Updated: Jul 23
The COVID-19 pandemic continues to have a dramatic impact on our daily lives. Figures and facts regarding infection rates simply can not adequately describe how much the world has changed and how our society is coping to deal with this new normal. As with any crisis, the conditions which once made an organization thrive may no longer be adequate to insure future growth and prosperity.
CHANGES IN CONSUMER BEHAVIOR PATTERNS
The responses to the new normal have created a change in consumer behaviors that we believe will be long lasting. A greater awareness of health and safety risks associated with personal contact are now accelerating the growth of contact free transactions, creating a reliance on (IOT) the internet-of-things, as well as expanding omni-channel operations especially in the area of E-commerce. Consumers who previously were late cycle adopters or were skeptical of retailer’s abilities to meet expectations regarding product attributes, delivery and returns are now moving rapidly to an online format.
This graph provided by Bloomreach shows some trends emerging as people respond to this widely shared experience.
The Bloomreach - e-commerce study confirms the increasing appeal of e commerce with year over year sales in the Home Furnishings and (DIY) “do it yourself” home improvement market segments showing weekly increases of 70% or more for the April 2020 time period. Clearly, those retailers without an e commerce presence are at a distinct disadvantage. The data also supports our observations from industry field interviews.
The overarching message is that customer expectations have changed dramatically and organizations now need to focus on meeting these requirements through adopting technologies, processes and organizational structures that align with the new norm.
TRENDS AND AREAS OF OPPORTUNITY
Final Mile Delivery
The final mile delivery process has been the area most impacted by the pandemic. Personal safety and the uncertainty around exposure risks have become a driving force in customer expectations. Given the environment, it is easy to understand that the traditional “white glove” approach of in-home placement and setup may represent a point of contention with customers. In response, retailers are now providing a wider range of delivery options.
Delivery options which have seen significant growth are:
Curbside home service – where items are delivered to the property, but outside of the physical confines of the home.
Threshold deliveries which typically fall into one of two types – assembled or unassembled and placed just inside the home. Note that it is critically important for threshold delivery that the customer expectations regarding what the service and state of assemblage are being provided is clearly understood.
(BOPIS) which means Buy online – pickup in store allows the consumer to purchase an item online and pick-up at the store or distribution point.
To help retailers manage the changing delivery landscape, Profit Chain has developed new standards for final mile delivery available here: NEW STANDARDS FOR FINAL MILE HOME DELIVERY
CUSTOMER-CENTRIC ONLINE PRESENCE
A second trend emerging from the pandemic is a heightened need for communication and customer interaction in a contact-free environment. A mobile device or desktop is increasingly the point of introduction to a brand in lieu of a store front location. The internet-of-things (IOT) is now the primary means of shaping brand perception and executing transactions with the customer. Somewhat surprisingly, many organizations have not adopted a technology strategy which adequately meets the increasing need for customer centric interaction in an online environment. The technology infrastructure employed should be robust enough to:
Engage the customer from any device,
Enhance the buying experience
Provide rich and real-time information through the entire sales cycle.
Successful online models have been quick to grasp that the purchase decision needs to be fully supported by allowing the customer to “feel connected and present” to the purchase. This can be facilitated by the use of virtual reality applications which provide a much more personal and customized shopping experience. The virtual presentation can further be augmented with design subject matter experts available through web | online chat or video capability. Creating an interactive experience is a key element in brand promotion and sales closure.
CREATE A SEAMLESS ONLINE TRANSACTION
Additionally, as part of the closing process the consumer is looking for easy online payment options. The payment experience has at least two aspects: the choice of a financial channel such as PayPal versus a credit card, and content concerning available financing options (i.e. in-house versus external).
INVENTORY MANAGEMENT AND ONLINE VISIBILITY
From an internal standpoint the pandemic has highlighted the disconnect that exists between actual inventory levels and the stated inventory available. The pandemic has created havoc with supplier fill rates and lead times while simultaneously impacting demand models. These factors alone have made inventory management and forecasting increasingly difficult. Inventories are sometimes distorted by factors such as failing to account for the returns process or capturing inventory at the channel level. In order to obtain an accurate picture of inventory for online sales you must review the inventory at a sku and location level.
We’ve developed an inventory checklist as a practical approach for creating an effective strategy for dealing with the disruptions we are currently experiencing.
GET THE INVENTORY CHECKLIST:
The current situation needs to be viewed as a growth opportunity. Organizations which build online relationships that engage customers and exceed their expectations in the new norm will ultimately win!. This vision will require flexible adaptive technology, streamlined and capable business processes and most importantly a robust business structure built around customer relationships and changing expectations.
CUSTOMER FEEDBACK Last but not least - we believe that every retailer should survey their customer post-delivery on the day of delivery. This guidance applies to retailers who use their own employee driver teams or third party logistics (3PL) providers. Having a consistent survey and feedback system in place for your home delivery will ensure that you know your final contact with the customer ends with a great experience. In today’s digital environment it just makes sense to rate your delivery since there are many affordable options available.
Consider the Net Promoter Score (NPS) or similar system to consistently survey the consumer. There are numerous surveys available with texting features and capabilities. Some retailers are still using outdated phone surveys. These surveys are highly inefficient due to factors such as robocalling issues and consumer trends and lifestyles. When you drill down into the numbers on these surveys you find that contact rates are well under 10% for voice to voice surveys and rely on manual tabulation and subjective interpretation. This is just the basics of offering and creating a well structured system. Final Mile (In-home) delivery service is an area that many furniture retailers are currently reevaluating. If you are wondering if you should outsource your Final Mile delivery operation to a 3PL provider or keep it in-house, our business advisors can guide you through that process. We have decades of experience putting in delivery programs at major furniture retailers that were designed to delight the consumer and improve Net Promoter Scores and ratings.
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Profit Chain is a Supply Chain Consulting firm dedicated to helping retailers and manufacturers grow their revenue and maximize profit. For more information visit our website to schedule a free consultation.