‘Seamless’, the key word for the re-launch of retail.
Today, despite many and different predictions it is very difficult to find new certainties. However, I believe that there are now consolidated underlying facts of the impact of the COVID-19 emergency on the future of the industry.
WHAT IS CERTAIN
Definitely the collapse of world GDP in 2020, both at the aggregate level and for advanced economies, where the average will be around -6%. Taking as likely the forecasts for 2021, which consider a rebound to 4.5%, seems to me a hazardous assumption, particularly in view of the resurgence of the pandemic in some areas of the world.
Also certain is the greater digitalization in the purchasing behaviour of the ‘restless swarms of homo consumens’, as defined by the sociologist Zygmunt Bauman. An evolution that obviously forces every enterprise to a faster, broader and deeper digital transformation.
From the effects of the two phenomena on the retail ecosystem, which by its nature is constantly changing, it can be deduced that the COVID-19 emergency is not a real breaking point, i.e. a rift between the past and the future, but rather, a violent acceleration of dynamics already underway for years and referable to the key word: seamless.
Inditex-Zara, for example, has planned the closure of 1,200 stores worldwide. This decision is certainly in response to the drop in sales of recent months, but entirely consistent with what has been happening in the U.S. for years: a wave of closures of brick-and-mortar stores, so much so as to induce the fear of a ‘retail apocalypse’.It is nothing new: the continuous growth of online sales will force fashion companies to reduce their stores both in number and size. Stores will be less and less important for direct trade and will turn into real showrooms, in which to immerse in the life style of the individual brand.
The acceleration of downsizing is a visible demonstration that the brick-and-mortar retail business model is no longer sustainable . It is therefore urgent to give concrete form and substance to the much-proclaimed concept of omnichannel retailing. There is nothing new under the sun, but the risk is to inflate the concept itself. But how much of the much acclaimed omnichannel development has really been made?
THE TRUE CHANGE
Today, all retailers able to invest choose technology. The aim is to concretely create a seamless ecosystem in which the physical boundaries of commerce dematerialize and become digital.
Greatly affected by the lockdown,world fashion now invests in the digitalization of the supply chain, looks for platforms that assemble the variants of the garments, transforming them into product sheets to be transferred to the suppliers, so as not to have to physically meet them.Or virtual showrooming platforms used to present the new collections to buyers of leading department stores scattered across the various continents, perhaps with dedicated video streaming sessions. These solutions have existed for years, but only now they are deemed indispensable.
In retail, therefore, the real tsunami generated by COVID-19 is the acceleration in digital transformation. The lexicon of the near future has suddenly become typical of the present: big data, artificial intelligence, super apps, blockchain technology, virtual and augmented reality. According to the MIT researchers, 86% of the CEOs of the world’s largest companies consider digitalization the top priority for the next two years.
The most important catering chains, severely affected during the lockdown, want to invest primarily in technological innovation. In fact, it becomes crucial to change the relationship with the customer, allowing to take advantage of the delivery services by linking the order made in the restaurant or through the app tofood delivery companies, such as JustEat or Deliveroo.In addition, the first virtual or augmented reality solutions are available for presenting the dishes on the menu. In other words, the digital innovation of food.
Even in large-scale distribution, if online sales have grown slowly over the years, they have exploded in recent months. According to an IRI report, the grocery e-commerce market will go from €461 million in 2019 to €854 million in 2020. It may seem surprising that even small proximity shops, traditionally resistant to innovation and insensitive to Amazon Prime competition, are asking to be able to have their online store.
But caution is needed as being online does not necessarily mean being profitable. The retail model changes, but the generation of value remains a consequence of economies of scale.
Evolution is about e-commerce itself. Websites are not longer able to keep up and, today, especially in China, it is already the era of social commerce where more and more consumers are buying directly on social media such as TicToc, without going through a marketplace or a service platform.
The new trend is streaming commerce, in which products are presented and sold in live streaming. In 2019, products worth €54 billion were sold in China in this way, and during the quarantine, Taobao Live increased its volumes by 700%. Sales go through video recordings with key opinion leaders, managed directly by the brand.
Seamless commerce does no longer want limits, not even in e-commerce. Those who maintain them, either in the store or online, are lost.