By the numbers, the scope of the digital shift is impossible to ignore.
According to PYMNTS latest consumer survey, 62 percent of consumers that have shifted more digital are shopping for groceries more often from home due to the pandemic and plan to stick with it. Eighty-three percent of those who’ve shifted to telework want to stay home. And 77 percent of those ordering food more often from mobile apps plan to stick with it even when the pandemic is passed.
But the numbers only tell part of the story when it comes to the change coming to retail in a post-pandemic world, Fabric CEO Faisal Masud told Karen Webster in a conversation for the PYMNTS ConnectedEconomy series. What the numbers fail to capture is the size and the scale of the shift that retailers still have in front of them. The post-pandemic retail landscape will be a good deal more demanding than many are anticipating at this point.
“In retail, there will have to be pretty significant changes post-pandemic,” Masud said. “It can’t be what we’re seeing today, where the stores add things, and you can pick it up while you’re in the car. I don’t really see that as a big deal; that’s been happening in Europe and other places for a very long time. I think Southeast Asia is way ahead of the rest of the world and on things like payments. I would argue that the U.S. is even a bit behind than the rest of the world.”
Behind and almost out of time to catch up. Masud said from his perspective as a CEO of a headless eCommerce platform, the reality is the next 12 months will look like the last 12 when it comes to consumer behavior. But what’s next is coming more quickly than anyone could have anticipated even a year ago — and that has triggered a sense of urgency across retailers. According to Masud, retailers now need to create “a more multichannel connected commerce experience,” which starts with asking the right questions.
“Am I serving the consumer? If they’re shopping in the store or online, do I offer a single seamless experience?” he said. “Because we do see that omnichannel shoppers have a 2.5 to 5 times more propensity to be attached to the brand.”
And while there are no single-serving silver bullets, there are some hard-won lessons from segments like grocery and major players like Amazon and Walmart that are at least pointing in the direction of what will start separating the winners from the losers as the economy becomes increasingly connected.
Grocery’s Great Regrade
While the shift in grocery has been profound and will require some major rethinking across the entire segment, Masud said, there is a certain amount of realistic perspective that needs to be applied to the segment. The majority of groceries are purchased in physical stores. While the experience is digitizing and expanding across channels, its destiny is not to become a “majority digital” business.
“I just don’t see a path anytime soon, where all of a sudden online grocery is 75 percent of the purchasing path,” he said. “I don’t see that happening.”
But Webster pointed out that some parts of grocery — cleaning products, paper towels and consumer packaged goods (CPGs) — are items consumers have learned they don’t need to physically touch before buying. They are just as easily shipped to their front door, which is where the real challenge to digital grocery lies — in the logistics of hitting that balance, Masud said. Consumers want the variety and diversity of products to be in that basket either online or in-store in order to make the math work properly.
“Otherwise, the math is completely upside down,” he said. “What I do see is grocers will have to wake up very quickly here because that delivery to your door is a real challenge from a business perspective. Yes, you want the consumers to shop whatever they want, but economic viability is an entirely different issue.”
The future of grocery is still physical stores, but it’s also going to be dark stores that focus on closing the last-mile delivery gap without disrupting the flow of commerce in store, he said.
Creating Connectedness From Core Competence
The future capturing the potential in the connected economy isn’t going to work the same for every player, Masud said. Amazon, with a two-decade head start, is clearly emerging as a winner in the great digital transformation because it has been running so far ahead of everyone else. Among one of Fabrics’ value propositions is to help level the playing field, giving retailers access to an application programming interface (API)-based platform that can give them the ability to launch products and features faster every week.
But at a high level, firms like Walmart can’t compete against Amazon while trying to chase them, as it has thus far proved to be an incredibly losing strategy, Masud said.
“Chasing Amazon is what’s holding Walmart back,” Masud said “They need to have their own ideas. Brands need to focus on their core competency and not get too distracted by competition. There’s a lot of chasing. Walmart has been trying to chase Prime all day long. But Walmart stands for low prices every day. Like that’s their moat. And they kind of got distracted from that.”
And those distractions can be harmful, he said. Brands need to think from a consumer perspective and “continue to double down on your core competencies” instead of trying to offer everything.
“A lot of retailers talk a lot about data and being able to see a single source of truth from unified data on a single consumer,” he said. “And we always find that big data is a big buzzword, but when it comes down to actually using the big data, not everybody’s doing it right. It’s one thing to have the data. It’s another thing to actually utilize it the right way that is actually serving the consumer.”