for sale. Instead, consumers get a multi-sensory experience to “feel” why the company’s parkas are worth the hefty price-tag, which is often upwards of $1,000 for a coat.
Canada Goose also intends to reduce its reliance on wholesale and retail distribution channels going forward.
Online-Only Sales Model
In some cases, expect companies to close their physical stores altogether and continue business solely online.
Bose, which in January announced that it would be shutting all of its stores in North America, Europe, Japan, and Australia, definitely saw the writing on the wall even before COVID-19 hit the United States.
The retailer decided that it would continue its business online only, and when you think about it, no one really needs to try on noise canceling headphones or test speakers in a store.
Today, consumers trust online reviews and content more than they do a sales pitch from an associate. It was time for a radical new idea from Bose.
In a surprise move, Microsoft also just announced they will permanently close all of the 83 their retail stores and shift to a 100% digital retail model.
The firm is not planning to furlough any of their associates, instead inviting them to take new roles helping customers on their website through video and chat experiences.
Looking at some of the recent earnings calls from big retailers, they have seen a seismic shift in their business model. E-commerce has been the survival pill during the pandemic.
For example, online sales were up 50 percent year over year in Q2 for Zara, and in April alone, its e-commerce sales were up 95 percent. In response, Zara has now updated its online sales growth forecast.
In 2019, just 14 percent of its revenue came from digital. By 2022, Zara expects e-commerce to account for 25 percent of all the revenues.
A Focus on Building Community
It’s no longer just about the sales support you get while you’re buying the product, or the service and help you get once you own it. It’s about the end-to-end customer experience.
After more than three months of the pandemic, many companies are realizing continued success will be just as much about how people perceive and engage with the brand. The experience starts from that first engagement, continues through to purchase—and beyond.
We’ll see a lot more brand-affinity building from retailers, such as community initiatives that customers feel aligned to, and that may give them a voice.
Many examples of online communities
There’s no better example of this than what Calvin McDonald, the CEO of Lululemon, talked about in June during the company’s 2020 future earnings call.
During the early days of the pandemic, Lululemon launched an online community where customers could congregate to share their stories, experiences, and continue to do yoga together in a virtual manner.
Lululemon also built a new chat program, its digital educator service. Using FaceTime and Zoom, customers can book appointments with “store associates” for a virtual video chat about yoga wear that’s right for them.
Lululemon has essentially taken what was happening in the physical store and digitalized it.
It’s Not What’s Coming, It’s What’s Here in Buying
The future of digital in retail is actually here now.
As it’s said, “necessity is the mother of all invention,” and this is what we’ve seen because of COVID-19.
Unfortunately, we will see negative repercussions some businesses have faced in light of the pandemic.
We will also see some really inspirational stories around resilience over the next couple of months, and how thinking outside of the box and digital-first, can future-proof a brand.
Image Credit: Adobe Stock
Peter is an established industry expert in eCommerce and omni-channel technology, having previously served as vice president and principal analyst at Forrester Research. In this role, he spent more than five years leading Forrester’s global research on digital commerce technologies, helping to challenge thinking and serve as a change agent for eCommerce executives undertaking major digital transformation and commerce technology programs. Today Peter leads commerce strategy for Magento, an Adobe company and the leading provider of commerce innovations to merchants and brands across industries.