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Pre-COVID Retail was already under siege

Even before COVID-19 struck retail was driven by razor-thin margins, and the winds of consumer emotions, sentiments and economic change. By the end of 2019, many large retailers were in the midst or brink of filing bankruptcy, following dozens of others since 2016. For instance, Barneys in New York liquidated all of its assets. Ascena, with its Tween Justice and Ann Taylor brands, had plans to close 1100 stores ahead of its filing.  Now, JC Penny, embattled for years with declining sales, lost 80% of its sales potential when it had to shutter its 850 store fleet due to COVID-19. It’s now considering bankruptcy. JC Penny is not alone. In fact, various news stories have projected as many as 25,000 or more stores could shut by year end. With consumers having less discretionary income to spend even before COVID many retailers felt the impact, particularly in small-town businesses and malls across America.  

But it isn’t just small towns and malls that have suffered in the past few years. Renowned Fifth Avenue in New York has seen its share of trouble as well. In 2019, Henri Bendel, a 114-year-old department store, shuttered for good, and along with it Lord & Taylor’s century-old flagship location. Polo Ralph Lauren, Massimo Dutti and Tommy Hilfiger, also closed shop on the Avenue last year. In response, during the last holiday season the Fifth Avenue Association filled the empty storefront windows with holiday displays to cheer up and lure in shoppers; all the more important as Black Friday ended up as a lackluster event for the start of the holiday season, driven primarily by deep discounts already found on the web.

Then the Unthinkable Happened

While brick and mortar retailers struggled to remain relevant the unimaginable happened – a global pandemic, which tossed aside existing business models, particularly those designed to improve the in-store or dining customer experience (CX). In rapid fashion retailers had to rethink policies and procedures and put new business models in place. As the pandemic grew and state and city officials mandated new restrictions, retailers had to rethink business models, while others were forced to shutter and even board up storefronts. Retailers considered “essential” and were allowed to stay open re-invented what it means to be a brick and mortar, discovering new ways to deliver goods and services safely to customers, including curbside pick-up and delivery, and online ordering.  Overall, those that could not quickly pivot to other models have struggled to survive or have given up and gone out of business. 

The difficulties did not stop there. Retailers were also challenged with new work-at-home (WAH) models for some, and changing business roles for front-line retail employees. Almost overnight retailers had to find ways to put new policies in place, keep employees trained, healthy, and motivated, yet remain flexible as conditions continued to change. While some furloughed or laid off staff, others, in what was deemed essential retail considered, such as grocery and drugstores, found themselves having to staff up for jobs that before were normal parts of a workday, but now consumed it, such as continuous sanitizing of stores and shopping carts, or hiring greeters at the front entrances of stores to limit the number of shoppers inside to maintain social distancing.

Consumers Driving Change

This unforeseen event has had dramatic consequences, as it wasn’t just the businesses themselves that were hurting, consumers were hurting as well. Suddenly there was a veritable land grab as customers raced to find and stock up on items either suddenly necessary, such as hand sanitizer, gloves and masks, or those items customers feared would be hard to find or rationed.  As COVID-19 spread, misinformation about the disease spread fear as well, keeping many away from stores, or scrambling to find times to go when it was deemed safer with less foot traffic. This further impacted the changes foisted on retail management.

Consider this:

  • COVID-19 forced a portion of the population to order online and use delivery services that had never done so before, setting up the need for more training and better applications.
  • In a normal retail environment with curb-side pick-up, stores are typically fairly staffed, and returns are easy. Social distancing and fear during COVID have customers coming in during ‘senior hours’, or when they think there will be less traffic, setting up uneven spikes in demand, and upsetting a store’s ability to make changes, have orders ready, or take returns.
  • There were also early concerns about how long the virus lived on surfaces, so a number of stores stop accepting returns completely, which is not very consumer-friendly.
  • Retailers have had to adjust shopping hours to accommodate restocking store shelves and sanitizing stores.
  • Stores have had to develop contactless check-out and physical protection for employees.
  • Online ordering with in-store pick-up had to be modified to curbside pick-up with mobile apps or employees acting as greeters at pickup with apps and tablets to streamline the process, and the need to reconfigure parking lots and traffic patterns to give space for pick-up.

Six Months in, Customer Care Technology to the Rescue

We are now half a year into this situation and the initial rush to move employees to home and reconfigure retail is well on its way. And with no end in sight this could be our reality for some time to come. In fact, there are all the signs of a large percentage of WAH employees who may never go back to an office, and in retail, many consumers now have grown accustomed to ordering online and picking up at the store or having goods and take-out food delivered.

However, as mentioned above, retail margins are really small, and throwing manpower at a problem is not a sustainable strategy. As we enter phase 2, retailers are both streamlining the process and seeking ways to cut costs, not just add more people. So how can technology help? As we reported in Frost & Sullivan’s “Infusing AI into the Retail Customer Experience – Watch Out World—Your Next Food Server Could be a Bot” AI and automation were starting to have a positive impact on the retail sector, unrelated to COVID-19.  

