Podcast

Retail Wrap-Up 2020: Setting goals for 2021

This holiday season (and year) has been unlike any other. Has any other year pressure tested every system, capability, process, resource and bandwidth limits simultaneously? Now is the time to assess your retail strategy, review your playbook, and think about your KPIs. Retailers and brands have permission from their customers right now to implement unprecedented levels of change. This is the opportunity to rethink and reinvent what the future looks like for retail, whatever brand or business you’re part of, and incorporate those ideas into your goals for 2021.

In our final podcast of the 2020 Retail Wrap-Up series, Joe Cox, Director of Communication Strategy, talks with Kristin Demel, Retail Strategy Director, on the biggest “aha” moments uncovered in the past holiday retail episodes, the three key takeaways for retail in 2020 and how retailers and brands can be intentional, versus reactionary, in 2021.

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Other podcasts in our Retail Wrap-Up 2020 series include:


Joe:
Welcome back to Uncovering Aha, a podcast devoted to helping brands transform data into action, to inspire creativity, to accelerate the growth of your business. I’m Joe Cox, director of communication strategy at Callahan. And today’s podcast will be our … hard to believe it’ll be our final podcast of this very special year of 2020, as well as the wrap-up of our 2020 Retail Wrap-Up series. So, wrap up of our wrap-up.

Joe:
And with me, I’m joined once again by Kristin Demel, Callahan’s director of retail strategy, who has been tirelessly commentating this, how you say, extremely distinct holiday shopping season, giving us the inside scoop from the perspective of retailers so that you and your own team can come out of this whirlwind season with some really specific learnings and actions that you can transfer to how you tackle 2021 and beyond.

Joe:
So, Kristin, this is it. This is the wrap-up of the wrap up. And in this episode, we are going to be taking the highlights of the previous episodes in our retail holiday season wrap-up series and delivering those big ahas that we uncovered along the way. We have three big overall learnings for everyone. And so, Kristin, whenever you synthesize all of those conversations we had in our entire place, what are some of the things that stood out?

Kristin:
Yeah. Hi, Joe. I am so excited to be back talking about holiday. It’s the Superbowl for retailers as you move through quarter four, and so it’s always exciting to see the strategies come to play, and I think never more true than this year as we’re all kind of quickly reacting. But I think the thing to keep in mind as we start to talk about learnings is this first learning is that while everything’s been different this year, and we’ve all learned and we’ve had to pivot and we’ve had to come up with new strategies and new tactics, this is really just been an acceleration of retail trends that have already been in the marketplace. And that is exceptionally true for what’s happened this holiday season.

Kristin:
I think the three highlights here, the first one is we’ve already had this migration where customers are shopping earlier. We’ve already had this sense of the holidays blurring between Thanksgiving and the December holiday season. I think what’s accelerated and new this year is that Halloween got looped into that, too. So now Halloween and Thanksgiving and the December holidays all became one big fourth quarter holiday blur. And Black Friday used to be the start of the season and almost became that Pavlovian stimulus, that bell that we all reacted to and said, “Oh, it’s time for the holiday season,” that just moved up into October with Prime Day.

Kristin:
So while it felt new and different and created a lot of reactionary behavior out there from brands and retailers, it really was just continuation of what’s been happening in the holiday season. I think as we start to think about Black Friday this year, and as we think about it in the future, it’s going to be less about a day and a weekend and more about a state of mind. Black Friday. Now, to me doesn’t mean Friday after Thanksgiving. It means, “Ooh, it’s time to deal seek and time to shop as I prepare for the holiday season.”

Kristin:
The second big acceleration is the shopping outside of physical retail. You can’t avoid news articles that are saying holiday online shopping is hitting records. Black Friday hit records online, or Cyber Monday and Cyber Week hit records, et cetera. We see crazy statistics about how digital sales have climbed versus last year. But that was already something going so that continues to be just an acceleration of a trend.

Kristin:
And then I think that the third thing here related to acceleration of retail trends is really around, I’m going to call it alternate delivery. You could call it curbside, buy online, pickup in store, third-party delivery, that last mile delivery that’s happening. But this also, to our point we’ve been making, is an acceleration of a trend that was starting to happen. When you look at all of the retail experts that are posting articles and content out there right now, Retail Dive published an article on the winners and losers of Black Friday with curbside and digital being some of those winners, in-store traffic being one of the losers. Store traffic’s been quoted over Black Friday weekend being down 50%.

Kristin:
But again, not surprising knowing where consumer behavior was for this year, but also knowing what’s been going on in the retail environment for the last several years.

