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E-commerce saw rapid growth during the Covid-19 pandemic. In most countries all non-essential retail was closed for most of 2020, forcing customers to shop online. Many customers had a positive experience, even if they were not familiar with e-commerce before the pandemic.

This means that the entire retail industry is facing a rapid wave of change that is bigger than anything seen in the past. Brands have been forced to innovate and customers have been forced to experiment. Our return to normality will not be a return to the standards of 2019 because consumer expectations have now changed.

E-commerce is now at an all-time high. Some analysts believe that the pandemic accelerated consumer adoption by at least five years, but while this is a great opportunity, it also creates uncertainty. Think for a moment about some of the other retail changes we have recently seen:

  • Consumer product brands have explored going direct to the consumer (D2C)
  • Retail giants are likely to have more stores than they need
  • Non-traditional products are being sold online - for example fresh food and groceries, which many consumers wanted to buy in-person before the pandemic.

The challenge for retail brands will be to decide how best to use the stores in their branch network to support an omnichannel customer strategy. Consider fashion as one example. Companies like H&M have hundreds of stores all over the world. Although they can open again, many consumers have changed their behavior and expectations - they are using Instagram to find new styles, not browsing in a shopping mall.

H&M is responding by closing some stores and adjusting the layout of others so the online customer is supported more directly, with collection and return points becoming much more prominent. The clothes on display are being reduced, so the feeling is that the stores are becoming more of a support hub for online shoppers. The brand is also focusing on sustainable clothing that is biodegradable - once again, responding to a change in consumer demand.

It’s not just retail that is changing fast. Look at the auto market and there is a complete change in the way that cars are marketed and sold. Volvo is a great example - their ‘Care by Volvo’ service offers a car by subscription. You pay a single monthly fee and Volvo gives you a car, with insurance and maintenance all included. When you no longer need the car, you just hand it back.

Volvo’s service removes a lot of the hassle involved in car ownership, the servicing and maintenance, the cost of insurance, the constant depreciation and the fact that you need to tie up a large amount of cash in the car outside your home - or borrow from a bank and pay interest on the loan.

Look at Kraft Heinz for another useful example. Who would have ever thought that you need a subscription for tinned soup and spaghetti? Heinz saw that it might become problematic to only rely on retail brands to sell their products and decided to start selling them direct, creating the ‘Heinz to Home’ service.

Although I am drawing on various examples from different industries, these innovations are all designed to help companies build more resilience into their supply chain and to reduce friction for the customer. A stronger focus on e-commerce and innovation is the connecting thread of all these examples I have discussed.

Customer expectations have adapted during the pandemic and the companies that succeed in the 2020s will be those that are inventive enough to explore entirely new ways of getting their products to the end consumer - whether it is ketchup or cars.

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