Digital Is The New Black: Rewriting Retail’s Rule Book For The Recovery And Beyond

Now that the era of full-stop lockdown is coming to an end and economic reopenings are under way to one extent or another in all 50 U.S. states, the $3.7 trillion question is: What happens next for retail?

Is a recovery on the way, and if so, what will it look like?

PYMNTS recently put those questions to an all-star panel of experts for the “How We Will Shop” segment of our Powering The Digital Shift panel. Joining Karen Webster were Cutter & Buck CEO Joel Freet, Natori Co. President Ken Natori; Nick Kaplan, president and co-founder of Fashion to Figure; and Robert Clarkson, senior vice president of global account, business and global partnerships at PayPal.

One thing the panelists agreed on is that they can speculate about where they think retail is going, but it’s impossible for anyone to know for sure.

“As we look at COVID-19 in terms of what it means for the future, I think we’d all agree the second half of this year is something we can all guess at in terms of what’s going to happen, but I don’t think any of us really know for sure,” Natori said. “The stores are going to open, [but] how much do customers go back? How willing are they going to be to shop? How scared are they going to be? That all to me is anyone’s guess.”

The world of retail as summer 2020 approaches is a very different place than it was when spring started, flipping nearly entirely to digital over the eight short weeks that the coronavirus has prompted store closures.

It’s a story clearly illustrated by PYMNTS’s recent consumer surveys of more than 12,000 American consumers every two weeks since March 6. Our research indicates that since the shutdowns began, 42 percent of consumers are using digital channels to engage in activities more often than they did before the pandemic broke out — not surprisingly. What may be unexpected is the percentage of those who say that many of those digital habits will stick — roughly 75 percent.

That means that retailers have had to rethink their strategies to building digital commerce journeys that are as experiential as they are transactional. All panelists agreed that retailers must ponder a coming landscape where stores still exist, but only as part of a much larger network of potential consumer “touch points.”

The Progression To Digital Was Happening Anyway

Still, Fashion to Figure’s Kaplan said the great digital migration currently underway isn’t some radical new chapter in retail’s history so much as a natural progression that was already happening before COVID-19.

“I think we were already heading to a digitized world for many reasons,” he said. “[The pandemic] certainly accelerated the trend, but it certainly wasn’t all of a sudden. What has happened is we’ve all had some revelatory moments in this [crisis] in terms of our priorities and our spending habits.”

Chief among them, PayPal’s Clarkson said, is the idea that building for the omnichannel consumers is no longer a nice add-on but a necessity. Even before COVID-19 hit, between 80 percent and 85 percent of consumers started or undertook some part of their commerce journeys on their mobile devices, he noted.

However, Clarkson added that only about 63 percent of merchants are actually optimized for that mobile experience — one he describes as going from “want to need.” That gap has become particularly critical for retailers to bridge in the past several weeks as consumers as a whole are switching to digital, he said.

Clarkson said a rapidly growing part of that group involves “Silver Tech” customers — those in their 50s and 60s who eight weeks ago didn’t necessarily use digital channels as their primary means of commerce. Clarkson said that demographic, which looms large in terms of spending power and actual size, should be a critical part of a business’ digital experiences plan.

Natori Co.’s Natori noted that when it comes to getting into eCommerce, the first step is often the hardest one for many shoppers.

“As great as eCommerce is, there still is a lot of friction for someone who’s never used it before … that could deter somebody who’d never shopped online before from actually [doing so],” he said.

But he added that since a massive number of consumers have overcome that initial reluctance, they’re likely to become repeat digital shoppers.

“There were a lot of people who had to go through [learning the process] and had no other choice if they wanted to buy something,” he said. “Now that they’ve experienced it … it’s like, ‘Boom, now you’re in.’”

However, panelists said all retailers must raise their game and build digital commerce experiences that create both context for a purchase and excitement that reaches beyond just getting the transaction done. Still, how things get built will vary, with no one set path to victory.

Cutter & Buck’s Freet, whose firm manufacturers high-end clothing for golf and other sports, said the goal is to build more than merely a transactional relationship with consumers. His firm uses partnerships with vendors already wired into creating experiences around sporting events.

“We’ve been definitely leaning into that and working to support those partners that already have the experience already built in,” Freet said. “They are delivering lots of people who are big fans.”

Fashion to Figure’s Kaplan said it’s important to focus not just on a one-off transaction, but rather to connect consumers to a brand’s larger story. The goal is to create an experience worth returning to — because in retail, the return buyer is the key to success.

“We always have to be building to get a two-time buyer, which is most valuable to us,” Kaplan said. “We’ll vote for that solution every time because if you can’t get that, you can’t survive.”

Brick-And-Mortar Retail Isn’t Totally Dead

Pandemic or not, panelists agreed that there are some things about consumers that aren’t likely to change.

For instance, don’t expect physical stores to completely go away. Even if there are still 18 months between us and a vaccine (as some experts have forecasted), consumers will eventually want to get out, talk to other people, associate in person and try on clothes before they buy them.

Yes, consumers will digitize their habits between now and then, and store traffic will likely never return to pre-pandemic levels, but the desire to physically see an object in person before buying it is unlikely to go away.

Clarkson said that if the changes he and his PayPal colleagues are already seeing tell them anything, it’s that what will mostly change are the procedures of how in-store retail gets done.

“I think stores that are going to adapt are going to recognize that consumers still want to see and feel the product and find ways to facilitate that either digitally or in person, but that the actual touching in the mechanics of the payment will change dramatically,” he said.

Clarkson said he expects consumers to gravitate toward various modes of contactless payments such as apps, going online ahead of time or using QR code solutions like the one PayPal rolled out last week. Merchants will want to provide for this because only by engendering feelings of trust and safety will they push customers back toward once-familiar retail channels.

More broadly speaking, panelists noted that even though the specific changes that are coming remain unknown, the fact that big changes are happening is a given.

“We know change is inevitable, and we have to embrace it,” Fashion to Figure’s Kaplan said. “I think the brands that will rise to the top will be the ones who figure out how to best facilitate those changes while being there for their customers on whatever channels they choose.”