Joe:
Yeah, this is one of my favorites, too, because this is the one that I really got it and it really coincides with a lot of the other trends that we’re seeing in marketing that are outside of retail world, is that what 2020 did, was it hit the fast forward button. It’s that acceleration, right? It did not put us into a state of everyone had eight months, nine months to start something, to build something from scratch, which it kind of seems that way. That’s not how the medication or the cure for the pandemic worked. It didn’t get started. It got started years ago. Right?

Joe:
So, but what we did see is that fast forward button happen, and I think that it makes a ton of sense. And I am really kind of looking forward to not seeing all that attention on Black Friday or a day, but a lot of creative … like a lot of things open up to me if I was within retail to be able to … Where do we fit in, and how do we see the retail season and holiday season? And how does our consumer see the holiday season? So I really dig this one because I can mentally see that fast forward button and, and what it means to not only retail, but other industries too.

Joe:
So what about the second learning? What was the second one that you took from our conversations?

Kristin:
Yeah. So the second learning I would say is stop thinking about your customers channels because the customers don’t think this way. It’s never been more blurred across channels than it is right now. I would say most retail organizations were set up and structured in a way where there was separate teams, almost a binary concept in retail. You had your brick and mortar team and you had your, well, e-commerce team. And that’s the titles of the teams and that’s the way that folks were thinking, and app development and social shopping and all of that kind of just fell under that e-commerce shopping.

Kristin:
But customers don’t think that way. And so designing your customer experience, designing your brand engagement in a way that connects in a binary fashion, either with customers physically or customers digitally, is just not going to work going forward. And so I think that that really becomes that big second learning. As you start to look at Retail Dive published a few days ago their retailer of the year, which became Target. And I’m a big Target shopper, sad to … Not sad to, but will proudly claim a big Target shopper here.

Kristin:
When I think about how I engage with Target, I don’t have one set of expectations for Target in-store and another set of expectations for Target on my mobile. It’s just Target. And that’s just how I’m engaging with that brand. And to their credit, they didn’t just start thinking about that this year because of the pandemic. That was them reading where the trends were heading, understanding where consumers were going to go, and then thinking about their consumer, not from a channel perspective, but from a customer experience perspective.

Kristin:
That really makes me think about a podcast you and I recorded a couple weeks ago, maybe a month ago at this point, about how does your customer think about you and how should you be moving away from omni-channel thinking and towards customer experience thinking. And Target’s a brand that really did think about, how is my customer engaging with me across task mode? Are they getting social interaction from me? Can I fulfill their need for discovery? Is there an entertainment or an aspirational value of what I can bring from my customer experience?

Kristin:
As you think about the big learning here, it’s your customer experience and how you behave as a brand should be channel agnostic. It shouldn’t be one way for one channel and another way for another channel. And I think what you’re going to see and have already started to see is that major retailers are rethinking this. And it’s not just rethinking the customer facing engagement, but it’s also the behind the scenes thing. Walmart’s done a huge restructure of these last few months merging those teams so that they have one team thinking about these environments together to ensure that seamless thinking and that seamless strategy development.

Kristin:
But that’s not just going to be something that impacts retailers. That’s also going to fundamentally change how brands need to interact with those retail partners. So no longer will you be interacting with multiple teams, it’ll be one team. And so what that does is it changes the expectations on you as a brand on the type of thinking, the type of insights, the type of recommendations, and even the types of conversations that you’re going to be having. So I would say the big, second learning here is brands and retailers really need to start thinking about customer experience as seamless and intertwined and not in this binary online/offline type of way.

Joe:
And I think I like this one so much because it is the way it should be, right? Like, this is the way we needed it to be, but there wasn’t something that was urging it on, right? There wasn’t something. Because it is a lot. It’s a big merge, right? And I totally get how those things started separately. Right? And they became their own beasts. But then when we are, all of us are like, we need to be customer centric, we need to think about the experience, and then we have two different teams that aren’t talking to each other, one for online, like there’s some kind of magical online shopper that’s only online shopper and a magical shopper that’s shopping there in the store. That’s not how it works. And really we saw big hints to how that’s going to work beyond 2020.

Joe:
So I also love that we’ve gotten past and connected the thing that brings somebody to the location, so the promotion or the marketing or whatever that is, and forced us to bridge those walls and connect us with the experience of the in-store. Right? And connect us all the way through to how is that entire experience. And I like how, instead of omni-channel, that experience is the thing that helps unite those underneath one platform. And I would say also with this one, the general experience is going to be better for a shopper within or without a pandemic coming out of this. So, great.

Kristin:
What you hear is that not everybody is going to stay a hundred percent digital. You know, there’s going to be very few things that once we move past the pandemic and can all move around freely, we’re not all going to be living a hundred percent digitally, but there will always be this new expectation of physical and virtual combining into to make these richer and stronger brand experiences. The customer will continue to expect that from retailers and from brands.

