We have all been affected by the economic shutdown in ways we could never have imagined. If you predicted during the 2019 holiday season that we would have a total economic meltdown in 2020, I would have laughed out loud at you and scoffed at the notion. What is apparent now is that retailers are taking the brunt of it in many unexpected ways.
Consumer spending is 70% of US domestic spending. We are in quite a hole and need to dig ourselves out. Retail stores are closing at a record pace, with over 9,000 store closings already announced this year. High store debt combined with the pandemic has resulted in a near retail apocalypse. Is there anything retailers can do to salvage their business? Yes, there do appear to be options.
Retailers have been shrinking their physical presence and moving towards technology solutions since 2010 after the great recession. Evidence of this occurred in the 2019 holiday shopping season where in-store purchases only increased 3.4% but online sales increased over 14%. Retailers who embraced technology for the past decade have put themselves in better shape for a pandemic future than those who have ignored the trend. Having an online presence is great for sales and for your future. Is there more that can be done? Let’s look at some of the trends and innovations that are possible.
First, do you have an ecommerce friendly POS system? A system that works seamless across your physical and online presence is now a fundamental retail need. I remember when “buy online, pickup in store” was a niche offering that was seen as a “wow factor,” but not necessary for retail survival. With cloud-based computing and other cloud offerings it should be a no brainer for a retailer to link their inventory, promotions and transactions to their online and brick-and-mortar stores. This is not a niche anymore, but a necessity for survival.
What about your big data efforts? By dumping all your data into a huge, raw data lake you can combine this with publicly available data trends such as population and weather trends and start to optimize demand forecasting. Cascade models can then be created to enhance your forecasting. As this method begins to run and you add your daily POS data to the pool, you can apply machine learning to your forecasting. This allows for learning approaches that are faster and more reliable over time and can really enhance demand forecasting.
And what about this online sales stuff? With consumers afraid to enter retail establishments can you leverage touchless delivery? Absolutely! We have an offshore partner that is an expert at touchless delivery of online-ordered products. They created a method of on-demand product pickup that is now one of the best solutions I have seen for product pickup – and product returns – that requires no personal contact between store personnel and consumers. Brilliant!
There is also a plethora of innovative technology solutions entering the retail space that may be applicable to many retail situations. Robotics used for product retrieval or even store inventory and restocking. Staff-free and cashier-less stores that allow consumers to completely self-checkout will proliferate soon. What about voice commerce? With the advent of Siri, Alexa, Cortana and Google Home Assist, voice recognition technology will enable consumers to compile orders for product pickup or delivery. At Tek.Advisors, we are working with providers who have expertise in these areas and are happy to point retailers in the right direction, as a healthy retail economy is good for the greater economy and all involved.