May 19, 2021 | 5 Minutes Read

Reimagining Premium Retail Brands in a Post-COVID World

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A BBC report revealed that "Retailers suffered their worst annual sales performance on record in 2020, driven by slump in demand for fashion and homeware products," and that the sales records were the worst in 25 years. [1]  From fluctuating consumer behavior to disruption in supply chain and a drastic fall in demand for premium products, companies have constantly been at cross-roads since 2020.

Retailers are still striving to bounce back from the dip in sales and navigate through the new challenges that 2021 continues to bring their way. From techniques to improve their bottom-line sales, to new approaches for customer engagement, and venturing into new sales channels, the situation over the last year has provided premium retail brands and their parent companies an opportunity to streamline operations and improve risk management capabilities. Here’s an overview as to how companies are facilitating the same through a combination of data, analytics and AI:

Catching the ‘Digital’ bus

Since the start of the pandemic, there has been emphasis on social distancing and staying at home, and as the pandemic continues to remain unresolved on a global scale, e-commerce has become the safer option as compared to shopping in stores. E-commerce has also become a crucial channel for sales, customer engagement and improving brand perception. Consumers are spending more time than ever on e-commerce. In 2019, e-commerce made up 14.1% of global retail sales, while by 2023, e-commerce is expected to account for 22% of global retail sales. [2]

Like all other competitors, luxury brands have focused their efforts on e-commerce sales. Online sales have also presented premium brands the opportunity to connect directly with consumers and cater to their preferences. Brands have started going online and are embracing innovations like livestreaming customer service video chat, social shopping etc.

This shift in channel and associated data, opens up an enormous opportunity for organizations to understand exactly what consumers are looking for. With click stream data, a customer’s journey can be converted from being a website visitor to a shopper. Each touchpoint in the journey can be analyzed to provide a delightful shopping experience as brands gain better visibility to each customer footprint like the products viewed, duration spent on looking at each product, products wishlisted/favorited, products abandoned, etc. This data can be leveraged to understand the customers’ favorite products and identify the most appealing offers. This will also help develop a better product line up in the future, optimize promotions, and improve demand forecasting.

Understanding the Change in Customer Dynamics

The pandemic has not only disrupted the economy, but also changed how customers perceive a brand. Consumers are more watchful than ever and analyzing how brands are responding to crisis scenarios. Brands that display reliability and sensitivity to consumer woes are gaining market credibility. And consumers are also analyzing the way brands are treating their employees. Studies and surveys conducted during the pandemic showcased that the way companies cared for their employees was one of the key factors influencing purchasing decisions for almost 1 in every 2 consumers.

With the advent of social media and other platforms, customers are becoming more aware of the plight of the factory workers in third world countries, where most of the manufacturing happens, and there is growing sensitivity to the well-being of factory workers. Also, with the rise in solidarity towards the idea of a sustainable future, customers prefer environment friendly products over other materials.

Premier product manufacturing companies should, therefore, be able to understand how to facilitate more eco-sensitive practices while still ensuring that they do not compromise on product appeal and adhering to customer preferences.

In order to have a clear view of customer perception, brands must undertake thorough analysis of consumers’ historical purchase behavior. Additionally, extensive analyses of social media trends and interactions can help understand social causes that consumers feel most strongly about. These initiatives will enable firms to have a better understanding of their customers and help curate campaigns and marketing content accordingly.

Providing a Personalized Experience

As established earlier, one of the key factors which distinguishes a premium brand is their ability to provide customized products to their consumers. From the right fit of an apparel to the right mix of flavors for a soft drink, consumers always look for products which matches their persona the best.

With millions of customers in the consumer base, it is difficult for large scale premium retailers to personalize products without a deeper understanding of consumers. In this regard, creating extensive customer segments is the first step towards a personalization journey. Customer personas are gaining more relevance, given that algorithm-based segments are augmented with information about clients obtained through detailed market research. With these data-driven customer personas, it becomes easier for the brand to send personalized discounts, product recommendations, etc.

