Loss Prevention Research Council Weekly Series - Episode 49 - WSJ Post Pandemic Retail and the 7 Imperatives
With Dr. Read Hayes, Tony D'Onofrio, Tom Meehan
WSJ March 13-14, 2021. Attention shoppers: We'll Never Buy the Same Again. Trends They See: 1) Holiday shopping will not be the Same. Black Friday not dead but changing. Promotions will start coming + will last longer. 2) Malls will be back but will be different. 25% of USA Malls will close according to Coresight Research. Roughly 40% of mall square footage in China is devoted to Food and Beverage compared to 11% in USA. There will be a pent-up demand for experiences like theme parks inside malls. 3) Retailers will rely less on discounts. Promotions based on customer location and buying patterns. More personalized promotions in other words. 4) A store will no longer just be a store. Stores morphed into Amazon fulfillment centers during pandemic. Target said it costs on average 40% less to ship from stores, compared to ship from warehouses. Major chains closed 8,700 stores in 2020 after shuttering 9,800 in 2019. 5) Curbside won't get kicked to the curb. For consumers it is about convenience. For retailers, it’s about saving money and let the consumers be the last mile for delivery. Target estimates that it costs 90% on average less when shoppers pick up their orders at curbside. 6) Shoppers will become a virtual reality. As ecommerce proliferates, the barriers separating physical and online shopping will blur. E-commerce will account for 21.2% of total retail sales at the end of 2020, compared to 18% at the end of 2019.
Some interesting data from The Wall Street Journal report: In February 2020, pre-pandemic mall foot traffic was up 10%. At its lowest in April 2020 foot traffic at malls dropped 95.9%. As of February 2021, it is still down 38%.
For USA, at Brick-and-Mortar Sales: In Q4 2020, Sporting and leisure sales were up 16%. For 2020 overall they were up 5%. Furniture + home was up 4% in Q4, down 6% for 2020. General merch up 3% in Q4, up 2% in 2020. Apparel down 14% in Q4, down 26% in 2020. For North America: E-commerce sales for apparel pre-pandemic were expected to be up 28% in 2020. They were actually up 39%. For sporting + leisure, ecommerce pre-pandemic projected at 19%, actually up 38%. GMS projected pre-pandemic 20%, actual 2020 was 20%. DIY projected pre-pandemic 11%, actual 2020 was 25%.
From RILA + McKinsey, Retails speaks seven imperatives for the industry. Four are focused in doubling down consumer-driven commerce. 1) Become omnipotent on omnichannel. Consumers will choose retailers based on case and richness + end to end experiences. 2) This time (an all the time) it's personal. Consumers expect personalized experiences and offers as table stakes: most retailers fall short off these expectations today. 3) Turbo charge delivery. As consumers expectations approach same day, stress on supply chains will mount. 4) Take a stand on take a seat. Consumers are finally voting with their wallets for sustainability and broader purpose.
The other 3 imperatives are focused on interesting growth: 5) Recalibrate talent strategies. winning the wars for diverse talent, next gen skills, and embracing a fluid marketplace will give retailers a performance advantage. 6) Pursue an eco(system) friendly strategy. Winners will embrace the network economy to win consumers mind share and accelerate capabilities. 7) Take productivity from foundational to transformational. Analytics and automation will enable the step change in productivity needed to fund the other imperatives.
Some interesting data from the McKinsey/RILA Report: Whole personalization is a top priority only 15%of retailers have implemented personalization across channel. Why is personalization a top priority? Leads to a potential uplift in 10% to 15% in revenue and retention. 10 - 30% more efficient marketing and cost savings. 3 - 5% increased customer acquisition. 5 - 10% higher satisfaction and engagement.
On delivery, more than 75% of specialty retail supply chain lenders have made two-day delivery a priority and 42% hope to offer same day delivery by 2022. 80% of retailers plan to concentrate their 2022 supply chain spending on addressing e-commerce fulfillment. As a point of comparison, it was $755.6 billion in 2018.
The number of people globally choosing mobile wallets to manage their payment was 901 million in 2019. It is projected to grow to 1.5 billion people this year, and nearly 1.9 billion by 2025. China will generate half of all mobile payments by 2023. For 2021, Chinese mobile transactions will reach $1.3 trillion. As comparison USA market is only $465 billion. But USA market will grow 47% to $698 billion by 2023. The UK is the third largest market at $98 billion in 2021. All this data was reported by Finaria Italy.
