The retail market share war was complicated before the pandemic – and now we have the new reality. Slowly and then suddenly COVID-19 crippled economies across the globe.
Regardless of how well retailers were doing, the pandemic created anxiety across businesses and customers alike. It not only disrupted the retail landscape but brought about so many changes that many retailers are still scrambling to get a foothold and stay relevant.
Getting a grip of the uncertain market has been tough for retailers with social distancing, altered manufacturing and transport, store closure orders and new policies that are being implemented regularly.
While brick-and-mortar bore the brunt of this disaster, the silver lining is the boom in ecommerce sales, with consumer spending in non-store channels jumping 20.5 percent year over year in April.
With this upward trend in ecommerce spending, retailers must jump on the opportunity to hone their online businesses and formulate strategies to thrive in this marketplace amidst retail giants like Amazon and Walmart.
Effective communication has always been important but in times of crisis, retailers should take particular care when communicating with their customers – taking the time to understand and relate to their challenges.
It is a good practice to reassure customers with positive and relevant messaging, with the efforts brands are making to cope with the crisis and keeping them updated.
Whatever retailers do at this point can sound opportunistic, especially if they are announcing discounts and sales, but if done smartly, customers will not be offended.
Walmart is a great example of a company that has earned a good brand reputation by offering help and support to the community through a commitment of $35 million, supporting suppliers and employees through reviewed policies and store safety, and increasing online deliveries, enabling two hour deliveries and curbside pick ups to ensure essentials reach customers on time while maintaining social distancing.
Learning from the giants can help retailers take the right step forward. Communication, when done properly, will help you build brand reputation and retain customers.
Retailers that think in terms of customer pain points and how their business can help employees and society reduce the havoc the crisis has wreaked, will win them market share.
Invest in an ecommerce solution
COVID-19 has changed how people shop – pushing internet neophytes to shop online and accelerating ecommerce adoption.
The US market witnessed a 30 percent increase in online sales year-over-year and Adobe’s analysis states that customers are turning to ecommerce stores for essential products such as protection products which have risen to a whopping 817 percent.
Hence, for brick-and-mortar stores, it is time to invest in ecommerce technology and align price and inventory with the in-store offering.
There is no doubt – now is the time – retailers must embrace a digital-first, AI-enabled strategy. The secret to the world’s leading online retailer, Amazon, is how it has successfully used AI to win customers and gain a competitive advantage over other retailers.
This is why Walmart and Alibaba have invested heavily in AI to maintain their positioning against their rival.
Accenture has predicted that AI can increase retailer profits by 59 percent by the year 2035. AI-driven intelligence and analytics cannot be ignored as they are fast becoming an essential part of every business.
Deploy dynamic pricing and price optimization
As the pandemic pushes more people to explore online shopping, retailers need to use dynamic pricing and price intelligence to beat the competition. Since AI-driven dynamic pricing adjusts pricing according to demand, it can help retailers in many ways.
Dynamic pricing will help retailers serve comparison shoppers and will enable them to win new customers. It can have an impact on profit margins, customer satisfaction, sales, and brand image.
Amazon continues to win the pricing war because it can adjust product pricing in minutes, not in days or weeks.
Retailers need intuitive real-time price optimization solutions to make SKU level price changes and optimize markups and markdowns based on competitor price movements and inventory.
Price optimization can help retain customers and drive up profits when done right. With the right AI-driven tool, price optimization can become easier as big data can be used to make decisions that will drive retailers to set prices in real-time, during uncertain times like these.
McKinsey found that retailers who implement dynamic pricing correctly typically see sales increase from 2 to 5 percent and increases of 5 to 10 percent in margins.
Optimize assortment and inventory
Maintaining a winning assortment is tricky, especially in these uncertain times. But retailers can leverage technology to make merchandising work in their favor.
Focusing on optimizing assortment is key at this time and choosing an AI solution to build assortments that customers actually want to buy, can help retailers drive customers to their online stores.
Retailers need to accept that having the right assortments will play a big role in attracting and retaining customers.
They need to stock up on products that are fast sellers to avoid customers from moving to other platforms due to out-of-stock products. Having an eye on what’s hot and what’s not can help build assortment experiences that customers will keep coming back for.
A recent study suggests that up to 17 percent of items in a category are duplicative in nature – having a smart retail solution can help identify and rectify these inconsistencies.
Apart from adopting a smart solution to aid assortments, retailers will have to rethink their supply chain and decentralize manufacturing to ensure they have a continuous supply of inventory despite market inconsistencies, as seen during COVID-19.
Keep a close eye on your competitors
With the war on retail raging fiercely, competitor insights are crucial for retailers. Competitor analysis can help retailers understand how the competitors are promoting, strategizing, and pricing their products.
This can provide a window of opportunity as it enables retailers to get ahead of their competition. The average response time for Amazon for a price change based on competitor movement is two minutes while it is 716 hours for US ecommerce and over 270 days for US brick-and-mortar stores.
To compete with retail giants like Amazon, retailers have to pivot their strategy to match this level of technological supremacy.
To be able to do so, retailers have to embrace retail analytics solutions that can act as their eyes and ears to constantly monitor competitor movements and shopping trends and alter their prices and assortments accordingly.
Have a recovery plan of action
Planning for recovery is going to be challenging for retailers as there is so much changing every day. While retailers were suddenly faced with store closures, cancellation of certain events, and a fluctuating demand, many were left scrambling in the absence of a contingency plan.
In fact, recent McKinsey research noted that many retail executives think it will take months for store traffic to get back to normal. The same survey also saw executives predicting a 6 to 13 percentage-point increase in online penetration compared with pre-pandemic levels.
Retailers need to be flexible to quickly adapt to these circumstances by adopting a digital-first approach.
If retailers already have an ecommerce website, focus should be on bolstering it to drive sales online, channeling in-store inventory to online stores and ensuring supply meets demand.
If they don’t already have an ecommerce platform, they should make it their priority to be able to cope with the recent retail disruptions.
By understanding the market in real-time and getting accurate data-driven insights, retailers can confidently take the next step and thrive even during these difficult times.
COVID-19 has disrupted lives and economies throughout the world and its aftereffects will be felt for months or even years to come.
It has irreversibly altered consumer buying behavior, demand patterns, and shopping trends – accelerating the need for a unified, omnichannel solution to thrive in the highly competitive retail environment.
Retailers must jump on the ‘digital-first’ bandwagon to make the most of the rapidly evolving retail market and win the war on retail.