This insight paints a broad picture of how employing solutions that are infused with technologies under the umbrella of artificial intelligence (speech technologies, artificial intelligence, machine learning, deep learning) can greatly improve operational efficiencies in the contact center and retail outlets as well as improving both CX and the employee experience (EX).  Examples include super-charging self-service applications to better assist customers, such as virtual assistants powered by conversational AI, webchat and messaging apps, or the use of AI-powered workforce management to fine-tune scheduling and forecasting, which better assists in planning for retail part-time or seasonal employees.

The use of these technologies within retail is particularly germane in the discussion on curbside delivery, which is the contactless version of the retail industry’s popular Buy Online Pick-up In Store (BOPIS). During the pandemic, by April 2020 30 major chains had instituted BOPIS, including Apple, Best Buy, CVS and others, many of which added curb-side as the pandemic progressed. For example, Albertsons announced in July that in response to demand that it is expanding its Drive Up & Go curbside pickup program by 40% to 1400 locations.

In response to demand, but with the need to streamline, create a positive CX, and cut costs, retailers have turned to technology partners for innovative solutions to improve upon curbside pick-up. A good example is how Walgreens has evolved automation in its outlets to improve CX. For example, prior to COVID-19, Walgreens had partnered with Theatro to use Theatro’s Intelligent Voice Assistant with in-store employees. Theatro’s Intelligent Voice Assistant is a wearable Internet of Things (IoT) solution that allows workers to get access to information and be continually in touch with other associates in a store in a hands-free way, using voice-controlled applications, a headset, and a small mobile device that clips to a belt or lanyard. This intelligent personal assistant allows employees to communicate using voice commands to get information or communicate with management or other employees. For example, employees can say something as simple as “Hello, John” to establish a one-on- one chat or message, call a department for a group chat, notify security of an issue, check inventory or price information, get associate or product location information, or query task management systems for their next work assignment.

By 2019 Walgreens had deployed the system in over 1,200 locations to help hourly workers be more effective. As reported in a recent webinar with Theatro, Walgreens stated that they already had curbside pick-up at 7300 locations in the US, and the use of the Theatro solution became even more important as demand surged. They noted that prior to COVID 2-3 exceptions, such as a customer asking for a different item or adding to an order, were the norm. But as curbside demand surged during COVID-19, exceptions increased as well, creating the risk of making the situation untenable for workers to respond to without the Theatro solution in place. As Walgreens added more curbside locations being able to connect front line workers, not just with those in their current location, but also with management, and back-end systems, such as inventory, has allowed them to be flexible and agile when exceptions arise. And of course, being voice-controlled and always on, all queries to back-end systems, communications with others and task management is sanitary and hands-free.

More Change is on the Way

While online ordering has had a definitive impact on in-store sales, it is here to stay. In the consumer goods sector companies such as Amazon have mastered the art of upselling products while customers are browsing, making online ordering a draw for most goods. However, in the grocery sector the impact has been less evident as customers impulsively go to the store, often can’t wait for a few days for delivery, and most importantly want to touch, feel, and see what they are buying.

COVID-19 changed the demand for grocery delivery and online ordering by mail, but now that grocery outlets have largely addressed the first layer of the pandemic’s impact through store reconfiguration and curbside pickup, the next line of change we will see happening is more marketing automation, customer engagement, and personalized targeted upselling that more mirrors the in-person experience.

Retail Takeaway

More than ever, technology can greatly impact the retailer’s experience by enabling businesses to have more flexibility in attracting, retaining and scheduling workers. It can help increase efficiency, decrease costs, and improve both CX and employee experience as well.

Now that panic has subsided and we are more calmly heading into a new normal, it’s time to revisit the use of technology to augment operations and think long term.  Whether it is modifying an existing mobile app to add new functionality, or streamlining purchasing and customer service for customers, now is not the time to shy away from using new technology to improve both CX and EX.

About Nancy Jamison

Nancy JamisonNancy Jamison is a Principal Analyst within Customer Contact within the Digital Transformation group at Frost & Sullivan. She covers all aspects of customer contact including cloud and premise-based systems and applications in the core areas of inbound/outbound routing, IVR, Workforce Optimization, and recording and analytics, with a particular focus on peripheral and emerging areas that impact the Customer Experience. These include speech technologies, omni-channel customer care, Big Data, digital marketing, Back Office Workforce Optimization, and Support Interaction Optimization.

Nancy JamisonNancy Jamison

Nancy Jamison is a Principal Analyst within Customer Contact within the Digital Transformation group at Frost & Sullivan. She covers all aspects of customer contact including cloud and premise-based systems and applications in the core areas of inbound/outbound routing, IVR, Workforce Optimization, and recording and analytics, with a particular focus on peripheral and emerging areas that impact the Customer Experience. These include speech technologies, omni-channel customer care, Big Data, digital marketing, Back Office Workforce Optimization, and Support Interaction Optimization.

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