Rethink / Commerce
A multi-faceted approach to navigating a rapidly changing consumer
In 2016, R/GA Ventures launched the R/GA Connected Commerce Accelerator with Westfield Labs in partnership with a handful of retail brands, including Westfield Labs, Shopify, Macy’s, Walmart, and Verizon. At the time, the companies in the accelerator were working to solve problems many experts hadn’t anticipated would impact retailers today.
What was scratching the surface then–meeting consumers where they are online, getting products to customers quickly, driving loyalty through personalization, providing competitive prices and quality–are now table stakes for retailers now. And in today’s climate, we’re witnessing an industry that hasn’t been disrupted but confronted by the necessity to change and push.
Industry leaders are well aware of the need to evolve — but they often don’t know where to begin. At R/GA, we help retailers take action now to yield outsized results, fast. We fuse design, technology, and business rigor to help you unlock short-term growth while setting an innovation vision for your future. And, we aim to bring our expertise in innovation and deep experience in retail to bear, to partner with our clients to redefine the future of the retail landscape.
In this article, we’ll outline a set of imperatives and implications in the retail category to understand where we are, where we’re headed, and where to prepare for what may come next.
A Digital and Socially Distanced Future
With orders to stay at home, to close non-essential businesses, and to practice social distancing, the way products are exchanged accelerated the adoption of digital transactions. Stakeholders in the retail industry should expect to increase their respective investments in retail technology while also engaging in emerging technology pilot partnerships in order to adapt to shifts in consumer behavior in real-time.
As it relates to the pandemic, relevant retail technology includes but is not limited to:
- Contactless payment solutions
- Supply chain automation
- Order fulfillment technology
- Online/offline self-serve solutions
- AI-powered targeted marketing technology
- Brick-and-mortar contact tracing technology
While the three areas of focus below are by no means exhaustive, they can be a starting place to help retailers navigate the nuances of the “post-COVID consumer.”
01/ Don’t Underestimate Short-Term Behavior
Observation
After initial reports of COVID-19’s presence in the U.S., native consumers had to garner their resources purely through digital means from home as brick-and-mortar locations shuttered globally. The report mentioned above asserts this notion and indicates that once COVID-19 began to spread, digital revenue saw a 41% spike during the final weeks in Q1–2020. This spike suggests accelerated consumer adoption of e-commerce beyond those that are digital natives, and this change in behavior is likely to have long-term implications.
Opportunity
With the increased usage of digital platforms, retailers can improve the customer experience by making e-commerce transactions more seamless. Technologies that enable same-day order fulfillment, closed-loop commerce, in-store experiences at home, and more, can help retailers capture and retain new business.
We’re exploring solutions answering questions like what if…
- we leverage virtual platforms to mirror brick and mortar shopping?
- retailers empowered more e-commerce customers to try products at home before a purchase?
- we leverage current consumer behavior to standardize closed-loop commerce?
- we could standardize voice as the interface for e-commerce shopping?
- we integrate AI-enabled technology partners directly on retailers’ apps to enable real-time, automated customer service?
Emerging technology platforms that enable in-store experiences at-home will be vital in making the accelerated transition to digital more seamless. Bringing human elements to the shopping experience when human connection is impaired, will help retailers get customers to remain highly engaged digitally.
02/ Operationalize Your Social Distancing Roadmap
Observation
As demonstrated by national crises of the past, the aftermath of COVID-19 may result in consumer hesitation to leave home often or be among fellow consumers in a brick-and-mortar setting for extended periods of time. Capgemini Research Institute reports that before COVID-19, 59% of consumers worldwide had “high levels of interaction” with physical stores. Yet, currently, no more than 24% expect to return to that same level of interaction. In light of increased, and likely prolonged, online shopping activity, retailers should look to create experiences that can provide consumers with a sense of safety and incentivize them to return to physical store locations for years to come.
Opportunity
Retailers must begin to leverage emerging retail platforms with technologies that empower consumers to practice social distancing in a retail setting and help put them at ease while shopping. Solutions that can shift the in-store shopping experience to support contactless payments, returns, and the like are well-positioned to provide consumers with a sense of security.
We’re exploring solutions answering questions like what if…
- every retailer streamlined the in-store shopping experience through automation?
- retailers could bring their stores and inventory directly to each consumer individually?
- merchandise returns were automated and limited to self-service?
- retailers were able to execute socially distant transactions at their brick and mortar locations?
- we leverage the self-checkout experience to learn more about consumer interests?
- retailers were able to shift to an entirely cashless payment model?
Every aspect of in-store shopping can be experienced in a safe and socially-distant manner through existing technological innovation. Contactless purchases and returns are critical in making the post-COVID customer feel at ease upon their return to a “normal” shopping routine. Retailers that provide contactless options for their customers can expect to see their customers stay in their respective store locations longer and return more frequently. While the amount of active shoppers in physical stores has not yet reached pre-COVID levels, contactless shopping technology will help sustainably accelerate the return-to-shopping timeline.
03/ Keep Consumer Relationships
Observation
Lack of available resources is forcing consumers to explore alternative brands, which harms brand loyalty across sectors. Research from AlixPartners found that “65% of US [CPG] consumers have tried a new brand or private label in at least one consumer product category since the coronavirus outbreak.” This disruption in brand loyalty is a direct result of the inaccessibility of brands while consumers were once forced to shelter in place. To maintain brand loyalty in this unique environment, retailers must invest additional resources into solutions that aim to personalize the online and offline shopping experiences for each customer.
Opportunity
Given the dwindling and limited opportunities brands have to interact with consumers, there is an imperative to drive loyalty and strengthen consumer relationships at every touchpoint. Solutions that employ contextual marketing tactics, personalize mobile promotions, collect first-party data and the like are well-positioned to help retailers better understand each customer’s individual preferences.
We’re exploring solutions answering questions like what if…
- retailers were able to know the underlying reasons for a consumer’s purchase?
- retailers were able to personalize offerings for each customer based on their respective preferences?
- brands streamlined their sales efforts by knowing a customer’s likelihood of making a purchase?
- retailers could provide consumers with dynamic coupons, rebates, rewards, and content via their mobile wallet?
- retailers were not limited to closing a sale before a customer left the physical store?
While personalization and customer loyalty are common areas of focus for virtually all retailers, current consumer behavior suggests that retailers should allocate additional resources to preventing churn. As a direct result of inaccessibility to products and curiosity, customers were more experimental than ever with the breadth of products available to them during the shelter-in-place period.
Retailers should look to leverage platforms that develop hyper-personalized digital offerings, help increase conversion rates, and minimize the risk of churn. It is unclear whether customers will remain loyal to their newly-trialed brands in the long-term. However, retailers should leverage this time to familiarize themselves with individualized customer habits if they have not done so already.
R/GA Ventures’ Retail Tech Portfolio Snapshot: Notable Exits and Financings
Exits:
- Onward (FKA Agent Q), acquired by Google in 2018
- Oak Labs, acquired by ZIVELO in 2018 (ZIVELO was later acquired by Verifone in 2019)
- Reply.ai, acquired by Kustomer in 2020
Growth Stage Companies:
- Darkstore, $30M raised to date (Series B)
- Clarifai, $40M raised to date (Series B)
- Happy Returns, $25M raised to date (Series B)
This article is part of our Rethink / series, built to unpack industry shifts accelerated or created by COVID and the emerging technology that can fuel new waves of innovation.
To learn more and stay in the know, visit ventures.rga.com and follow @rgaventures on Twitter and Instagram.
