Article

How “The Great Compression” can lead to better retail CX

Retail’s digital tipping point is a blessing in disguise

By Tara Ramroop

Published April 7, 2021
Last updated April 8, 2021

The future of retail probably won’t be the awkward ballet of head-counting, hand-sanitizing, and anxiety it is now—and thank goodness for that. But, adaptable creatures we are, people took to some of the changes made throughout 2020, getting especially comfortable with digital enhancements to the retail experience: like virtual wine tastings to go with an uptick in wine purchases (no judgement) or pantry items from Michelin-starred restaurants.

Looking ahead, the question for many is how customers and retailers will behave now that glimmers of normalcy are starting to show.

Pre-pandemic, retailers were hitting their stride in providing unique, in-person retail experiences until they were forced to pause seemingly overnight. As Mitch Joel, Founder of Six Pixels Group Inc., put it during the National Retail Federation’s Big Show 2021, the antiseptic motions of customers and associates “became sterile for my health but deadly for my shopping experience.” But it turned out there were still experiences to build and offer—and there will be as long as there are customers and innovative business leaders who want to meet those needs.

But, adaptable creatures we are, people took to some of the changes made throughout 2020, getting especially comfortable with digital enhancements to the retail experience.

Speaking virtually (of course), Joel went on: “The opportunity as retailers, as people who think about how to better connect to our customers, is not to think about it as the great depression, but as the great compression.”

[Related read: The hottest CX trends for retailers are anything but trendy]

The Great Compression” refers to our forced, collective digital transformation, which compressed the timeline of evolution into months instead of years. Digital collaboration became a business imperative as enabling multiple generations on a video call became a personal one. Even with Covid-19 vaccination programs underway and normalcy within reach, the world is forever changed—as are the ways in which businesses build experiences and connections with customers.

Retailers have to be poised, ready, and empathetic to meet the new challenges of shopping in-person, digitally, or through a combination of both. Doing so means doubling down on a tech strategy, particularly with an emphasis on mobile; adding (and keeping) services borne of pandemic innovation; and attending to unfinished business, like climate change and social inequity, that preceded the pandemic.

The Great Compression

To set the stage, Joel brought us back to spring 2020, when, suddenly, everything, and everyone, went digital. Office workers who were already used to some video collaboration were thrust into it completely and indefinitely. Executives who traveled for client facetime were grounded. Grandparents who were used to visiting grandchildren had to make do with FaceTime and Zoom. Children, many of whom didn't have reliable home internet or feel comfortable learning online, nonetheless took to computers for their studies.

Though this forced digital evolution remains bumpy, it drastically changed our collective capabilities.

But it turned out there were still experiences to build and offer—and there will be as long as there are customers and innovative business leaders who want to meet those needs.

“It’s important to think of this in a dramatic way,” Joel says. “Not just acceleration of adoption but a true compression—everything we expected to take until 2030 to accomplish happened in months last year.”

He describes the retail compression in three stages:

  • Survive. In spring 2020, retailers had to figure out which areas of which stores were impacted most, asking a tough question: Which products or services were considered essential? Many, as we know from shuttered storefronts, didn’t make it through.
  • Sustain. Joel says businesses settled into the long haul around summer 2020. The question shifted from what was essential right now to what was essential for the foreseeable future. We explored alternative ways to work, make connections, collaborate, and even hold high-quality virtual events.
  • Strive. This is our long-term reality and, ideally, combines elements of pre-pandemic normalcy with the new innovations customers came to love in the meantime.

In January, Joel said he would still place the world in sustain mode, but that it’s time to build a strategy around striving. That’s how the story of retail becomes one of endurance.

Leaning on tech and leaning into tech

Technology is a key element of the strive phase. While tech is never a silver bullet, thoughtful integration between technology and teams will be the scalable path forward. That has been true for years in retail customer experience, and it’s become even more important today.

[Related read: Mullets are back in business, especially in customer experience]

Even as widespread vaccine distribution will shift consumer behaviors once again, WGSN Retail Forecast 2021 says “consumers will have normalized online behaviors and expect businesses to be able to serve them digitally.” Ecommerce, which grew massively in 2020, is expected to maintain its grip on overall sales, according to the WGSN report. In China, for example, online sales accounted for nearly 75 percent of total sales in 2020, and they’re expected to increase to 77.1 percent in 2021. This is a far cry from the “30 30” formula—30 percent ecommerce by 2030, which Joel says was the accepted realty for a long time. His guess is that even if the percent of ecommerce sales shift back down, it won’t be anywhere near its pre-pandemic level.