Less is More: Optimizing Stocks

Having more varieties of products in the inventory does not necessarily yield higher sales. However, having a good but small mix of products with good customer perception often proves profitable. The retailing space has, in the last decade moved away from being a product-focused market and towards a consumer-focused market. The pandemic has accelerated this shift.

To align with the same, it is important to optimize SKU distribution. It is important for firms to understand the actual demand for individual products across various time periods. For instance, any predictions pertaining to inventory for the year 2020, is likely to have been skewed due to pandemic disruption and resulted in over stocks or stock outs. In response to this, retailers must undertake a detailed analyses of consumers’ feature preferences and identify products with least favorable features.

With access to enormous amounts of data across touchpoints, customer preferences in terms of color, material and other features for each product can be tracked and analyzed. And through analysis of the same, products can be tweaked to meet the customer demand and help convert stock into sales. Additionally, products can also be repurposed into raw materials for other products, wherever possible.

Apart from product feature, price is another key factor that determines eventual ROI. Companies must therefore analyze how the sales of a specific product changes with change in price. A deep dive analysis on low performing SKUs across various quarters can help identify trends that correlate with profit, product features, and pricing etc. This is especially important when it comes to designing and pricing future products as well as to ensure real-time updation of product costs to maintain a competitive edge in the market.

Deeper Partnership with the Vendors & Suppliers

The pandemic has emphasized on the need to re-balance supply chains and one of the key focus areas in this regard would be to improve vendor and supplier relationships. Many companies that operate in a transactional relationship with their vendors and suppliers must transform their conventional methods.

The crisis has exposed the vulnerability of the activities involved in procurement processes and retailers need to have a better rapport with their vendors to ensure seamless supply chain operations. By analyzing vendor and supplier interactions, retailers can classify stakeholders based on relevant attributes relating to product supplied, supplier location, pertinent socio-economic factors, etc. Historical transactions can also be analyzed to identify bottleneck patterns and points of concern/friction. Payment credit days and discounts for the suppliers can also be customized based on vendor traits identified through analyses, helping differentiate between reliable and at-risk vendors. Creating a Supplier Cockpit dashboard can further help assess and classify suppliers into different segment, identify risks in advance, enhance supplier relationship and prevent extra costs due to inefficient processes.

Emerging Workplace Trends

With a fundamental shift in the way of working, companies need to develop strategies for the new workplace regulations that foster both remote working and working from premises. A report by Statista showcased that globally, 60% of companies split between employees working out of an office and working remotely, while 30% respondents were working in a fully remote setup. [3]   Retailing setups too are transforming because of this change.

Employees who do not work for retailing in D2C capacities, have the advantage of not being restricted to a specific geography or location. This indicates significant cost savings on the office and other facilities. It also indicates that retailers can widen their talent pool. D2C specific roles, like customer service, in-store assistance, grievance redressal, etc., need to be moved online as regulations of social distancing continue.

Companies are therefore investing in enabling customer service via mobile applications, website, social media platforms, virtual assistance programs, etc. This ensures that companies continue to build on D2C relationships virtually, and all the data generated through this personal interaction, can fuel extensive analysis that helps understand customer pain points, preferences, most frequent grievances, etc., thereby helping retailers improve their overall service provided and products offered.

While 2023 is perceived by many in the industry as an optimistic scenario, at present, the priority for organizations should be to take note of inefficiencies in existing processes and improve upon them to build resilience and optimize risk management. Leveraging the data, finding the opportunities, identifying and prioritizing the problems to be solved should be the main focus for the next couple of years.

AUTHOR BIO

Vishnu Krishnan | Consultant

Vishnu Krishnan is a data science and analytics consultant with over 8 years experience in the industry. Through his career he has worked towards enabling a plethora of analytics solutions such as process optimization, demand analysis, etc., for the BFSI and retail industries. A trained singer, Vishnu loves to sing, and learn and explore all things music. He also loves to read fictional novels.

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