Sucharita Kodali: There seems to be four major quadrants of consumers depending on whether or not they are vaccinated and their attitudes toward COVID. Those that are vaccinated and think they aren’t at risk seem to be moving on with their lives very much like it was 2019. Those that are unvaccinated and don’t see themselves at risk (which is many of the people where I live in North Carolina) are also moving on with their lives though they were among the earliest adopters of mask dispensation anyway.Those that are vaccinated but nervous about still getting infected haven’t changed their behaviors much and will need more assurances for their safety to resume “old” behavior. And those that are unvaccinated and fearful about getting infected will likely be in a Groundhog Day of March 2020 until vaccines are more broadly disseminated.
Other than that, I do see business travel waning and that may be permanently disrupted, even more than shopping.
We must believe they do, or we are all doomed! There are no easy ways to reverse the dominance of the tech players. They (Amazon, Facebook and Google in particular) have been beneficiaries of bad laws, or at times, no laws which have allowed them to flourish, often unfairly. New laws that level the playing field with their competitors will be needed, competitors need to fight for a level playing field and investors need to demand that companies be held accountable to metrics like social good versus just shareholder value for things to change. None of those will happen overnight, or even quickly, I’m afraid. But I’m hopeful. And the Europeans seem to be much more evolved on this matter than other regions of the world.
I see AI in retail as a big topic that fits into one of 3 buckets: consumer-facing AI solutions like magic mirrors or cashierless checkout, field worker facing AI solutions for workers in stores or warehouses, or back-end AI solutions that help office workers make better decisions. In all of our AI conversations with retailers, consumers and technology vendors, the latter is where there is the biggest impact that is most affordable to many retailers. They are solutions that make marketing, merchandising and IT easier for employees, often by automating manual processes. Things like returns optimization and anomaly detection we see as being high value AI tools.
By using solutions like Shopify or BigCommerce! Those are cheap tech solutions that have leveled the playing field for many small retailers and entrepreneurs. There are many other solutions too. At the moment, social networks ranging from Instagram to Reddit to Pinterest are easy and inexpensive ways to reach shoppers though they don’t scale particularly well without more investment. One thing that is important to recognize: there is no shortcut to building a brand. Some people think that VC funding is, but that isn’t a sure thing. The landscape of retail is littered with failed VC investments.
No two companies are the same so there isn’t a universal line of advice. But we do know that companies need to examine themselves and their relevance constantly. If one finds it is no longer relevant, it must to reinvent itself. That is why we are seeing so many companies now investing in alternative monetization strategies like retailer media networks. Another bit of advice: all retailers could benefit from being a bit more paranoid and protective of their turf which means investing in things like IP protections and lobbying governments for legislation in their favor. That is what the Big Tech companies have been doing while sectors like retail have had their heads in the sand. I see retailers with very libertarian philosophies because it’s an industry which has historically had no barriers to entry. The entrepreneurs in retail just want to embrace the survival-of-the-fittest approach. Well, in this day and age, the fittest are Amazon and whatever player(s) the Chinese government chooses to endorse, so you better revise your libertarian approach or you’ll die. Final bit of advice: retailers do need to grapple with the reality of higher costs of doing business, particularly as wages for warehouse and store workers will likely go up over time. Don’t fight that or you’ll be on the wrong side of history. Figure out how to hire better, reward your best employees, and automate what is low-value work.
I hope it’s more nimble and fluid. We shouldn’t have retail leases that are 20 years long. Real estate companies hate hearing that but that is a model that benefits no one but the landlords and it’s time that that concept dies. Many of the upstart retail businesses have lifespans far shorter than 20 years anyway. Retailers need to be much more creative about engaging with shoppers. They need to view any place where people congregate as a pop-up opportunity. It could be a sporting event, a graduation ceremony, or even a popular restaurant. We also need better solutions to long-tail items. The large marketplaces are the only solutions for that right now but they shouldn’t be.
The only other major issue not addressed here is the growth of brand manufacturers and their selling directly to shoppers. I’ve said for years that brands are the retailers of the future. They don’t need storefronts, consumers already know them and direct sales promise to provide a new and lucrative distribution channel.
Moving Closer: Retail in Vulnerable Times