The physical shopping street is having a hard time due to online competition. That was already the case in 2019, but the Corona crisis really stepped it up a notch. According to McKinsey consulting firm, we have managed 3 to 4 years of progress in terms of digital adoption within a few months. That means that having a digital mindset and digital talent is essential for retail to survive.
Purchasing behaviour has changed, partly because people have been and continue to work from home on a large scale. Since 2020, consumers have spent more on furniture, garden products, home fitness equipment, and less on clothing. Moreover, nowadays clothes are mainly bought online, rather than in shops. The same is increasingly true for food.
The result: more and more brick-and-mortar retailers are closing their shops and continuing online or being swallowed up by major online players. This is already happening regularly in the United Kingdom and the Netherlands, and Deloitte Netherlands warns that this is only likely to increase when the Corona support packages from the government are eventually stopped.
Thinking bigger is crucial
If these companies are to survive, a lot needs to be done. Many businesses are in the process of a digital transformation, but the steps they’re taking are too slow and too small. According to Deloitte, they need to focus their efforts more on these areas than they have previously:
Engagement: The consumer has to be found again. You can no longer reach the consumer via TV spots or flyers, but online: ‘[…] there has to be a faster shift to data-driven targeted marketing focused on where consumers lead their digital lives.’
Channels: Too many stores seem to be from 1997. Deloitte argues for bigger steps and more innovation. It’s not just about an omnichannel strategy, but also about a different mindset in the shop: ‘[…] shop employees should be part of the distinctive character of a shop, not a cost item where you need to find ways to save every year.’
Fulfillment: To keep retail profitable, it is important to focus on “targeted investments and smart thinking about the most important costs (storage and logistics), combined with propositions that encourage the most beneficial behaviour.”
Commerce: Develop revenue models with other sources, such as data. As an entrepreneur, you have valuable information about your customers, and you can earn money from it.
In the boardroom
The above advice should be encouraged at the highest level. And that doesn’t always seem to get through. Harvard Business Review spoke to dozens of executives from different companies about their digital strategy and concluded that many of them struggle with digital developments. They know they have to do something with it but often find it difficult to estimate the value of investments.
As a result, many plans are unjustly dismissed. And the ideas that are implemented are often too modest, too focused on short-term goals or too focused on efficiency and cost reduction. While digital should be used to tap into new revenue models. And the management should encourage and guide this.
Digital talent is key
This means that it’s largely about digital skills and a digital mindset. The winners of the retail battle are going to be those who win the battle for digital talent. These are the marketers who help you get customers back into your store and the leaders who direct the management from the boardroom. They don’t need to write code themselves, but they do need to know the power and possibilities of current technologies. It’s possible to cultivate a new mindset, either through training or a stricter hiring policy, which will lead to taking the major steps necessary to continue participating among the top ranks of retail, not just in the short term but also in the long term.