Retail Excellence Playbook - 2021 Retail Outlook - IN PARTNERSHIP WITH - Avanade
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2021 Retail Outlook
Retail Excellence Playbook
IN PARTNERSHIP WITH
In 2020, a confluence of factors impacted the retail industry in
fundamentally transformative ways.
Digital acceleration Supplier & supply disruptions New behaviors An uncertain economic climate
A multi-generational shift in From inventory locked in The events of 2020 have Consumers and enterprises alike
eCommerce adoption occurred factories and stores during impacted humanity in deep and will have to contend with the
in 2020. While COVID-19 acted global lockdowns to multifold transformative ways, including long-term impact of high
as a catalyst for this change, and demand surges for essential what we, as shoppers, value. unemployment, shrinking GDP
growth rates may slow in the items; from evolving global Safety is the new experience growth, and loss of consumer
coming quarters - this is not a trade policies to smaller table stakes. Store-based activity across sectors such as
reversible trend. A new baseline suppliers facing existential experiences such as BOPIS and travel, hospitality and brick &
is in place for shopper behavior. threats - the global supply chain Curbside Pick-Up are rede ning mortar retail. Even as
has been reshaped. convenience. And, shoppers eCommerce growth o ers
demand total transparency - retailers a rare silver lining,
from product origin to order pro tability concerns remain.
delivery.
2021 Retail Excellence Playbook
With so much having changed, This report is based on insights from Incisiv's Consumer
Industries Data Pool, which is comprised of a holistic
retailers need a new playbook for combination of shopper, executive and enterprise performance
customer experience and data. Data cited in this report represents aggregated insights
operational excellence in 2021. from surveys spanning:
In 2020, retailers' immediate response to disruption- a quick cobbling
together of a patchwork of systems to get the job done - was swift and
1,019
necessary. However, it should not paper over the fact that most retailers' industry executives
business processes and systems are held together by duct tape.
73%
As they re-prioritize transformation in 2021 and beyond, retailers must Director level or above
focus on new experiences and capabilities that align with shoppers'
53% of retailers
changing expectations, while at the same time re-architecting their
systems and processes to be better prepared for future disruption.
with annual revenue > $1B
Incisiv's 2021 Retail Excellence Playbook o ers retail executives
prescriptive recommendations based on peer-to-peer research and
Unless stated otherwise, all data cited in this report is from
benchmarking analysis of high-performing retailers. Incisiv's Consumer Industries Data Pool.
See details about Incisiv's research methodology and data-pool.
2021 Retail Excellence Playbook
A guide to Strategy Flywheel
Five key areas of strategic alignment and investment.
improving
customer Digital
experience and Store
Commerce
Supply Chain
operational Transformation Agility
excellence in 2021
Shopper Next-Gen Retail
Retailers have limited resources and a Imperatives Workforce
broad transformation agenda. It is critical
their investments be focused on
experiences that matter most to their
shoppers, and on capabilities that will Open
help improve operational e ciencies.
Modern Intelligent
This report o ers a strategic framework
for retailers to identify and prioritize key
Technology Foundation
transformation investments.
Underpinning strategic priorities with technology leadership.
2021 Retail Excellence Playbook
01 | New Shopper Imperatives
Understanding shopper
preferences in the new world order.
2021 Retail Excellence Playbook
NEW SHOPPER IMPERATIVES Certainty Flexibility Planning
Convenience
Show me accurate, real-time Provide me comprehensive Show me available assortment
Redefined store inventory online so I can be ordering, delivery and pick-up based on my choice of
Having experienced new digital assured of product availability. options (e.g. Curbside Pick-Up, ful llment method, store
BOPIS, BORIS etc.). and/or preferred delivery / pick-
experiences (such as Curbside
up time.
Pick-Up), convenience is no longer
just about speed of delivery for
shoppers. They demand new
Give me a wider selection of O er clear, exible returns - Allow me to nd and lter
experiences that o er them available delivery and pick-up anytime, anywhere (return stores based on availability of
certainty, exibility and the ability times, but narrower and more online items in-store and vice products, services or ful llment
to plan ahead. accurate estimates for pick-up versa; return during pick-up method.
readiness and delivery times. etc.).
Returning an item
to the store is the 2nd biggest motivator
for future store visits (behind same-day
need). Deliver a consistently speedy Give me a variety of payment If an item is out-of-stock,
experience across all aspects of and checkout options, both in- suggest relevant substitutes.
the customer experience, from store and online. Tell me when it is expected back
purchase to customer service. in stock; and alert me when it is.
2,510 shoppers rated their recent Curbside
Pick-Up experience an average 3.53 stars
(out of 5).