Joe:
I’ve noticed it in myself, and with the retailers that have it as an option, and I’m actually seeing a lot more retailers that do, is that whenever I’m checking out online because I’ve thought of something really quickly … I’m not going to shop, but I thought of something and I need to remember it before I forget, and then there’s an option to go pick it up down the street, I’m going to take that to save myself a couple of days on shipping or money on the shipping, whatever it is. So yes, it is coming to the shopping experience and meeting the customer where they’re at versus forcing them through hoops that help us.

Kristin:
Yeah. I think if retailers and brands only offer one solution and one delivery it’s going to be very limiting, which I think leads to the third learning of, look, the customer is giving you permission to try something new. It’s not just that the rules changed for retailers. Everything’s changed for consumers and we’re all different. We’re different people than we were this time last year, because we’ve all lived through something that drastically impacted how we interact with the world. It drastically changed our values, our priorities, and our finances. We’re just different.

Kristin:
And we’ve now gotten accustomed to, as consumers, living with uncertainty, not understanding where companies aren’t leaning into purpose and mission, expecting more of companies. Our health and our family are more top of mind, which all leads to the values and priorities of us are different. And so when you combined that with we’re now open to and expect different delivery methods, expect more seamless interaction across the brand, that just gives us permission as brands and retailers to do something new. We had to this year get off autopilot and we had to face ethical dilemmas and how we were going to show up.

Kristin:
I mean, we had an interesting political landscape. We’ve had unprecedented amount of social issues. The list could go on. But we now had to rethink things that we would have normally just taken for granted. And so customers aren’t just open to it. They’re expecting us as retailers and brands to throw out our old playbook and think about what’s really going to resonate with them, and what do they actually need from us?

Joe:
Yeah, there is permission right now to break the things that weren’t working, to break out of the chains of the things that have held us back and we’ve done it because that’s the way it is, and all those assumptions and things that we’ve always known about it and always talked to our coworkers about why do we do it that way or whatever, now is that excuse. And it is the time. When we come into 2021, I mean, the first thing I’ll be doing is building a list of what things can we knock down. This is the chance. This is the opportunity to really get past those places and rethink what the future looks like for our own retail, whatever brand and whatever business that we’re a part of.

Joe:
So I love this one on the creative end of things, because it really gives that permission for creativity, but the struggle or what you have to deal with in 2021 is, part of it is being able to tackle those things. It’s a lot harder to attack them and to take them out than it is to moan and groan about them year after year. So it’s really to say, okay, what are we going to actually, let’s put it up. What are we actually going to do?

Kristin:
Yeah, for sure. I want to give some advice to brands and retailers on how they should react to these learnings and what we’re talking about. You have this permission now as a brand and retailer to do something different, but let’s break that down into kind of short-term and long-term. We all have now, we lived through 2020, and for some of us there could be an audible sigh of like, “Whew, thank goodness that’s over.” But the fact is January 1st, 2021, it’s not going to be drastically different from December 31st of 2020.

Kristin:
And so you can’t just go back to assuming what’s always worked will work. And that can be easy for us to say, and could probably be the most obvious thing to say on this podcast, but you’re really going to have to live through every month of strategy and tactic development thinking, is this actually going to work this year, or am I reverting back to old patterns and habits and going back to my old playbook? You’re going to have to, as brands and retailers, really go back to the basics of, what does my customer need for me? And why or what triggers their need to make sure that we have the right marketing strategies, messaging strategies, retailer partnership strategies, even down to promotional pricing and assortment selection.

Kristin:
Let’s play this through to something more tactical: forecasting and inventory management. Don’t always assume what has worked in the past is going to work in the future. There’s going to need to be an enhanced focus on forecasting and inventory management, and that’s going to have to connect to your marketing strategies. If there’s a disconnect, and those silos exist, as we all know, between marketing and merchandising teams or marketing and sales teams, marketing can’t put out a message to drive customer to an action if there’s no inventory to convert the sale. That just becomes a let down for the customer who, by the way, has been let down on in-stock issues for all of 2020, just trying to buy basics like toilet paper.

Kristin:
So this standard approach to forecasting and inventory management that you used in the past is not necessarily going to be the right solution for you going forward. And I think that even leads to the question of, are we set up in a way, as we develop these strategies month to month, and these tactics month to month, are we set up in a way that we can actually read and understand, is this connecting with my consumer? Is it driving the results that I need to help you quickly pivot in the short-term to make sure that you have the tools and capabilities and you have the relationships established that you can react? And so that we’re not in this, “Okay, well, I learned something now, let me go put it into place six months later.”

