We’re now over a year on from the start of the pandemic. It's safe to say that while a lot of things have changed beyond recognition, we’ve also adjusted to a ‘new normal’ in retail. Offerings like curbside pick-up have gone from being novelties to expectations, while many consumers have headed online to shop for the first time.
So what does this mean as we enter the ‘late stage’ of the pandemic? Having been forced to adopt new shopping habits over the past, just how readily will consumers return to business as usual? Or, are we looking at a longer-term shake-up in the retail sector?
Here at Whiplash, we're highlighting the 4 trends that are having the biggest influence on retail and fulfillment as we continue to combat the effects of COVID-19:
We can all remember the confusion and panic that took place with the onset of the pandemic in March 2020. Storefronts were shuttered virtually overnight, and consumers were forced to make a frantic pivot to online shopping. Carrier networks became overstretched, and supply shock quickly set in due to panic-buying and reduced freight capacity.
Now a year on from the start of the pandemic, the picture has changed somewhat.
While restrictions on gatherings and in-store retailing continue, supply chains have adjusted to an increasingly hybridized retail landscape. Although we’re still seeing high volumes of small parcel freight, carrier networks are better equipped to cope with sustained demand. And with vaccinations now rolling out at a steady pace, this light at the end of the tunnel is beginning to strengthen consumer confidence.
As the pandemic - and consumers’ response to it - has matured, shopping habits and the retail landscape at large have been forced to enter a sustained ‘new normal’. Some brands have thrived by making rapid pivots to D2C distribution, while others have faltered due to changes in buying behavior.
So, what does this phase of the pandemic mean for retailers who are grappling with ‘what’s next’ in this fast-evolving marketplace? We’re going to dive into four trends that are shaping retail as we head towards recovery.
Peak season is not a new phenomenon. The last quarter always bears witness to a huge spike in demand for fulfillment and shipping services as the gift-buying frenzy takes hold. But as COVID-19 saw huge numbers of consumers migrate to ecommerce, the so-called peak has continued to the point we should no longer consider it a spike, but a new baseline.
Estimates place online sales in 2020 at $860 billion - a 44% increase in 2019. This left parcel networks handling what would previously have been considered as peak season volumes for the entirety of 2020.
So, what happens when those forecasted ‘peaks’ become regular? For carrier networks that have had to pivot from large commercial orders to individual deliveries, it’s required a big change in strategy.
Back in February, FedEx announced new peak season surcharges on express and residential ground shipments, applying to companies shipping more than 30,000 packages on a weekly basis, as it continues to find new ways to manage capacity. Also recognizing a longer-term shift in small parcel volumes from SMBs. UPS is shifting towards what it’s calling a ‘personalized pricing’ system where billing will be tailored to the needs of its customers.
As the pandemic continues to disrupt normal sales patterns in 2021, all signs point to this reliance on ecommerce as being more than just a blip on the radar. As consumers adjust to using online shopping more regularly, we’re going to see the residual impact of a lasting change in shopping habits.
Here at Whiplash, we’re been extolling the virtues of real-time inventory reporting for a while now (after all, it’s a core part of our platform!) But where real-time reporting may previously have been a value-added extra, it’s become a necessity in this late stage of the pandemic.
Why? Because the pandemic forced many traditional retailers to augment their store locations with omnichannel shopping offerings. As BOPIS, curbside pick-up, and in-store returns all experienced a rapid surge in demand, this has created a new puzzle for retailers. Namely, how they can get the right SKUs to the right place at exactly the right time.
This is no small undertaking, especially when visibility is lacking. But as consumers adapt to this newfound convenience, they're going to expect more seamless and flexible experiences - and you need the right technology to back you up.
As well as allowing you to get a much better handle on areas such as SKU turnover and penetration, you can also share these insights with your customers to enable more frictionless shopping journeys. If customers can see stock levels online at each of your store locations, they can make informed purchasing decisions that bring them closer to your brand.
As shopping habits have shifted over the past year, retailers have had cause to think more carefully about the strategic value of store and distribution locations. With home delivery skyrocketing, retailers have taken steps to optimize their fulfillment operations for faster last-mile delivery and more fluid inventory.
By pursuing a multi-node fulfillment strategy that places facilities close to major population centers, more robust omnichannel selling strategies become possible. As consumer expectations grow for ever-shorter delivery time frames, bringing SKUs closer to the end customer allows for better competition with the ecommerce giants.
Another trend that’s fast picking up steam is the recalibration of brick and mortar stores for the purpose of fulfilling online orders. This takes advantage of locations already housing large amounts of inventory, often within suburban areas, allowing retailers to cater more readily to O2O (online-to-offline) retail strategies like curbside pick-up.
Target’s so-called ‘sortation centers’ are allowing the retail giant to meet increased demand for same-day home delivery, while Lowe’s has moved to fulfilling 60% of online orders via store locations, enabling the fulfilling of orders six times faster than in 2019.
It remains to be seen how viable store-based fulfillment will be once in-store retail restrictions end. Especially when increased foot traffic will muddy inventory reporting and staff responsibilities on and off the floor. However, we can expect to see the greater use of strategic locations as omnichannel dominance grows.
The pandemic has forced brick-and-mortar and ecommerce to blend together across shopping journeys. This has helped to highlight the strengths and weaknesses of each sector in regard to the customer experience.
However much online shopping grows, the structural limitations of ecommerce make it difficult for online sellers to fulfill critical parts of the customer experience. The absence of face-to-face interaction can act as a barrier to consumers building a relationship with a brand, or interacting with certain products.
Moreover, delayed gratification continues to present a problem for some consumers - no matter how fast delivery becomes.
Retailers should take note of these shortcomings as the return of foot traffic grows closer. If the pandemic has taught consumers anything, it's that shopping in-store is no longer necessary - unless it offers them an experience they cannot get online. If your store is merely a physical cut-out of your online product catalog, consumers have little incentive to engage.
As the in-store retail sector recovers from the pandemic, consumers want to reacquaint themselves with what makes brick and mortar great; immersive brand experiences, knowledgeable floor staff, and opportunities to try and test products.
As the economy opens up, retailers can set themselves up for success by using the in-store experience as a tool to bridge this ‘experience divide’ and foster brand loyalty.
The pandemic has forced consumers to adopt new buying behaviors to fulfill their needs. This has led to the discovery of better, more efficient ways of shopping that aren’t just going to disappear when the economy reopens. A year on from the pandemic, we can clearly see the formation of more permanent habits that have made lasting changes to the retail landscape. Retailers need to take note of how they can meet these expectations not only in 2021 but into the future.