Why Does It Take A Crisis For Retailers To Innovate?
During the COVID-19 crisis we are experiencing tremendous innovation and experimentation on the part of just about every retailer. From curbside pick-up (and other forms of “contact-less” delivery), to appointment shopping, to the overall hyper-growth of e-commerce, and more, we’ve scarcely seen so much change in such a short period of time.
In particular, many are applauding legacy retailers for embracing the notion that most customer journeys are digitally-driven and that online shopping and brick-and-mortar stores can work in tandem to produce remarkable results. To this I say, “Really?” adding: “Glad you finally woke up, Rip Van Winkle” (note to Millennials: look him up). We should not be applauding these brands. Instead, we should be asking what took them so long? How is it they slept through the revolution?
To be sure, few could have predicted the timing and cataclysmic impact of a worldwide pandemic. Only a handful of retailers could possibly have positioned their balance sheets and business models to withstand such a drastic drop in consumer demand. Even some of the most innovative brands in the world are struggling to navigate these choppy waters. And clearly some consumer behaviors (and resulting retailers’ responses) are very much of the moment. The degree to which they will materially persist is hard to predict and likely very much tied to the timing and efficacy of a potential vaccine.
Yet there is no denying that the retail industry witnessed an epic revolution during the past two decades, much of it driven by the disruptive impact of digital technology. In turn, the power has shifted to the consumer and the underlying bases of competition have been upended. Indeed, shift happens-and even in the pre-COVID world it was happening faster and faster all the time. Accordingly, market share and value creation has gone to the bold and innovative, while once former leaders experienced the drip method of irrelevance.
For many years now, a central theme of my consulting, writing and keynote speaking has been the notion that, despite overwhelming evidence that the middle was collapsing, shopping channels were blurring, most customer journeys were becoming digitally-enabled and that even very good was not good enough anymore, many legacy retailers sat around and watched. At best, they seemed to believe that a slightly better version of mediocre ( see Macy’s) was a winning strategy or that they could cost cut and store close their way to prosperity. It wasn’t true before COVID-19 and it’s not true now.
It’s been said that necessity is the mother of invention. And with the dramatic impact of the current health and economic crisis perhaps it’s more accurate to say that it’s desperation. Yet there are many retailers-from Home Depot to Lululemon, Best Buy to Nike, and many more-that were keenly aware of the shifts in consumer behavior years earlier, accepted their import and responded in remarkable ways well before a crisis. It is both their commitment to innovation as well as their more agile business models that explains their better than average performance thus far and that bodes well for the brave new world we are now navigating.
In the absence of a time machine the retailers that have been asleep at the wheel do not get the chance to go back for a do-over. But their Boards should demand an after-action review to discern the outcomes that were unpredictable and simply bad luck, versus those that reveal systemic failures to understand where we have been headed and why leadership failed to embrace a culture of experimentation years earlier. As just one small example, it’s been pretty obvious for close to a decade that BOPIS (buy online pick-up in store) would eventually become table stakes for most retailers. Yet still only half have implemented it.
I am hopeful that one of the lessons of the COVID-19 crisis is that retailers that defended the status quo will become retail radicals, rewiring their processes to say “yes” more often and aggressively fostering a culture of experimentation. Time will tell. But if the seismic shifts of the past decade or so didn’t already convince you to transform, I’m not sure another log on the fire, however big and flammable, will necessarily make the difference.
One thing is for sure-and here I’m paraphrasing Warren Buffett. When the tide goes out we quickly learn who’s been swimming naked.
A version of this story first appeared at Forbes, where I am a retail contributor. You can check out more of my posts and follow me here
Originally published at https://www.linkedin.com.