The pandemic isn’t over yet, but there is light at the end of the tunnel. Brands are looking at the second half of 2021 with cautious optimism, and for good reason — as vaccines become widely available, regulations are being relaxed and consumers are venturing out to shop, dine and hang out with friends in numbers that we haven’t seen for over a year.
Many retail experts are expecting these developments to boost brick-and-mortar. But as things return to some semblance of normal, many of the habits that have consumer behavior since March 2020 will remain.
For example, digital commerce and contactless customer touchpoints will be two of the key pillars of post-pandemic retail. But stores will still exist, although they may look and feel a bit different. The test for most brands will be how they approach the challenges of weaving all these threads together into a seamless, compelling omnichannel retail strategy capable of responding to the consumer’s changing needs at any given moment.
At the Modern Retail Summit, held between April 21 to April 23, top retail executives discussed precisely these topics. Leaders from Walmart to Ocean Spray to Verizon provided insight into what the retail landscape will look like for the year to come. As always, Modern Retail surveyed the state of the industry and touched on what brands are learning, testing and implementing to drive business forward in the coming months.
Here are some of the top insights presented during the three-day event.
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Omnichannel strategies were one of the most prominent themes of the summit — and new retail experiences are a big part of that.
A number of retail leaders discussed new programs they are implementing in the months to come, to help shoppers feel more comfortable about going to stores. Adam Michaels, SVP & Chief Digital Officer at Crocs, for example, said he can see the brand investing in fleshing out services like curbside pickup and in-store pickup for online orders – a common refrain at the summit. Crocs is certainly betting on digital payments and buy now, pay later in markets around the world, Michaels added.
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To aid in this, many brands are looking for new payment options. A payments revolution is transforming the nature of commerce. Touchless payments, QR codes as well as buy now pay later services are exploding in popularity. “Retailers want payment partners to lean in to bridge that gap between online and in-store in a bigger, more meaningful way to offer flexible and seamless experiences,” said Eileen Bennett, Director of Strategic Partnerships, Global Pay Later at Paypal.
Beyond touchless commerce options, customers have been seeking out new ways to buy their goods. Online marketplaces became vital outlets for brands in 2020, and many of our speakers said that’s not going to change. At Crocs, Adam Michaels said brands need to acknowledge that so many consumer journeys begin on a marketplace rather than on a space owned by the brand. Michaels shared insights on combating unauthorized sellers and navigating new product launches on Amazon, as well as tapping into global marketplaces like Rakuten in Japan, 11Street in South Korea and Wildberries in Russia. His take is that a good marketplace should be invested in more than just seeing brands complete transactions. “We really want to talk to the marketplace about how they can help us build the brand, tell the product stories we want and really position the brand the right way,” Michaels said.
Case Study: Verizon
The coronavirus really only accelerated a bigger shift towards touchless technology that was already underway, as Krista Bourne, President & SVP, Sales & Operations at Verizon, explained.
During the pandemic, Verizon’s My Verizon app allowed customers to schedule in-store appointments and check in upon arrival. The system also helped in-store employees manage the flow of customers in line with current COVID-19 regulations. It’s been a huge success – according to Bourne, as of March 2021, 60 percent of Verizon’s sales began with a digital interaction. “We’ve always known that customers feel best when they are in control of their experience when they feel like we are curating and personalizing it for them,” she said.
The next step is building these services out further. By the end of the second quarter of this year, Verizon will launch a video call service allowing customers to connect with in-store staff from their homes or mobile devices. The employee can answer questions, walk the customer around the store to show them items, help with device setup, and more.
New technologies were a hot topic at the event. Orchid Bertelsen, Nestle’s head of digital strategy and innovation, talked about CPG giant’s three-pronged deployment of AI, which powers text-based interactions (chat bots and predictive text), voice-based interactions and computer vision technology.
A prime example is Nestle Toll House’s AI-powered, virtual “cookie coach,” named Ruth. Bertelsen talked about developing Ruth to “spark joy” in consumers, thus clearing the “uncanny valley” hurdle that can hinder AI projects.
Brian Spencer, Director, Product Strategy and Innovation, Kroger Precision Marketing, said the future of e-commerce will be built on back-end infrastructure as much as on customer touchpoints. Kroger has invested in automated fulfillment centers, each powered by around 1,000 robots that Spencer said are “about the size of a dishwasher.” The robots buzz around the fulfillment center, picking out items for delivery. “They can assemble orders in five to ten minutes that would normally take in-store pickers 4,550 minutes,” said Spencer.
On the front end, Kroger is betting on personalization, using AI to develop algorithms that deliver personalized search results and product recommendations based on shoppers’ habits and preferences.
A few big marketing themes came to light. Here are a few of them.
