Why Legacy Retailers are Thinking More Like Startups

Thanksgiving. Black Friday. Cyber Monday. If we haven’t already, most of us will spend more time shopping over the course of the next few weeks than we do all year. Meanwhile, retailers have spent months preparing for the spike in demand and flood of voracious shoppers. The customer journey and the quality of customer experiences—both online and in-store—are top of mind for retailers as they look to sustain momentum into 2019.

The way we shop has changed. Look at Cyber Monday, for example. It has transformed Black Friday from a one-day holiday into a five-day event. The reason? The Internet.

As more digitally native retailers enter the fray and legacy retailers finesse their eCommerce presence, shopping events have evolved to meet demand.

According to a recent Retail Dive article, “This holiday season retailers aligned sale prices across multiple days and multiple channels, giving consumers choices of when to spend. Customers can now engage in traditional brick-and-mortar shopping, or they can start early in the comfort of their own homes.”

Every business that hinges on a Q4 peak season has had to figure out how to differentiate themselves during the holiday season that is already incredibly saturated. Some of those are,

• Convenience—prioritize flexible delivery options and actualize delivery promises to maximize customer satisfaction
• Dial-up the personalization and treat customers like people, not dollar signs

Digitally native retailers were built for eCommerce; legacy retailers were not. To stay relevant and competitive, legacy retailers have had to innovate and embrace the mindset of their smaller, more nimble constituents.

New year, new them? #

In 2017, we predicted more large retailers would borrow supply chain strategies from digitally-native startups. Were we right? Sort-of. Walmart continues to lead the pack with its Store No. 8 initiatives and its aggressive acquisition strategy of high-impact lifestyle brands. Other notable companies making strides in supply chain innovation and the in-store experience include:

“Apple. Their stores are things that we all look at and we think from the outside that it’s beautiful… I think the majority of us are still buying Apple products in the store and not online because of that experience. You can go in and you can get help. It’s streamlined and you know what to expect.” – Rian Buckley, Fitcode Co-Founder and CEO

“Nike stores. They are all about an incredibly curated experience. They will offer products in the store that you can’t get anywhere else, as well as ways to test out the product and they’re differentiating the experience by channel.” – Karl Siebrecht, Flexe Co-Founder and CEO

“Best Buy used to be the Amazon showroom. You went there and you checked things out and then you went to Amazon and bought it. Now you say, ‘Hey, Amazon says that I can get it for $200. Can you do it?’ ‘Yeah. Sure. No problem.’ Best Buy is doing a good job on that.” – Mauricio Cuevas, BevyUp Founder and CEO

Progress aside, there’s still ample opportunity for industry giants to reevaluate their end-to-end supply chain strategy and to invest in agile logistics. Here are a few ideas.

Convenience is king #

The cornerstone of eCommerce is convenience. Being able to shop online and count on fast delivery not only reduces the list of errands to run, it also gives people time back in their day—this is particularly critical during the holidays when there’s a lot going on. The undercurrent of convenience is finding what you need, when you need it, and knowing you can obtain it in a timely manner.

Convenience in shipping is no longer an expectation, it’s a given. Consumers today know they can receive goods when and how they want them. In fact, delivery speed and cost are two of the biggest considerations when making a purchase online. eCommerce startups have led the charge offering customers new, flexible delivery options—from direct-to-consumer (D2C) to in-store pop-ups to omnichannel shopping experiences.

On the opposite side of the spectrum, legacy retailers have a unique advantage due to their size and incumbency: a wealth of customer data. Understanding how your customers shop and what delivery options they prefer is paramount to providing a convenient experience. So how can big Brand X wield its data AND model the flexible, eCommerce “have-it-your-way” delivery experience?

To start, reevaluate your delivery promise and clearly communicate customers’ delivery options. Let’s say data shows a majority of your customers are last-minute shoppers. When they are buying a gift online, do they know they have the option to pick it up in-store the next day on their way to work instead of waiting two days for it to be delivered? And by the way, could you offer to gift wrap it as well? At the end of the day, convenience depends on giving customers options.

Putting the person in personalization #

In addition to convenience, customers want a high-touch personalized experience. Whether they are shopping at a local mom-and-pop store or the largest retailer in the country, customer experience is key. Industry goliaths have worked tirelessly to recreate the “small-store feel” in a big-store setting; however, much of what goes into a personalized experience starts with delivery details like packaging and the unboxing experience.

Just look at the successful new breed of eCommerce hair care and wellness brands. What do they have in common?

• First of all, the product itself is designed to be customized—down to the specific ingredients in each shampoo bottle.
• Also, the customer’s name is strategically placed front and center on the container to reinforce the “made-for-you” message.
• Finally, the product is accompanied by an experience. Whether it’s recommending Washingtonians take an extra vitamin D supplement during the grey, cold winter or advising a fitness junky to reduce the number of times she washes her hair, these companies offer a regiment that is especially tailored for that customer’s unique lifestyle and needs.

Large retailers don’t always have the same eye for detail. However, they often DO have a robust logistics footprint and a compelling delivery promise. Identifying opportunities to insert more personalization while optimizing for delivery cost and time will set them apart from their direct industry peers. For example, consider using your sophisticated supply chain to deploy a surprise and delight campaign like Chewy.com’s handwritten holiday cards or Kleenex’s get-well kits during flu season.

Consumers today don’t want to feel like every other customer, they want to feel special. Companies that can successfully curate a one-to-one connection with their customers will continue to win their business.

The future of innovation in retail distribution #

Digitally native startups—born in the age of eCommerce—built entire businesses around online shopping. Without physical stores, one of the only ways people could try their product was direct-to-consumer shipping. More often than not, eCommerce businesses live and die by their inventory management and fulfillment strategies.

Legacy retailers have extensive resources and established infrastructure to manage complex end-to-end supply chain operations, but that doesn’t mean they don’t face their own set of challenges. Remember, that same established infrastructure was originally designed to get goods to shopping malls and store shelves—not to people’s front doors. Now is the time for large companies to embrace the startup mindset and breathe new innovation into their logistics network.