Retailers have to be poised, ready, and empathetic to meet the new challenges of shopping in-person, digitally, or through a combination of both.

Businesses will need to incorporate digital into every aspect of retail strategy, providing online options at every point in the customer journey—which includes customer support and CX. To keep up with customers and connect remote teams, 75 percent of companies say they’ve accelerated their digital transformation, according to Zendesk Benchmark data. Almost half of Zendesk Benchmark customers said they increased their 2021 CX tech budget, and even more expect to make greater CX tech investments in the coming years.

The clearer your strategy, the easier it is to know where any investments will make the biggest impact and resonate most strongly with customers. That means creating easier shopping experiences, supporting those on the front lines helping customers, and keeping the business in sync with apps, integrations, analytics, and reporting.

Improving mobile experiences

Omnichannel shopping experiences and BOPIS (buy online, pick up in-store) are well established as part of the retail customer experience. Joel suggests that mobile experiences are the next, necessary frontier.

There is still a notion that mobile shopping and browsing only happens on the go. But one of many outcomes of the last year is dramatically increased screen time—which includes shopping from the couch while customers Netflix and chill. The WGSN report says that in India, the average amount of screen time shot up by 25 percent over the course of the pandemic to almost seven hours per day, according to research commissioned by handset maker Vivo and conducted by CMR. Other studies are finding similar results worldwide, with the largest shifts happening in emerging markets, according to research by the UN Conference on Trade and Development. This behavioral shift has huge implications for retailers who haven’t yet invested in a mobile ecommerce experience that’s worthy of the attention retailers put into it.

While tech is never a silver bullet, thoughtful integration between technology and teams will be the scalable path forward. That has been true for years in retail customer experience, and it’s become even more important today.

Using Nike as an example, Joel explains that after the athletic wear brand’s experience-heavy stores closed, it had to reimagine how it fit into a new world in which people still wanted its products. And it turns out that unique brand experiences for tangible products can also happen digitally. Marvel and Nike, for example, collaborated on custom outfits for avatars in the Fortnite game, and even limited-edition product drops inside the game.

Services are the new experience

Another approach is adding more services to products or adding more services on top of services, Joel says. Walmart, for example, now offers pet insurance. With a rush on pandemic pet adoptions, this was a logical service offering to augment the pet-related products the company already sells. Levi Strauss also started reselling gently used jeans, an extension of the company’s vintage-friendly vibe and a move that augments messages of sustainability.

Businesses will need to incorporate digital into every aspect of retail strategy, providing online options at every point in the customer journey—which includes customer support and CX.

“When you see something like this, it should give us pause to think about what is going on,” he says. “I believe this to be the next level of customer experience.”

Customers now seek these experiences, and Joel says retailers should continue to offer them and get creative about offering new ones.

Addressing pre-pandemic problems

Striving also means being responsive to problems that predate the pandemic. Customers expect companies to be responsive to and responsible for issues like climate change and socioeconomic inequity.

“Working to stay open and operational through continuing periods of lockdown will be important, but it's also essential that retailers treat the shifts emerging as longer-term movements and realign business accordingly,” according to the WGSN report. The report further notes that, according to global research from Accenture, 67 percent of consumers think that businesses will “build back better” by investing in longer-term, sustainable and fair solutions for production, labor, and more.

[Related read: How social advocacy is shaping retail consumer trends]

Striving is the (only) way forward

If customers enjoyed new ways of interacting with your business during the pandemic, there’s no reason to take those experiences away. Live-streamed workouts, Airbnb online experiences, and personalized meal kits from our favorite restaurants held water. They did more than keep businesses afloat because the experience suddenly became more personal, more accessible, or both. Instead of thinking of experiences and innovations like these as survival tactics, we should instead think of them as now long-term elements of a strive strategy.

“The question we need to think about in 2021 is 'Which of these innovations will we keep?' Joel suggests, speaking directly to the businesses standing at the crossroads at this pivotal point in time. “We experienced something that forced us to move faster to sustain. I don’t want to see you stop those things.”

The digital tipping point

See how mid-to-large-sized businesses can accelerate CX success in 2021.