2021 Retail Excellence Playbook
NEW SHOPPER IMPERATIVES Safety Trust Transparency
The New Customer
Provide a safe and clean in-store Make sure my experience works
Experience Table shopping and pick-up as expected, especially when I
Show me where my order or
service request is in detail,
Stakes experience for me and your store need it the most (e.g. during including complex scenarios
workers. demand peaks, holidays etc.). that include third parties (such
Conditioned by circumstances
as appliance installation).
(such as the constant reminder of
health risks) or less than ideal
experiences (such as a shortage of
Create contactless experiences Align with my values in your Tell me about my product’s
essentials such as toilet paper),
across product discovery (e.g. actions (racial equality, social origin, ingredients,
shoppers will put safety, trust and augmented reality), self- responsibility, environmental manufacturing processes,
transparency above all else in 2021. checkout and contactless pick- consciousness etc.). carbon footprint etc.
up.
79% of shoppers
say contactless experiences are very
important to them.
O er self-serve experiences, Provide authentic sales and Show me what data you store
and provide virtual interaction service, including instant about me and how you use it;
69% of shoppers with sales and service refunds for returns. allow me to manage it.
rate retailers' communication of Curbside associates.
Pick-Up order status three stars or lower.
2021 Retail Excellence Playbook
NEW SHOPPER IMPERATIVES Human/Digital Assistance Safe Socialization Retailtainment 2.0
Alone, Together
Allow me to connect directly O er shared digital shopping Continue to engage me with
With social distancing norms, with a store or service associate experiences (e.g. live streaming your brand through new
about any queries - about online shopping, social media experiences such as trial kits,
contactless experiences, and a shift
product availability, order status challenges etc.). innovative direct mail and
to largely transactional shopping, or service requests. subscription services.
the "joy of retail" seems lost.
Shoppers want retailers to make
interactions with them more Repurpose outdoor space to
Talk to me “like a friend”, using Let me enjoy safe in-person
human, and o er new avenues and my preferred digital platforms experiences in your stores, e.g. create new experiences that will
experiences that entertain and (messaging, social media etc.) private events, reserved o er a greater degree of comfort
rather than forcing me into shopping trips for groups etc. when I’m ready to return to
delight.
another app. experiential retail.
91% of shoppers
miss shopping in stores, and "getting out O er me a variety of digital Curate digital experiences (e.g. Create authentic moments of
of the house" is one of the top three tools, such as store-mode in cooking classes, workouts etc.) inspiration and entertainment
motivators for future store visits. your mobile app, that enhance that align with my interests and through social media, brand and
my experience by combining the immerse me in your brand. in uencer marketing, and user
best of digital + physical. generated content.
2021 Retail Excellence Playbook
02 | Store Transformation
Digital is the front door to the store.
2021 Retail Excellence Playbook
STORE TRANSFORMATION
Deliver contactless checkout,
Rapid Experience Rapidly scale and optimize
store-based fulfillment
Improve store inventory
visibility to fulfill cross- pick-up and service
Innovation experiences. channel demand. experiences.
Habits formed out of necessity are
now default preferences. So, online
ordering and store pick-up are here Be able to quickly adapt Easily access enterprise-wide Enable contactless customer
to stay. However, shoppers demand store-based ful llment inventory to ful ll store and and associate experiences
a better experience. In 2021, "good strategies based on prevailing online orders via tight from within a single
enough" will no longer be good circumstances, both at a integration of point-of- interface, allowing store
enough. chainwide and store cluster experience and order teams to seamlessly manage
or individual store level. management platforms. multiple tasks.
With online ordering adoption
expected to continue to grow over
the next 6 months, shoppers will
switch loyalties to retailers who
Tractor Supply Company rolled out Curbside Pick-Up in a
o er more seamless store
experiences.
matter of days, and same-day/next-day delivery in a couple of
weeks to all stores nationwide. The company also launched its
1 in 3 retailers website on a new platform and its rst mobile app in rapid
response to the shift in shopper behavior.
do not combine online and store
inventories.
2021 Retail Excellence PlaybookSTORE TRANSFORMATION
Allow store teams to convert
Digital Selling Enable store teams to build
stronger relationships with
Mobilize demand through
personalized promotions and fulfill shopper demand
Store associates continue to be shoppers digitally. and recommendations. anytime, anywhere.
seen as an important source of
knowledge and insight, but
relationships with customers will O er store teams the tools to Give associates the ability to Enable two-way
need to be digitized. connect with shoppers access all customer purchase communication between
digitally - from a customer and browsing history, curate stores and customers,
1 in 3 shoppers master list to the ability to digital assortments and including the ability to sell
say the ability to consult with engage them via email, text baskets for customers, and in-store inventory and accept
in-store specialists is among or social media. o er personalized payments remotely.
the Top-3 things they miss promotions.
about in-store shopping.
