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  • Writer's pictureJohn Rindone, VP - Client Relationships


2020 was a year unlike any other. The pandemic changed the way consumers interact with brands while accelerating the demise of many established retail companies that couldn't absorb the impact social distancing would have on their bottom line. When we look back at the retail industry over the last five years, it's clear COVID-19 merely amplified the challenges retailers were already dealing with. Much has changed over the last half-decade. The lessons of yesterday can help us understand what we might expect in the future, preparing us for a post-pandemic retail environment.

5 Years Ago - The Emergence of Direct-to-Consumer Brands

Around five years ago, companies like Harry's, Casper, and AllBirds started to rethink how consumers interact with retailers. All three of these brands connected their product to a unique selling story, leveraged channels like email and social media, and ultimately disrupted the grooming, mattress, and sneaker industries.

A common thread from the emergence of DTC companies was their penchant to leverage organic and paid social media to promote their brand narrative. Through highly targeted audience segmentation and tailored messaging DTC startups were able to create meaningful and engaging relationships with their ideal audience. Relying on social validation, DTC companies entered into customer’s social spheres to build trust and community – increasing conversions and awareness.

When they launched, Harry's made waves with their referral marketing program. Relying on word-of-mouth and email, Harry's awarded users with free products for every tier of referrals made. This robust database of potential customers helped Harry's raise capital. Increased funding allowed the company to buy a German razor factory, improve control of their supply chain, and challenge industry titans like Gillette. Harry's took a trivial and expensive, daily chore and turned it into a convenience with a trendy story to share.

Casper flipped a dated and awkward shopping experience on its head. The company innovated in the sleep space by offering online-only, direct-to-consumer (DTC) sales of vacuum-sealed, memory foam mattresses. Not only did boxed mattresses arrive on consumers' doorsteps, but Casper also offered a 100-night trial of their product. They improved the customer experience by removing any hesitation of buying the wrong bed. Just like Harry's, Casper built a unique selling story that challenged consumers to think about how their mattress could improve their daily lives; they weren't selling mattresses; they were selling a good night's sleep.

AllBirds built their brand around sustainability, a storyline gaining more steam as we head into the new decade. Just like Harry's, AllBirds relied on word-of-mouth marketing, leveraging an uber-successful KickStarter in 2014 to launch the company to the top of the DTC marketplace. The company stands out by aligning its messaging with sustainability and comfort-minded consumers.

By 2015, more and more DTC companies were investing in real estate. Companies like Warby Parker and Bonobos saw the benefit of in-person touchpoints with their growing customer base. Not only did this decrease customer acquisition costs (which can be staggeringly high through online channels), it also provided a tangible space for consumers to interact with their product and connect with the brand. All three companies highlighted above made some type of move to physical locations over the last few years.

The direct-to-consumer revolution extended beyond retail into other spaces like finance and travel. Since the early 2000s, Expedia single-handedly put travel companies out of business by offering a streamlined digital experience for bookings and reservations.

While DTC companies were disrupting the market, we saw the first wave of store closings. Former titans like Radio Shack, Office Depot, and Circuit City began to shutter doors. A combination of online competition from aggregators, eCommerce market places and consumer desire to "shop small and simple" laid the groundwork to wipe out retailers who couldn't keep up with changing consumer demands, rendering themselves obsolete.

2 Years Ago - The Fall of Department Stores and the American Mall

The aftereffects of the 2008 recession and the increasing popularity of online shopping, led by DTC outfits, resulted in what some call the 'Retail Apocalypse.' 2018 and 2019 saw the closing of over 9,000 retail locations. Department stores failed to adapt to the changing retail landscape, and by the end of 2019, iconic brand names found themselves on the verge of bankruptcy.

The disappearance of anchor stores like Macy's and JCPenney led to a decrease in foot traffic that could no longer sustain the smaller shops throughout your average American mall. Stores like Sears, Payless ShoeSource, GNC, and Toys "R" Us were on their way out by the end of 2019.

The retail consumer of 2019 was better informed and tech-savvy than the consumer from 2015. Retailers who were tapping into this, both brick and mortar and DTC companies alike, found themselves leading in an industry going through unprecedented change. The winners of the 'Retail Apocalypse' were those who thought ahead. They developed the means and logistics to integrate their digital channels with their physical in-store experience to leverage an omnichannel strategy.

This paid dividends in 2020.

