The Coronavirus Pandemic Rewarded Companies with Foresight

Stephen DeAngelis

September 29, 2020

Hindsight — understanding of a situation or event only after it has happened — is important; however, foresight — the ability to predict or the action of predicting what will happen or be needed in the future — is even more important. Companies that had the foresight to embrace online (omnichannel) operations prior to the pandemic have been richly rewarded. Journalists Sarah Nassauer (@SarahNassauer) and Jennifer Maloney (@maloneyfiles) report, “Nearly six months into the coronavirus pandemic in the U.S., big-box retailers are emerging as business winners while competitors — including some apparel sellers and small businesses — struggle.”[1] They go on to note, “Several factors tie their success together. These big companies had already invested to build their online businesses and had cash on hand to adjust to the pandemic. They were selling what people were buying and had large supply networks they could tap to eventually restock. In addition, most were deemed essential retailers early in the pandemic and thus have largely remained open.” In other words, companies with the foresight to see consumers were increasingly taking the digital path to purchase were much better situated to serve customers when the pandemic forced almost everyone to become an online shopper.

The rush to omnichannel operations

While some manufacturers and retailers had fairly mature omnichannel operations, other companies hastened to bolster their operations. According to journalist Sara Castellanos (@SCastellWSJ), “Retailers from Home Depot Inc. to Nestlé SA and AutoNation Inc. have accelerated their e-commerce efforts to keep up with a rush to online shopping impelled by coronavirus precautions.”[2] She goes on to note, “U.S. e-commerce sales are forecast to grow 18% to $709.8 billion this year, according to a June report from market research firm eMarketer. E-commerce is expected to represent 14.5% of total retail sales this year — a record, according to the firm.” Many people assume retailers are the only group concerned with omnichannel operations. Manufacturers, however, are also getting more involved. For example, Castellanos reports, “At Nestlé, e-commerce sales soared this year for products ranging from pet food to coffee. E-commerce sales on direct-to-consumer websites such as Nestlé Purina PetCare and Nespresso grew by almost 50% in the first half of the year, amounting to 12.4% of total sales of over $45 billion, according to the company’s July 30 earnings report.”

Journalist Erica Shaffer indicates the rush to master omnichannel operations comes at a time when the pandemic has produced, especially in the grocery sector, the “omni-shopper.” She explains, “Subscription services coupled with the convenience of click-and-collect — ‘pickers’ selecting grocery items in-store for pick up at a specified time — means consumers can get what they want, when they want it and in a location that is convenient for them. This is the reality of the omni-shopper.”[3] At a recent conference, Shaffer reports, Meagan Nelson, associate director at Nielsen, told participants they might be surprised who is becoming an omni-shopper. “Just because it’s online, doesn’t mean it’s just the millennials,” Nelson said. “Millennials are having kids; millennials are nearing 40. But from an omni-shopper perspective, millennials are still below average in terms of how much weight they have in that particular space. A really good proportion are Gen Xers to late boomers.” Because retailers and manufacturers might be surprised who constitutes their consumer base, Shaffer indicates, “Retailers need to invest in customer intelligence.” Cognitive solutions, like the Enterra Shopper Marketing and Consumer Insights Intelligence System™, can leverage all types of consumer data to provide high-dimensional consumer, retailer, and marketing insights. Nelson also stressed operations need to be omnichannel. She explained, “The preferred path to purchase will vary — online because that’s what the consumer has time for or a trip to a brick-and-mortar store because that’s a convenient solution — but it’s going to be the simplest option that consumers aren’t going to spend much time thinking about.”

More foresight needed for the post-pandemic world

Retailers and manufacturers must always be looking ahead to see how the business landscape is changing. As the pandemic demonstrated, it can change in a hurry. Meghan Howard, vice president of sales at Chicory, believes 2020 will continue to witness a lot of change. She writes, “Although many are calling this time the ‘new normal,’ it’s anything but. All of the external factors impacting brands are forcing them to get creative when connecting with consumers and driving sales at retail. Retailers will also need to get creative and allow non-traditional tactics to play more of a key role in negotiations with brands. All in all, 2020 is set to be a year of radical transformation in shopper marketing.”[4] Like Howard, Krish Iyer, Head of Industry Relations and Strategic Partnerships for ShipStation, sees 2020 as a tipping point for shopper behavior. He explains, “A retailer’s main goal is to perfect the overall customer journey — and the online experience has been front and center for the past decade. From social media to same-day shipping, successful retail brands chose to pivot and innovate to keep up with the competition. Then the pandemic hit — forcing all brands to vastly adjust operations to not only keep up with demand but also comply with changing regulations. COVID-19 has likely changed e-commerce forever, but meeting customer expectations remains the priority. And for now, flexibility, communication and sustainability top the wish list.”[5]

Iyer believes retailers, especially those with an online presence, need to continue to be flexible. He writes, “Prior to the pandemic, retailers were already implementing more flexible omnichannel models to keep up with consumer needs and expectations. During the pandemic, storefront closures and restrictions on when and how many consumers could shop meant everyone from the retailer to the shipping carrier to the end consumer had to shift their expectations and approaches. … To continue meeting heightened expectations, we’ll see e-commerce retailers consolidate their tech stack and streamline everything from marketplace channels and carrier management to inventory organization and automated, post-purchase customer communications. Additionally, COVID-19 significantly impacted returns. As storefronts closed or reduced their hours, and a greater demand on the supply chain caused delays, many customers needed additional time to complete returns. What’s more, customers were hesitant to make returns in stores even when they began to reopen. As a result, retailers offered extended returns windows — yet another pandemic perk consumers likely won’t want to give up.”

Concluding thoughts

According to journalist Shira Ovide (@ShiraOvide), “Online shopping is not as big a deal as you think, and it’s a much bigger deal than you think.”[6] She explains, “While for some it can feel like e-commerce is the only commerce, Americans still buy about 85 percent of our stuff in person. And our internet shopping over recent years has been a contributing factor to a record number of store closings every year and other retail pain — but it hasn’t been the cause. What’s remarkable, though, is the profound effect from the relatively small amount of digital shopping. Online shopping has changed our behavior, reordered the nature of work and challenged the functioning of our neighborhoods and cities.” Retailers and manufacturers who had the foresight to see the profound changes e-commerce would make on the business landscape and beefed up their omnichannel operations have done well both before and during the pandemic. The digital path to purchase is here to stay and companies that continue to demonstrate foresight will continue to do well in the post-pandemic world.

Footnotes
[1] Sarah Nassauer and Jennifer Maloney, “Big-Box Stores, Worried About Amazon, Were Ready for Coronavirus,” The Wall Street Journal, 24 August 2020.
[2] Sara Castellanos, “Retailers See E-Commerce Investments Pay Off Big as Coronavirus Keeps Shoppers Home,” The Wall Street Journal, 19 August 2020.
[3] Erica Shaffer, “How digital disruption created the ‘omni-shopper’,” Meat + Poultry, 18 March 2020.
[4] Meghan Howard, “Shopper Marketing Trends in 2020,” Path to Purchase IQ, 20 July 2020.
[5] Krish Iyer, “Customer Expectations and E-Commerce in the Age of COVID-19,” Longitudes, 6 August 2020.
[6] Shira Ovide, “A Little E-Commerce Has Big Ripples,” The New York Times, 19 May 2020.