Business Model Transformation: New-Age Retail Ecosystem
Thirty days, behavioral experts say it takes to form a new habit. The real question is what habits businesses must enforce and what habits they hope would customers follow.
During the pandemic, every step in every process was a victim of disruption. So far, 13 renowned retail brands have filed for bankruptcy – Ascena Retail, Brooks Brothers, Chuck E. Cheese, Century 21 Stores, GNC, Guitar Center, JCPenney, J.Crew, Lord & Taylor, Neimen Marcus, Pier 1, Stein Mart, and Tailored Brands.
Amazon’s advertising market rose by 52.5 percent last month. As a result, Amazon’s ad sales share in the US digital ad industry increased from 7.8 percent to 10.3 percent.
Many assume that the pandemic has slowed down spending. That is false. The assumption is not true by a substantial degree.
The year before COVID, consumers spent $598.02 billion in online shopping. In 2020, consumers spent $861.12 billion in online shopping – a whopping 44 percent hike in spending.
‘Contactless’ regulations accelerated the adoption of digital real-time wallet payment by 41 percent in 2020, making way for a ‘contactless’ economy (real-time wallet payment options include Google Pay, Samsung Pay, Apple Pay, and other such payment intermediaries).
Retailers have now realized that if they want to survive the ‘retail apocalypse,’ they must become digital-first. Much of the resistance that retailers had before the pandemic is gradually dissipating.
The coronavirus has shown categorical evidence of the importance and value of digital retail transformation on its own. It made technology more accessible to all. And technology has shown that if things are done well, there is a higher chance of doing well than before and being more competitive than before Covid.
The retail sector will rely on a hybrid paradigm under the current order of things. Consider it a hybrid topping on a pizza with a digital crust.
Retailers must combine both virtual and physical touchpoints more intricately and more comprehensively than it was ever done before.
People have been expected to remain indoors due to the pandemic. The restaurant industry is dying as people choose to eat at home or attempt to develop immunity by eating wholesome foods. Indoor restaurant revenue fell by 36.5 percent in 2020.
On the contrary, online grocery sales went boom with an incredible 42.6 percent last year.
A frictionless cross-device shopping experience is now desired by 76 percent of shoppers. With 36 percent of Americans owning at least three gadgets (according to Pew Research), retailers must create bridges that easily link one point to the next without any gaps or lags.
Usually, the research takes place on a desktop, comparisons happen on a mobile, and purchases happen on a tablet while watching TV.
For all that has been going on in terms of Zoom overload, extended lockdowns, and having to wear masks nearly all the time, ‘convenience’ plays a huge role in the retail experience for shoppers. According to a Deloitte Global State of Consumer Tracker, 73 percent of consumers are willing to pay more for convenience.
Instead of going global, brands must focus on staying locally strong. Consumers trust recommendations 92 percent of the time, so imagine the impact if you had a community of word-of-mouth marketers recommending your shop to their friends and families. Community-endorsed brands are becoming hugely successful after the pandemic forced people to limit their commute.
As a result of the pandemic serving as a global wake-up call, 57 percent of customers have made significant lifestyle improvements to reduce their environmental effects. 60 percent of people go out of their way to recycle and deliberately choose environmentally friendly containers and materials.
75 percent of consumers want brands to reduce the amount of packaging material they use. 32 percent of consumers are willing to pay for a product from a brand that is committed to sustainability.
The retail world is rapidly evolving because of technology, the pandemic, and customers. Retailers who can digitize their stores and change their overall business model would be effective. Retailers who will adhere to their old habits are doomed to fail eventually.