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By Tony D’Onofrio – CEO, TD Insights / Marcin Pilarz – CEO, Talkin’ Things
The latest retail industry research quantifies the challenge of global inventory distortion at $1.8 trillion with 81% from products being out-of-stock and 19% from overstocks. Lockdowns, misdirected inventory, and closed stores severely compounded challenges with inventory management. An estimated $570 billion in lost revenue has already been attributed to COVID-19 inventory distortion.
All industries now recognize that accurate inventory visibility is critical short term as we continue to recover from the crisis and long term to dynamically adjust product levels based on continuously changing customer purchasing patterns.
In early 2020, the retail industry was off to a very strong start. Through February USA retail sales grew 7.5%. Then March came in as a pandemic lion with a substantial part of the world hitting the pause button. We all very quickly learned the difference between essential and non-essential retailers. The financial pain for the global retail industry for all of 2020 will total over $1.6 trillion.
An April 2020 consumer survey found that consumers felt safest in grocery stores, followed by drug stores and big box retailers. Malls ranked lowest with only 33% of respondents saying they would feel safe shopping in these locations. Sixty-five percent of women did not feel safe trying clothes in dressing rooms, 78% felt unsafe testing beauty products, and 66% had similar concerns working with sales associates.
The impact of COVID-19 has delayed the arrival of the new roaring '20s projected at the start of the year and it is now setting up a very interesting 2021.
As the Economist asked in sharing their thoughts on the New Year, "do you feel lucky? The number 21 is connected with luck, risk, taking chances and rolling the dice. It’s the number of spots on a standard die, and the number of shillings in a guinea, the currency of wagers and horse-racing."
From a leadership point of view, I do feel lucky entering 2021, primarily because I have discovered the ONE word that will make the New Year successful. This one word is not complicated and you do not need a dictionary to understand its meaning. See if you can spot it as you read this year-end article.
Let's face it, the last nine months have not been easy for any of us. Leveraging the title from one of my favorite spaghetti westerns, 2020 to date has been the year of "the Good (pre-pandemic), the Bad, and the Ugly."
Routines that were years in the making were disrupted in the blink of an eye. For me personally, it was a fast-paced globetrotting career boarding a flight every week, even after very early retirement two years ago to focus on private equity emerging technology companies.
The global retail industry will decline over $1.6 trillion this year. We all very quickly learned the difference between essential and non-essential retailers.
But much like the hero in many of our movies, in the end multiple of us are emerging refreshed, stronger, and better prepared for a world that has forever changed.
What will I NOT miss in the post COVID-19 "new normal"? What is the most important personal asset highlighted by this crisis? What world does the virus leave behind? How do these changes link to the retail industry?
In retrospect, the timeline of the pandemic to date makes for very interesting reading.
The Internet, mobile and social media have forever transformed the distribution of viral messaging. No longer the best kept secret, at the center of successful communication is the medium of video. If you still need convincing, here are a few statistics on the future of video.
Six out of ten people would rather watch online videos than television. Mobile video consumption rises by 100% every year. By 2022, online videos will make up more than 82% of all consumer internet traffic - 15 times higher than in 2017.
By platform, EVERY DAY five billion videos are viewed on YouTube, 10 billion on Snapchat, 8 billion on Facebook, and 1 billion on TikTok. Video campaigns on LinkedIn have 50% view rates.
Viewers retain 95% of a message when they watch it in a video, compared to 10% when reading it in text. Seventy-two percent of customers would rather learn about a product or service by way of video. Social media posts with video have 48% more views.
Video increases organic search traffic on a website by 157%. On average, people spend 2.6x more time on pages with video than without. Videos under two minutes long get the most engagement.
Having a passion for powerful visual communications, weekly through my personal website I share multiple new videos focused on retail, emerging technologies, and leadership. As we reach the end of this surreal pandemic year, here are my top 7 amazing innovation leadership videos of 2020.
In October, I had the pleasure of delivering my latest updated presentation "The Disruptive Future of Retail" on three continents. The new edition analyzes the state of nearly $30 trillion industry, answers whether ecommerce is eating the retail world, analyzes the recovery trends underway, provides a peak at the surprising early holiday season, explains the trends of what will be the new normal, and concludes with a summary of the technologies moving the retail industry forward.
COVID-19 has become a disruptive accelerator of digital transformation trends that were already underway. It's not only a question of being anointed as an essential retailer that determines success. Companies that were investing in creating harmonious retail channels with digitally enhanced immersive consumer experiences, coupled with strong branding will emerge stronger out of the current health crisis.
The world the virus leaves behind requires immediate focus on five transformational strategies and three foundational technology platforms. At the center of these critical initiatives is a much more intensive focus on creating passionate consumers that become active digital brand ambassadors for retailers.
With COVID-19 severely impacting retail across the globe, of great interest has been the continuing research and predictions of the 2020 holiday shopping season. For the world's two largest economies, China and the United States, the good news is that after very steep drops at the start of the pandemic, retail sales have already recovered to 2019 pre-pandemic levels.
In China, retail sales rose 3.3% in September, the strongest rise since December 2019. In USA, "total retail and food services sales amounted to $549.3 billion last month, up 1.9% from revised August sales and 5.4% from last year's September total."
Mid-October, Amazon kicked off an early holiday season with the successful Prime Day sale. Initial reports indicate that total sales during the two day shopping event hit $10.40 billion globally, up from $7.16 billion in 2019.
This article summarizes selected holiday predictions from my continuously updated "Disruptive Future of Retail" presentation. Variations of this content with greater focus on digital transformation were delivered on three continents this month.
How are retailers entering the holiday season? What is the latest consumer sentiment? Who will win the season based on the latest forecasts?