4 in 5 shoppers When the onset of COVID-19 disrupted its international
value personalized expansion plans, intimate apparel brand Knix re-created its
recommendations from store
tting experience digitally. Customers can book a 20-minute
associates. However, 85% of
store teams don't have the
virtual consultation with a “Knixpert”, one of the company’s
tools to share personalized store associates redeployed to help shoppers, to learn how to
look books or promotions take accurate measurements and nd the right t.
digitally.
2021 Retail Excellence PlaybookSTORE TRANSFORMATION
Be more transparent with
360-Degree Service Simplify return experiences,
and turn every interaction
Provide a continuous service
experience across channels. shoppers, offering them a
Shoppers seek greater into a selling opportunity. variety of self-serve options.
transparency, easier access to
support and the ability to do more
within a single interaction with Enable advanced returns use O er 360-degree visibility Be able to deliver automated,
retailers. cases, including uneven into past orders and in-context alerts related to
returns and returns during customer service issues to order or service status to any
Returns will be an ever more checkout or pick-up. Enable store and service teams with customer touchpoint - digital
important aspect of customer upsell during pick-up and appropriate role-based or in-store.
service in 2021. Shoppers want returns. access.
retailers to make it easier for them
to return items any way they like,
whether bought online, in-store or
curbside.
Footwear retailer DSW expanded Curbside Pick-Up to
43% of shoppers "Curbside Services" - allowing shoppers to make returns
plan to increase store visits to without having to enter the store. In areas heavily a ected
return an order, and 91% say during the pandemic, it even added the ability for anyone to
the self-service tools make shoe donations curbside - o ering a value service to the
retailers o er can be
community.
improved signi cantly.
2021 Retail Excellence Playbook03 | Digital Commerce
New expectations call for
reimagined digital experiences.
2021 Retail Excellence PlaybookDIGITAL COMMERCE
From Personalization to
Humanization
Arti cial Intelligence driven
personalization has been the
hallmark of successful digital
engagement strategies in the past
ve years. Most shoppers,
however, nd purely AI-driven
digital personalization impersonal.
Haus makes a personal connection.
2021 will see the emergence of
human-assisted personalizations, Haus is an all-natural, low ABV, direct-to-consumer apertif brand that's taking on
from personal stylists who curate Big Alcohol with a more responsible, transparent and personal approach. Founders
your look to dedicated delivery Woody and Helena Albrecht feature prominently in the brand's farm-to- ute story.
partners who know your preferred Personal touches, such as a holiday card featuring the Albrecht family sent to loyal
delivery times and product shoppers, help position Haus as your friendly, neighborhood, artisanal winemaker.
substitution preferences.
Haus launched The Restaurant Project at the peak of the pandemic in 2020 - a timely
Improving retention by 5% can increase
collaboration with several restaurants and their chefs to co-create speci c aperitifs
pro ts by 25% - 95% for each restaurant. It o ered shoppers a way to support their favorite restaurants, as
Source: Harvard Business Review 100% of the proceeds went to the restaurant partner.
2021 Retail Excellence PlaybookDIGITAL COMMERCE
From Brand Loyalty to
Brand Love
With increasingly ine ective
digital media strategies chasing
ckle consumer attention,
customer acquisition costs are set
to skyrocket in 2021.
Retailers must focus on customer
retention, ensuring they extract Snowe makes room in homes and hearts.
maximum lifetime value from an
acquired customer. Doing so will Snowe is a direct-to-consumer houseware brand that o ers well priced, elevated
require retailers to better basics - from sheets to glassware. While Snowe's distinct design ethos pulls shoppers
understand their customers, in, its carefully crafted customer engagement strategy builds stickiness and loyalty.
improve targeting, reward loyalty,
and be unafraid to treat valuable Snowe's refreshingly simple loyalty program awards points for purchases and social
customers di erently. media engagement (such as leaving a review, or following Snowe on Instagram), while
its referral program o ers both shoppers and their referred friends $35 each for new
42% of retailers
purchases.
are challenged by the inability to track
targeted customers through their entire
journey. In 2020, Snowe launched The Every Edit - a curated, revolving selection of products
Source: Statista from indie designers. Every collection centers around a topical theme such as "The
Great Outdoors" or "Work From Home".
2021 Retail Excellence PlaybookDIGITAL COMMERCE
Redesigned
Experiences
Evolving shopper behavior and
preferences have led to changes in
customer journeys all the way from
search to checkout. Digital
customer experience must
transform accordingly.
