Why it matters:

  • The pandemic has prompted consumers to spend more of their dollars at local businesses.
  • Retailers and brands connected with quarantining shoppers via virtual events on timely topics like health and wellness that deepened customer engagement.
  • To meet consumers’ COVID-changed buying demands, retailers tapped technology, such as predictive models, to anticipate supply chain disruptions at the individual SKU level.

Local businesses are experiencing a renaissance as consumers flock to neighborhood shops; brands are deepening customer bonds via virtual events on timely topics; and retailers have packed years of supply chain innovation into 14 months, fulfilling consumers’ bricks-and-clicks orders with newfound speed and accuracy.

These boons for business would have been inconceivable had the pandemic never occurred, experts told CO—.

Here, analysts unpack how necessity has been the proverbial mother of invention for the business community, which has turned the crisis’ unforeseen toll into opportunities to streamline operations and tap new growth.

 Headshot of Tierney Wilson, SVP at January Digital.
Tierney Wilson, senior vice president of client strategy and consulting, January Digital. — January Digital

‘Radical localization’ shifts consumer dollars to neighborhood stores

Tierney Wilson, senior vice president of client strategy and consulting, January Digital

The most basic market opportunity for brands that would likely not have happened without the pandemic is the rise of localization — radical localization, if you will.

The pandemic wiped out 20 years of travel growth in one year. People are staying, driving and traveling locally. Consumers are spending their dollars locally. Despite the national roll out of vaccines, a major return to global travel appears to be several years away.

A recent study conducted by January Digital and Coresight Research found that 33% of Americans expect to have the ability to purchase the same products in store as they see online. Localized marketing is here to stay and will become more important than ever before for brands. This means that brands must focus now more than ever on delivering personalized experiences at a localized level and must invest in marketing and analytics technology that enables them to have sound data to do so.

[More here on pandemic business trends that are here to stay.]

 Headshot of Fashion Law Institute founder and Fordham professor Susan Scafidi.
Susan Scafidi, Fordham professor and founder of the Fashion Law Institute. — Fashion Law Institute

Masks as an ongoing sales opportunity: ‘How often does the fashion industry find a whole new area of the body to dress?’

Susan Scafidi, Fordham professor, founder of the Fashion Law Institute

How often does the fashion industry find a whole new area of the body to dress? Masks from surgical to stylish have defined our pandemic wardrobes, and while many fully vaccinated consumers are embracing the freedom to show their faces in public again, masks will no doubt hang in airport shops next to neck pillows and teeny tiny toiletries from now until the end of time, as there will always be passengers who want to protect their health, their privacy or both. And if the pre-pandemic Asian market is any guide, we'll continue to see everything from luxury branded masks to their disposable counterparts on the runway and the street as well, especially during cold and flu season.

Pre-pandemic marketing was defined by chasing the ever-shorter consumer attention span, from the 30-second spot to the one-sentence tweet to the single-image social media post.

As we hunkered down at home, however, brands like M.M.LaFleur and Bluemercury brought us virtual events designed to engage the consumer with longer, personality-driven conversations on topics such as wellness or favorite books. While some seminar marketing focuses on products, in a direct line of descent from Tupperware parties, infomercials and YouTube how-tos, the new wave of long-form consumer engagement owes more to talk shows. While life may be speeding up again, the focus on branded banter rather than product promotion is likely to resonate for some time.

[Read here on how to livestream a virtual event.]

 Headshot of Brian Kilcourse, managing partner, RSR Research LLC
Brian Kilcourse, managing partner, RSR Research LLC — RSR Research LLC

Pandemic forces quicksilver supply chain innovation so retailers can better respond to ‘rapidly changing consumer demand’

Brian Kilcourse, managing partner, RSR Research LLC

In 2020, vertically integrated retailers—meaning companies that control the design and manufacture of products that they sell—identified the need for much greater supply chain agility as a top business challenge, according to RSR Research studies. The retailers in our studies were about 45% import oriented and 55% domestically sourced.

For retailers that primarily sell imported items, there was a trifecta of challenges. These challenges especially intensified in 2020 amid the pandemic: Consumer demand changes rapidly, retailers said, undercutting their ability to buy in big volume at lower costs. What’s more, customer demand for more omnichannel fulfilment options is creating inefficiencies that erode retailers’ profitability. And retailers also said they must create more flexible sourcing strategies due to geopolitical issues.

In 2019, retailers and their trading partners were already well aware of the need for a more agile response to rapidly changing consumer demands — but they thought they would have more time to address the challenge. COVID compressed a lot into a 14-month window. Had it not been for the pandemic, we doubt seriously that companies would have had to move so quickly.

In response, more than 50% of the vertically integrated brands in RSR studies pointed to the need to create more flexible sourcing strategies in response to both geopolitical issues and problems resulting from big disruptions like the pandemic. As part of that, vertically integrated retailers want to leverage external influences like macroeconomic factors, weather, consumer sentiment, demographic trends in mid- to long-term forecasting to drive supply chain decisions. Ultimately, these companies want to be able to determine when to add additional capacity to any supply chain node including supplier volumes, manufacturing locations, distribution centers and transportation modes — and they’re looking to AI-enabled predictive modeling and forecasting to help them accomplish that.

By far the best single way for these retailers to overcome the challenges was to use predictive models to anticipate supply chain disruptions at the individual SKU level and recommend cost-optimized corrective actions, according to RSR studies. Interestingly, most — 70% — of these retailers were what we characterized as over-performers.

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