The pandemic has pushed many retailers to their heels. It goes to show that operating in a highly constrained environment can bring great ideas to life; there’s a reason why good startups don’t raise too much capital and maintain their agility in a resource constraint environment.
McKinsey wrote a great piece on retailers adapting to a new normal. Worth a quick read.
The big-short list:
- Marketing.
- Reaching the right people at the right time. Reduce media waste, start tracking better. Every good marketer in a large organization will need creative and technical chops.
- Build a better digital ecosystem.
- Discovery and intent start on mobile. The phone is an extension of people. Next gen retailers will double down on mobile experience and optimize for “zero friction.”
- Product assortment.
- Less is more. Having hundreds of thousands of products sitting under one umbrella brand isn’t strategic in the mobile age. For example, JC Penny would be better off compartmentalizing and creating micro brands for fashion, fragrance, beauty, etc versus having it all transact through one large brand. In the mobile world, brands need to optimize for communities. What resonates with my mom won’t resonate with my sister.
- Do me a favor and go to JC Penny’s website. Just try to find the ideal product for you in any category. There’s a high likelihood that you’ll face a paradox of choice and eventually just leave. “More” isn’t actually “more” in the mobile world… legacy retailers must consider having microbrands under their ecosystem to thrive.
- Become value driven.
- Experiential retail is a big opportunity. Most non-essential retail must think like luxury retailers. I wrote a thread on Twitter about how brands can take simple steps to achieve this. I recognize it doesn’t work for all, but it can certainly work for many non-essential product categories that have high average order value and/or is a considered purchase.
Ultimately, legacy retailers have attempted to win on both cost and value, and are not winning in either. Here’s a quick 1 min essay on value vs. cost… relevant for startups and large companies.