2021: A Make-or-Break Year for Retailers
Updated: 3 hours ago
The pandemic drove an immense amount of change in 2020. Retailers and restaurants were two entities that really had to pivot—and quickly. As these businesses move through 2021, some trends may continue to accelerate, others will begin to stabilize, and even some could begin to disappear. Tom Furphy, CEO and Managing Director of Consumer Equity Partners and CEO of Replenium, and Kevin Coupe of Morning News Beat, shared their thoughts about 2021 as a “transitional” year on the most recent episode of The Innovation Conversation—a virtual discussion platform that explores various facets of an increasingly technology-driven retail landscape. Here are the key areas in which brands need to concentrate on now and past 2021: Go, Go, Grocery: Why Now Is Not the Time to Take a Breather The surge in volume among grocers was monumental in 2020. Food consumption largely occurred at home, as individuals were no longer traveling, going to work, or eating out. Deemed “essential” from the start, it will be important for these retailers to continue to find ways to stay essential—even as the impact of the pandemic lessens. “They have to keep thinking about the notion of being essential every day; of owning the customer experience, differentiating themselves through products, services, and technology. And not letting their foot off the pedal,” states Coupe. Yet, some retailers see this as a time to catch their breath. Or, they view slowing down now as a cost-saving strategy. Furphy cautions this approach could lead to stagnation. “It was such an opportunity for retailers to take on this new volume and serve it in new ways. You have the customer shopping from you, either physically or digitally or some combination thereof. They’re buying more products from you. It’s not the time to pull back on that. At a minimum, maintain your level of focus, read what your customers are doing, gather data, refine that offering, and continue to step it up,” he urges. Major Boost in Ecommerce… But Now What? Some retailers had record volume last year as the ecommerce boom clearly contributed to increased product movement. However, this is a trend that may not be sustainable unless retailers implement a certain level of refinement related to investing in ecomm offerings. For example, retailers can no longer approach operations in triage mode (e.g. “We have to do curbside! Stat!”). Now, companies need to investigate how to make ecommerce more profitable while still meeting shoppers’ expectations. Third-Party Partners: Finding the Right Balance to Preserve Value Proposition Third-party partners witnessed rapid acceleration in 2020 in both the grocery and restaurant sects. Instacart provided a much-needed solution for shoppers and has received great credit for doing so. Companies like Grubhub and DoorDash did the same for restaurants. Yet, retailers need to find the right way to partner with companies and solutions that will add to their brand value proposition—as opposed to potentially subtract from it. This is another area Coupe and Furphy recommend companies assess carefully. “When it’s just a few points of sale, retailers can co-exist with [third parties]. When it becomes a bigger portion of your sales, that’s tougher to co-exist,” explains Furphy. “We’ve said time and time again, retailers need to own that brand relationship; the customer relationship. We can’t offload the brand value strictly to a partner.” Data Science + Shopper Tools: Investing in Your Customer Relationships One missed opportunity during the pandemic observed by Coupe was retailers ignoring the value of their customer data—particularly in regards to demonstrating loyalty to their “best” shoppers. “The pandemic opened this enormous window where they could have said, ‘This is our moment to prove our loyalty to our shoppers.’ Best I can tell, nobody took advantage of that moment,” he notes. Furphy agrees, to a point. But he also sees a significant shift in how retailers are utilizing data to build customer relationships and bring more value to those relationships. Brands are even going so far as to enlist the expertise of business leaders in other industries that have been perfecting loyalty programs for years (e.g. airline, hotel). Many are hiring data science PhDs in this field to drive loyalty strategies. “I think we’re going to see a Renaissance in loyalty in 2021 that’s going to separate retailers that win and those that don’t. Customers are used to personalization; everything you do in life is personalization. Done right, it can be magical. I think some retailers are going to realize that and will really reap the benefits,” he shares. An avenue where personalization has the opportunity to flourish in 2021 and beyond is in the auto replenishment game. Retailers can further build on customer relationships by combining data science with customer tools and capabilities. “It totally changes the game. I think a lot of retailers are now ‘getting it,’ and they see auto replenishment as, ‘This is a great way to use our data in a way that truly helps our customers.’ Those that don’t change their focus to truly serve the customer, to leverage data and other capabilities, they’re never going to make it long term,” adds Furphy. “A lot of them have already set the course to their ultimate demise.” Watch for future Innovation Conversations between Kevin Coupe and Tom Furphy by subscribing to the Morning News Beat YouTube Channel.