While the COVID-19 pandemic pummeled retail sales across the board, the most agile retailers should be thinking of their newfound challenges as opportunities to reimagine how their business engages shoppers.
Kicking off the Aptos Engage Digital event last week, Aptos CEO Noel Goggin made it clear that retailers must have a “material shift mindset” as part of what he called “the next normal.” This means there must be a material shift in talent, capital allocation and organizational energy if retailers want COVID-19 to be a positive catalyst for digital transformation within their business.
“What COVID is highlighting is the need for agility, and those retailers who have been fast to respond, that have been scrappy, innovative and creative can make things happen, versus waiting,” Goggin said. “They’ve adopted a launch and learn strategy. They’ve tried some things, some things have worked, some things haven’t. That is going to be critical in terms of the growth of the next phase of post-COVID.”
Aptos retail customers that are using the company’s omnichannel platform to enable various use cases including ship from store or curbside pickup have actually increased omnichannel sales made through these services by more than 200 percent since February, prior to COVID-19 shutting down the U.S. market in mid-March.
“These are new habits,” Goggin said. “These are real habits that our consumers are adopting to begin to use them. They like the convenience of it, and I think that’s really important as we factor that into planning and the future, planning new ways of reaching our customers, serving our customers and building that brand loyalty that we need with them. It is early days, so we need to see more of this trend line sustain over time. However, it’s very encouraging that we’re seeing consumer confidence increasing.”
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In shaping the “next normal,” Goggin said retail should expect five key shifts. Despite the recent surge in e-commerce activity, online shopping habits continue to grow, he said, but will not overtake brick and mortar. Consumer demand for convenience will increase, he added, while the role of the store evolves and retailers must rethink traditional planning. Last but not least, seamless, omnichannel experiences will become even more critical to building brand loyalty.
Goggin highlighted the success stories of retail clients including footwear and athletic apparel giant Nike and China-based fast-fashion retailer Fast Fish as companies that have epitomized strong digital transformation efforts during the pandemic.
Nike achieved a 5 percent sales increase in China in the first quarter, due to the company’s rapid shipping of inventory from their stores and wholesale partners into their own e-commerce facilities for delivery.
And despite having to close its more than 2,400 stores in China, Fast Fish reported in April that it had brought back about 80 percent of the sales it lost, and opened up 20 new stores in the month. Fast Fish company attributes some of that success to its decision to enable livestreaming on WeChat, the ubiquitous social app, as a new avenue to sell products when stores closed.
“They enrolled their store associates who had relationships with customers who had brand affinity, awareness, excitement and passion for the brand, and they started a sales and affiliate network of products in a livestream capacity,” said Goggin. “They have now taken that as a construct, because it was a so successful. Fast Fish actually converted two floors in the corporate headquarters to be dedicated to livestreaming.”
Innovation VP details COVID-19 response for EOM, SCM
After the keynote, Aptos vice president of retail innovation Nikki Baird shared three immediate impacts on retail as a result of the pandemic: the drastic consumer shift to online, the preference of contactless store environments over experience and a new uncertainty looming over what holiday 2020 will look like.
With these impacts in mind, Aptos deployed a COVID-19 response of its own to help its retail partners. This includes an Enterprise Order Management (EOM) “quick start” as ship from store and curbside pickup became crucial to more shoppers, a Supply Chain Management (SCM) “quick start” to help retailers gain greater visibility of their own suppliers and a new Merchandise Financial Planning (MFP) Foundation platform.
The EOM quick start has been beneficial through the COVID-19 rebound. In three of the past five weeks, Aptos retailers saw 200 percent sales increases for omnichannel purchases. Typically, these retailers see between 15 percent and 50 percent of customer orders fulfilled from a store.
“We saw during the shutdown that retailers who could reach into store inventory even in a limited fashion were able to sell on average 10 percent more than retailers that were relying only on their e-commerce distribution centers,” Baird said. “What we’ve seen as stores have reopened is that ship from store is not already back to the levels that we saw before the shutdown, it’s actually doubled the amount of inventory that is being sold by leveraging either ship from store or pickup in store today.”
The SCM quick start is designed to track steps after a purchase order to identify product delays and missing quantities much earlier so the retailer can rapidly react. Baird noted that some Aptos retail customers would execute more than 100 emails per purchase order prior to implementing the solution, indicating how disrupted the communication within the chain has been throughout the pandemic.
“Once a retailer places an order, they often don’t see anything that happens to it until there’s a ship notification that comes out the other end,” Baird said. “What you really want to be able to do is get into all of the steps that happen before that ship notification happens. That’s especially important now where we’re looking at summer inventory and we’re trying to decide how much we can bring into fall and how much fall inventory we need to have. Retailers are definitely placing a huge priority and emphasis on the ability to have minute control and be able to throttle up and throttle down depending on what’s happening in their supply chain and in stores.
Baird noted that predicting 2021 goals is going to require analyzing 2020 plans and 2019 results, but not 2020 results, so retailers can compare what actually happened last year with what they thought would happen this year. The MFP Foundation platform is designed to assist merchandise planners in this process as they manage the impacts of COVID-19 in real time and make further quarterly and annual projections without having to resort to spreadsheets.