Right now retail is reckoning with a post-pandemic landscape where nothing can be assumed. From the patterns of shoppers’ lives to the role of real estate, everything is being re-evaluated. Retail strategies need to be rebuilt to respond to the biggest market shift in our lifetimes, and without the right data, retailers and brands are making critical decisions blind.
On 14th July 2021, The Interline partnered with Placer.ai to capture retail at this critical juncture. The hour-long workshop, delivered to Interline Insiders, retailers, brands, and students live, included both an exclusive briefing on the trends and datapoints that matter most as the industry emerges from the pandemic, and insights into the importance of objective data when it comes to building a new approach to retail.
The full workshop replay is available to watch below (hosted on The Interline‘s YouTube channel), with edited transcripts of a few select segments underneath.
What can data tell us about just how far COVID has set retail – and especially fashion retail – back, and what trends can we draw from the pace of recovery?
Ethan Chernofsky: We’re hearing a lot of different perspectives, because there are a lot of different players using a variety of different data sources, and that can make changes in consumer behaviour difficult to understand within context. But it’s important to establish a baseline: to understand where we really are.
Here, on the left, we have a year over two year comparison, looking at weekly data for overall retail visits throughout the United States, compared to the equivalent week in 2019. Whereas the right-hand chart represents the same numbers as compared to 2020. And this is where the conflicting ideas that either everything is better than it’s ever been, or that we have a long way to go, come from.
The comparison to 2019 is probably the most useful, because it’s the closest thing to so-called normalcy. So today, as we think about heading back into the critical “back to school” season, it’s going to be essential to remember what happened in 2019, because if a brand is hitting 2019 levels in the next few months they are still doing exceptionally well, not just ok.
This underlines the importance of contextualising data – something that we also see in retail figures from early this year. February 2021 was a much worse for most nationwide brands in the US than January was, or March on the other side of it, and that’s not because the pace of recovery had stalled – it was because of weather conditions in Texas, and New York, and throughout the South, where retailers have major locations.
So context is absolutely vital when we’re trying to understand what the data means.
Over the last eighteen months, omni / multi-channel strategies have been stress tested in a way that nobody could have foreseen. What has COVID taught us about the reality of how the different channels are (or aren’t) blurring, what omnichannel really means today, and what can data tell us about how retailers can adapt?
Ethan Chernofsky: Everyone knows omnichannel is the most important thing, but if you actually look at how many retailers are truly embracing what it means, that list is really small.
That’s because, in part, we’ve been assuming that omnichannel means using digital channels to support the core business of brick and mortar commerce. But the flipside is also true, and that could be one of the big elements we’re missing, as an industry: we’re not giving physical retail the credit it deserves.
Today, locations are penalised by returns numbers, even though returns to physical stores are significant cheaper than online returns, and despite the significantly higher potential for up-sell that goes with it. This logistical value of a location – the ability to buy online and pick up in store, for example – is something that people pass over when they’re trying to understand the value of a physical location. For buying online and picking up in store to work, there must, by definition, be a store to pick up from, so it’s not right to frame that as a digital channel when it incorporates both a digital and a physical component.
Almost every brand looks at their website as a marketing channel, but how many are giving the same attention to their stores as touchpoints on the consumer journey?
It’s so important to recognise that every retailer is different, and that really doing omnichannel justice is not a copy and paste operation. As a retailer, the important thing to do is to define a omnichannel strategy that goes beyond the transactional, and that makes sense for your brand and your customers.
There’s an idea that the two extreme ends of the retail spectrum, luxury and low-price, high-volume, are thriving, while the middle is on a downward trajectory. But the data seems to suggest the opposite.
Ethan Chernofsky: As a concept, that bifurcation of retail was very popular, but when we look at the data it doesn’t actually make sense.
Each of us has an innate sense of what constitutes a luxury brand and what makes a value brand, and we can name several examples of each because they’re so oriented towards delivering either exceptional quality or extreme value. When we think of the middle it’s more difficult, because we’re operating in a sphere that’s harder to define. But when we look at the retail landscape, some of the most successful brands are the ones that are most effectively targeting the middle – and they’re seeing tremendous growth compared to 2019 because they don’t face the same degree of competition.
People today are ready to spend more money on certain items, but they’re also ready to save on certain items, and the brands that understand that are the ones that are going to be thriving.
One of the biggest questions hanging over retail now that the pandemic is, hopefully, waning in some of the biggest consumption markets, is whether the last 18 months have altered shopping behaviours permanently. What can the data tell us about this?
Ethan Chernofsky: From our data, the world today looks a lot more like it did pre-pandemic – at least from a retail perspective – than it did at any point during the pandemic. It’s widely acknowledged that COVID has lasted for an extended period of time, and that behavioural change has sunk in, but the truth is that every time we see retail reopen – in a regulatory sense – people come back. And when we see work and school returning, people very quickly go back to their former routines.
This tells us a lot of really interesting things. We were doing the things we wanted to do before COVID. It was common to hear people say pre-pandemic that they hated having to go to the store, which may have been true, but COVID has demonstrated that they liked it more than they like having to do all their shopping online. That’s something the movement data is bearing out on a day to day basis, which suggests that a lot of pre-pandemic behaviours were rooted much more deeply than we gave them credit for.
What’s really interesting is that the primary retail trend of the pandemic – mission-driven shopping, with fewer locations visited for more time, and buy more – has not lasted. Visit duration is already declining, weekend visit percentages are increasing, and these are the signs that our behaviours are going back to the way they were. If you liked going to Starbucks on your way to work, and now you’re going back to work: you’re going back to Starbucks.
The caveat here, where nobody really knows how things are going to develop yet, is what working from home means and how embedded that culture is going to become. Because if working from home lasts for a long time, even a small shift in behaviour could have a really pronounced impact.
What advice would you give to a retailer or a direct to consumer brand that’s building a retail strategy suitable for the future? How important is it to draw from objective data to inform decisions?
Ethan Chernofsky: Leveraging data, and using it to replace intuition, doesn’t mean replacing human decision-making. Data is an asset, and it provides a very critical perspective, but it’s just that – a tool that can help to limit risk and deliver better outcomes.