One Year Ago - COVID-19, A Catalyst for Change

2020 brought on the rapid adoption of buy online, pick up in-store (BOPIS), and saw a boom in eCommerce sales. Markets previously resistant to online shopping, like grocery and auto, experienced a shift as whole audience segments, which were previously slow to adopt eCommerce channels started placing orders online. The retailers who were quick to adapt and adopt online tools that improved customer experiences not only survived but have been thriving during the pandemic. Frictionless transactions and convenience became the primary driver for successful retailers.

Creating a seamless customer experience is critical when consumers can access your product 24/7, ship to store, or ship to their home. Due to the demands of COVID-19, today's consumer expects more than just being able to see what's available in-store or what can be shipped to them. They also want a seamless return and exchange process, helpful frontline staff, and knowledgeable customer service representatives.

Where We’re Headed

While the pandemic certainly accelerated eCommerce growth and digital adoption, the writing was on the wall for the past decade. The Home Depot championed omnichannel distribution as early as eight years ago, streamlining buy online pick up in store (BOPIS) and buy online return in store (BORIS) in the years since. Walmart was also an early advocate of curbside grocery in step with their shift to an e-tailer.

Digital conveniences are here to stay. If 2020 taught us anything, it is that companies that are ready to adapt and innovate will lead the charge into the future. Retailers who were developing and implementing BOPIS strategies in 2018 had an edge during the pandemic, but the industry will catch up, especially when things return to 'normal.'

Indeed, internet born brands like Harry's and Casper will go back to opening new storefronts once we can walk the streets without masks. As DTC companies reinvent the brick-and-mortar space, traditional retailers will benefit from revitalizing their in-store experience by creating high-tech, high touch spaces that complement their customers' online experience.

Leading manufacturers are also learning from the DTC playbook. At the dawn of the pandemic, PepsiCo launched their own direct-to-consumer platforms in and to deliver their popular food and beverage products right to consumers doorstep. Others, like Unilver and Dollar Shave Club in 2016, are taking the acquisition route. The acquisition merged Unilver’s logistical expertise with DSC’s loyal brand reach to maximize the DTC leader’s potential.

Lastly, retailers are bringing DTC stalwarts into their brick-and-mortar locations through micro-shops. Micro-shops give DTC companies a physical space to engage with their customers, while retailers benefit by tapping into a new group of loyal followers. Target and Casper are perfect examples of this growing trend.

So, What Should We Be Thinking About for 2021 and Beyond?

Contact-less interaction, unique partnerships and activations, immersive shopping experiences, and superior customer service will be essential for success in a post-pandemic world.

Retailers must adopt an omnichannel fulfillment mindset. In the past, the focus was finding the ideal market and channels and pairing it with optimized messaging and communication. Now, retailers have to take the same mindset and apply it to product fulfillment. Here’s how some of the world’s leading brands managed to innovate leading into the pandemic:

  • Best Buy skirted disaster by transforming from another big box retail merchant to a service venue and experiential based retailer. They further closed a serious gap by offering high end audio and home automation installations – eliminating the burden of identifying an installer in the eyes of consumers.

  • Walmart strategically went ‘all-in’ as an e-tailer with the purchase of and the added value of immediate pickup and returns.

  • Home Depot, as mentioned earlier, completely overhauled their fulfillment operations, leading the way in BOPIS, BORIS, and BOSFS.

  • Amazon partnered with Kohls to process returns simply and in real time while increasing foot traffic in the bricks and mortar locations.

    • Amazon Go removes the most painful aspect of grocery shopping - waiting in line and paying at the register.

    • Amazon is pushing the boundaries of fulfillment, employing drones to complete same day, door to door deliveries.

  • Innovation isn’t contained to the retailer and CPG space. Logistic giants Amazon and UPS are leveraging pickup and drop-off locations with Amazon Hub Lockers and UPS Access Points.

Focusing on messaging, communication, and personalization will help retailers stay at the top of their audience's mind in an increasingly competitive marketplace. How can you deliver the right message to the right person and ensure it's relevant and meaningful? The convergence of online data and in-store shopping means there's ample opportunity to activate customers with bundled products that tie-in to your brand's value proposition and selling story. To get this right, you need to identify potential problems, test the consumer experience, and optimize until you reach a solution that satisfies all stakeholders.

Companies that continually find ways to reduce friction in the purchase process find themselves ideally positioned when things head south. Retailers can avoid becoming obsolete by providing a compelling product selection, an easy way to shop it, an easy way to get it, and an easy way to return it.

The successful retailer of tomorrow will do well to look back on the evolution of retail these last five years. What DTC tactics, like paid social media, can traditional retailers adopt and implement? How can retailers connect their selling story to their online and in-store shopping experience? If shoppers aren't going to the mall, where can we find them? What habits and tools will stick in a post-COVID world?


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