- Authenticity remains the gold standard for brands in terms of communications and community-building
Garrett McGuire, Director of Retail Marketing at Merrell, talked about how Merrell has developed a highly localized marketing strategy built around speaking to local culture and sensibilities, from language and in-jokes to locations and working with local personalities.
The brand employs ten field marketers nationwide who are tasked with soaking up everything that makes a given location tick. Meanwhile, the Merrell team scours social media to identify “influencers” (who may just be regular people, as opposed to conventional social media influencers) whose content resonates with the local community. The goal is to get people outdoors and active. “It’s just a way of connecting with people in a really interesting way, an authentic way,” McGuire said.
- New platforms like TikTok must be handled with care
Nathan Apodaca’s video of himself skateboarding while drinking a bottle of Ocean Spray was a perfect example of unsolicited user-generated content that became a major opportunity for the brand.
CEO Tom Hayes said Ocean Spray’s team understood the brand’s response had to be measured. Hayes said the goal was to “develop the story and make sure the positivity continued and was amplified, without trying to take over the moment, which would have been wrong.” Ocean Spray eventually did a Super Bowl ad with Apodaca, but they avoided accusations of overkill. Similarly, Hayes said the brand understood the pitfalls of trying to replicate a viral success and falling flat.
- Customers can provide the best marketing
Storebound CEO Evan Dash spoke about creating conditions that support user-generated content without contriving it. For example, limited edition releases, like a line of the Dash brand’s waffle makers in unique patterns, have previously delighted customers and inspired social media sharing.
“By creating products that are really cool, that becomes social currency that the that the users want to share,” Dash said. Meanwhile, Don Larkin, Head of U.S. Digital Commerce at Reebok, said user-generated content created by in-store employees during the pandemic “paid dividends in our on-site conversion.”
Focus groups of young consumers help inform Storebound’s TikTok strategy, Dash said. The company scored over 100 million views related to its brands on TikTok without creating a single piece of content on the platform. “We’re doing right by the millennial and Gen Z generations, and we’re producing things that they love,” Dash said. “They’re so adept at social media that we’ve just put ourselves in the best possible position to ride the wave of content that’s being created.”
This is a really important concept for brands to take in if they plan on leveraging a variety of AI-powered technologies, from chatbots to robots and digital human assistants and influencers. The “uncanny valley” phenomenon refers to the emotional response humans have when confronted with something that is not human but is designed to have human-like qualities and interactions.
For example, imagine a robot that mimics the likeness and behavior of a human in a very crude way. With each iteration of that robot that is slightly more advanced than the last, the people who interact with it will respond with increasing positivity. However, at a certain point, the robot will provoke negative emotional responses – unease, mistrust, perhaps even fear. At this point, the robot’s likeness and manners will be both “too human” for comfort and “not human enough.” This is the uncanny valley. Further iterations will eventually evolve the robot towards a more perfect approximation of human manners, inspiring positive responses once again and pushing us up and out of the uncanny valley.
“What we have learned with the data that we do have so far is that many of our traditional in-store shopping customers actually stuck with us through the pandemic and they engaged online” – Karilyn Anderson, VP of Digital Marketing & CRM, SPARC Group
As brands move beyond the pandemic, many are looking forward to seeing an uptick in customers returning to physical stores. However, there’s no rolling back the shift to e-commerce that defined 2020. Anderson talked about SPAC Group’s brands embracing an omni-channel approach where physical commerce and digital commerce and marketing are seamlessly integrated.
“The question that we’re answering is where and when do you insert the human assist versus the digitally lead transactions, and how do you give customers the right choice.” – Krista Bourne, President & SVP, Sales & Operations, Verizon
As we move into an era where omnichannel commerce predominates, it will take time for each brand to find the configuration of elements that delivers optimal results for customers and for the business itself. Krista Bourne spoke about this with regard to the balance of knowing what tasks and services are best performed by Verizon employees and what can be assigned to digital tools. However, the same negotiation will take place in multiple areas as brands figure out how to integrate physical and digital commerce, marketplaces versus owned channels, and AI versus human support.
“It’s also helping these merchants reach these consumers earlier in that shopping journey, which is really where all that impact is – being able to see the messaging upstream is really what gets that consumer to commit to that purchase.” – Eileen Bennett, Director of Strategic Partnerships, Global Pay Later, Paypal
Customers of all ages in markets around the world are falling in love with buy now, pay later programs. These payment models are having a major impact in stimulating e-commerce spending among budget-conscious consumers. But as Eileen Bennett pointed out, the consumer doesn’t decide to purchase at the checkout, but further up the funnel. With that in mind, brands who use buy now, pay later models – and the payment providers themselves – have to push the message out earlier in the customer journey.
Ocean Spray’s social following grew by 600% in the aftermath of Nathan Apodaca’s “skateboarding” video, according to CEO Tom Hayes. The video itself racked up 24 billion earned media impressions, CEO Tom Hayes said.