While Black Friday has its origins in the US, it has become more popular around the world in recent years. Britons, along with other nationalities, without bellies full of turkey, have benefitted from retailers’ Black Friday discounts, stemming from a US tradition that no one can quite pin down. As ecommerce has grown, Cyber Monday has also become a staple in retailers’ and consumers’ calendars, now giving retailers a higher chance of profitability and consumers more choice.
But this year is different. Eleven months into a global pandemic, the retail world has been shaken and enveloped in uncertainty. Shops have been forced to shutter as lockdowns have taken place globally. People’s buying habits have adjusted, not just due to shut shops but also an uncertain economy. According to a new study by marketing research firm Piplsay, 49% percent of Americans plan to do most of their Black Friday shopping virtually this year. France has postponed their Black Friday by a week.
What does Black Friday in 2020 Look Like?
Retailers have opted to extend Black Friday beyond the physical day, providing shoppers with the option to benefit from discounts throughout the month of November, hoping to reduce swarms of people and thus risk of COVID spread. This same concept has been applied online as well, giving people ample opportunity to enjoy discounts while preparing for their holiday season.
But fundamentally, buyers’ mindsets have changed. According to a global research survey conducted by REPL Group on consumers, 31% of respondents revealed that they didn’t want to buy gifts for Christmas anymore moving forward, showing that the wide-reaching impact of Covid-19 may have changed consumers’ mindsets for the long-term. Additionally, this year alone, 44% were reconsidering their Christmas gifting due to the possibility of not seeing others over Christmas, with a further 30% of people are looking to spend less on gifts.
Where Do Retailers Go from Here?
So where does that leave retailers? Unable to control economic, environmental, and social factors, what options do retailers have to maintain profitability and reduce costs in an age of so much uncertainty?
The key is and will be, adaptability and agility. The retail businesses that can proactively plan and react nimbly will prevail.
Leveraging Data Better
The pitfall retailers often fall into is not putting the data they collect to good use. However, if data is leveraged properly it can help an organisation to be more agile.
1. Workforce Forecasting
One of the best ways businesses can cut costs and react quickly to consumer changes is through accurate workforce planning. Retailers can leverage data from events, promotions, local activity and even the weather, to intelligently forecast labour demand and accurately create labour models.
2. Customer Journeys
What better way to anticipate ever-changing customer demand and sentiment than by investing in new, non-invasive, low-effort, digital technology solutions to capture the ‘softer’ aspects of customer experience while building up a clear picture of the perceived effectiveness of the retailer’s safeguarding approach. Businesses like Sainsburys have done this with an effective in-store shopping app (theirs is called SmartShop), which allows customers to reduce contact with people while shopping while still enjoying the in-store experience. Retailers can use insight on shopping behaviours to adjust stocking, rearrange stores and more.
3. Streamlined Warehouses
With a shift to online shopping, social distancing challenges, and strains on supply chain, visibility is more critical than ever in the warehouse. Retailers should be leveraging IoT-enabled fleet Information to inform macro and micro insights and across the supply chain. Machine-learning and demand forecasting will improve customer service and reduce waste and cost by optimising footprint, reducing picking times and more.
Of course, to derive value from their data, bricks-and-mortar retailers must ensure that they are able to trust it. For this to be the case, the data they have access to must be consistent and accurate which they can ensure by identifying gaps and performing data integrity tests. While this is standard practice for some forms of data, such as financials, retailers must begin to apply the same discipline and processes to all types to guarantee its quality. Investing in a data science team is now more important than ever.
Handling Digital Transformation Differently
COVID-19 has clearly accelerated digital transformation. But one must ask, why did it need to be accelerated? Shouldn’t digital transformation have already been adopted across the board? As a result of the pandemic, digital technology initiatives are the top strategic business priority for enterprise directors over the next two years, followed by customer engagement and managing the remote workforce, according to research from Gartner. 86% of respondents to the 2021 Gartner Board of Directors survey said technology has a transformational role in addressing strategic business priorities.
According to Harvard Business Review in October 2019, the biggest reasons that digital transformation fails is disagreement among senior levels of the business and a failure to estimate short-term and long-term capabilities properly. If retailers are looking to be more agile and adopt digital transformation more rapidly then there are a few things they will need to do.
1. Start off small
The best way to avoid major change management issues and digital capacity issues is to reduce the size of your project – prioritising departments or areas of the business that will benefit the most.
2. Ensure stakeholder engagement
Working back to front from the challenges and ensuring continued stakeholder engagement is key to unlocking the potential value of innovation. The most successful digital transformation teams have people dedicated to internal communication, recognising that communication and change management are often the biggest challenges, and areas of opportunity for maximising value. Engagement at the highest level is often the easier to execute, as digital transformation is often the brainchild of senior executives. Ensuring that the budget holders at the next level down are engaged is almost more important and should form part of a well planned and executed communication strategy.
3. Restructure and reduce silos
Where new products and ideas often cut across multiple departments, consideration should be given to the organisational structure. Re-imagining the structure away from traditional silos of work, towards customer experience and a product-based lens gives the business a head start in cultivating and maintaining digital transformation. Ultimately this requires a significant organisational transformation. Encouragingly, many companies are embracing the opportunity, undergoing digital transformations that will help enable a product-based approach.
It is the End of an Era
At the end of the day retailers need to adapt a more agile approach to business, an approach Amazon has taken for years. The quick response that COVID demanded needs to be replicable and long lasting. While restaurants and grocery stores rapidly launched contactless and curbside pickups during the peak of the pandemic, grocery stores reimagined their customer experience and pharmacies shifted to offer prescription deliveries, these adjustments need to be analysed and made into long term strategic moves for retailers.
Adapt or Die
Retailers also need to change the way they work internally, meeting often and quickly to make data driven decisions that the business can respond to rapidly. The biggest takeaway from Black Friday this year is that an age-old guarantee is off the table and the retail world is still changing. While this might have been accelerated by a pandemic, it was already happening. The best thing retailers can do is reinvent themselves, continuously, to make way for a new type of shopper and a new retail world.