Joe:
Yeah. Once bitten, twice shy, right? You don’t want this to happen again. And who knows what the future holds? But the way we can really learn is how do we react quickly, right? How can we do that with as least pain as possible? I love that you led with, what can we do now? Right? Like, those quick things that we can really put into place in 2021. But we know it’s a mixture of short-term and long-term. So what are those things that we can really take a long look at what we’ve been through this 2020 holiday retail season and say, “Okay, long-term, how does this affect that?”

Kristin:
The glass half full thing of 2020 here is that everyone should have had their systems, capabilities, talent, you name it, pressure tested. We’re all now keenly aware of where we can move quickly, where we fall short, and even down to, are we quick enough at making decisions? And do we have the right resources in place to be able to pivot and to move on a dime if we need to? And so I think my advice really would be, look at that list of where you fell short, from all the things that have been pressure tested this year, and as you think about your investments and your plan to adjust to those capabilities, pause for a minute, and then think about the KPIs. And, okay, if I was able to get these capabilities in place, what am I going to use to measure to make sure they’re successful, to make sure that my investment is doing what I need it to do, or even to validate that where I have a capability shortfall is actually the right place to be invested.

Kristin:
I think in the past, retailers and brands have really relied on … I’m going to call them business health metrics, which I’m not saying are not important. They are still important, but they’re not the only thing that we should be looking at. We know that through this pandemic, 75% of shoppers have tried something new, including new purchase channel, new brand, a new retailer, et cetera. So what are those right customer relationship measurements that are going to help us with our resource allocation and to make sure that we’re efficiently managing our brand, but also building relationship with our customers so there can be some loyalty built into where we’re investing in and how we’re meeting their needs?

Kristin:
But that also raises the question of, all right, now that I have these new KPIs that I want to measure, can I measure them? Do I have the right amount of data? Do I have the right information sources? And do I have the right analytical bandwidth to make sure that I can be looking at this information on a regular basis and get what I need to out of it to go back to that? Can I actually read and react to the information that I’m bringing in?

Joe:
Yeah. I like read and react. And I think that what you definitely have to be careful about is … What you’re not saying is that the future will be all about instant reaction, right? Well, what we want is the right tools and the right view of what’s going on to help us understand what are we doing correctly and I need to do more of, and then what are the things that I need to change as it goes? But what somebody could easily do is say, “Well, I want to instantly change all the way through. So if I see something …” I think you need to have the right things in place that gives you at the right points at what you would be like, “Okay, is this working or is it not working? When should I react?”

Joe:
It might not be react in a day. It might be give this thing certain amount of time, but do you have the KPIs? Do you have the tools in place that give you that foresight, or at least give you the right things to make decisions upon? And that’s a whole … I love how you put that in long-term. That’s a lot of work. That is bringing on a lot of new sources, but it’s going to, at the end of the day, help you become a better retailer.

Kristin:
Yeah. Just take customer loyalty for a minute. Understanding the difference between a consistent flow of transactions from a customer and the difference between an actual brand advocate that’s out there posting their purchases from you, encouraging their circle to also go be one of your customers, et cetera, those are two different sets of data that you need. But if you only have the transactional view of that shopper, you’ll never get the full picture. And so when something like a price fluctuation or a change in shipping method or something disrupts them, they’re going to be the first to go. And so I think to your point, it’s not just do I have the right set of data flowing in, do I have all the data points that I need? And do I actually have the tools in place to decipher that?

Joe:
Yes. Yeah. I think it’s not going to be going away, none of this in 2020, right? Like, we are not seeing anything, much of anything that’s going to be going away, but this acceleration is just going to bring … Let’s glass half full, it’s going to bring a lot of a better experience to the consumer. It’s going to bring more awareness and more ability to have touch and react to what’s going on in the world for retailers. And once we’re through some of this pain and transition, it should be a better experience for both sides. So with all of that, three great lessons from lots of content, it’s been a fun ride, but that is officially a wrap.

Joe:
And the end of 2020, the end of a very interesting holiday shopping season, that I’m glad I had you along for, Kristin, and an end to that 2020 Retail Wrap-up series. So thank you so much. It’s been so much fun getting to go through this journey with you. And I know me personally, I’m never probably going to be looking at shopping experience the same way. So it’s nice to have you along for that ride. And thank you for your expertise and commentary.

Joe:
And from all of us at Callahan to all of you, wish you a warm and joy-filled holiday and may all of the crap of 2020 be left there so that marketers and brands can enter 2021 with at the very least knowing that if they can get through this year, they can probably make it through most anything. So long, 2020, and see everybody on the flip side. Thanks again, Kristin. See you next year.

 

You’ve been listening to the Uncovering Aha! podcast. Callahan provides data savvy strategy and inspired creativity for national consumer brands. Visit us at callahan.agency to learn more.