Subziwalla delivers home-style comfort by
As shoppers adopt digital innovating new experiences and products.
equivalents to replace or augment
physical experiences - such as Subziwalla is an e-grocer focused on making it easier for customers to access fair-
nding the right t in apparel, or priced, high-quality Indian cooking ingredients. 2020 brought about an exponential
the right product substitute in increase in consumer adoption of digital grocery, and along with it, rapid changes in
grocery - retailers will need to consumer behavior.
redesign existing experiences in
addition to building entirely new With increased demand and supply chain uncertainty, Subziwalla prioritized
ones. transparency in its customer experience. They used accurate inventory visibility to
increase consumer con dence when ordering, and frequently refreshed curated
88% of shoppers
journeys to navigate customers to in-stock items in order to avoid an out-of-stock
say retailers can make the pick-up
experience better by allowing returns experience. For customers who would prefer to eat in, Subziwalla launched a prepared
during pick-up. meals service “Subziwalla Kitchen” in 2020, o ering customers a health-conscious,
valuable and e ortless alternative to eating out.
2021 Retail Excellence Playbook04 | Supply Chain Agility
The status quo of the retail supply
chain is unsustainable.
2021 Retail Excellence PlaybookSUPPLY CHAIN AGILITY
Combine multiple data Provide plug-and-play
Inventory Visibility Provide a single view of
inventory across channels sources, internal and convenience for partners,
The lack of inventory visibility has and touchpoints. external, for richer insights. regardless of their maturity.
been a perennial retail challenge.
The disruptions caused by COVID-
19 only served to highlight the lack Unify a single view of Sense and predict supply Use standards-based APIs
of progress retailers have made inventory across the supply chain demand and and business-friendly tools
over the years despite stating it as a chain, and enable role-based disruptions by enriching your to accelerate new partner on-
strategic priority. access across business own data with intent and boarding and extend
functions. context signals. inventory visibility deeper
Conditions are ripe for retailers to into the supply chain.
make advances in improving
inventory visibility. However, for
transformation to take hold,
Walmart has been able to scale its ful llment methods (BOPIS,
enterprises need an incremental
Curbside Pick-Up, Last-Mile Delivery) on the back of real-
roadmap that helps them achieve
big outcomes with smaller rst time, accurate inventory visibility. It evolved its online
steps. ordering experience by giving customers greater control over
eCommerce and store operations choice of store, and pick-up and delivery times. The Walmart
executives access inventory data from Grocery App is now #1 across US shopping apps, and the
di erent systems at
company has seen 74% growth in ecommerce in large part due
1 in 3 retailers to its investments in inventory visibility.
2021 Retail Excellence PlaybookSUPPLY CHAIN AGILITY
Advanced Intelligence Use artificial intelligence to
predict and automate key
Perform multi-factor, non-
linear optimization.
Business-user-friendly
tooling and experience.
Retailers must be able to respond supply chain tasks.
quickly to macro and micro
changes.
Integrate planning tools with Optimize supply chain O er best-in-class
Enterprise-grade arti cial machine learning models decisions at a more granular visualizations, dashboards,
intelligence is key to enrich and across a variety of supply level (e.g. forecasting to a day scenario simulators and
automate critical supply chain chain and merchandising use x SKU level, or optimizing results explainers to help
decisions. cases. ful llment decisions while business users more readily
balancing cost and trust and use AI tools.
81% of retailers experience parameters).
do not consider the cost of markdown or
stockout in their ful llment optimization
decisions. As its online order operations grew more complex and expanded to
include stores, REI moved from rules-based sourcing to arti cial
47% intelligence- based multi-objective optimization. REI’s order
of business executives "strongly agree"
optimization engine looks at a variety of real cost drivers (such as
that arti cial intelligence tools need shipping rates, labor cost at a location etc.) and future pro t impact
greater transparency for increased trust (such as potential for a markdown or stockout at a particular node)
and adoption.
to come up with the optimal ful llment solution based on REI’s
speci ed business goals (such as product margin or shipping
speed).
2021 Retail Excellence PlaybookSUPPLY CHAIN AGILITY
Provide complete Enable rapid development of
Business Support a variety of use
cases across supply chain, configurability of inventory new experiences atop
Configurability merchandising and digital. business rules. inventory data.
COVID-19 will recede, but supply
chain disruptions will continue to
occur in the future. Retailers must Allow the enterprise to start Be able to move inventory Enable internal IT and
transform and digitize supply anywhere and grow exibly across channels, segments or external partners to access
chain processes to be better in their use of inventory data retail partners, and optimize inventory data "as-a-
prepared for whatever comes next. by enabling a range of use inventory safety stock in service" to enhance existing
cases (forecasting, real-time. or new experiences.
replenishment, ful llment,
etc.).
3 in 4 retailers
believe current e orts do not adequately
Molson Coors Beverage Company equipped its Toronto DTC
prepare them for future supply chain
disruptions. initiative with both local pickup and local delivery. Customers
can choose to pick up their orders or have them delivered from
their nearest retail location. Since using its retail location to
41% of retailers ful ll online orders, Molson Coors has: launched an online
say their current supply chain technology
store in 10 days, with local delivery in Toronto; grown sales
prevents them from quicker responses to
supply chain disruptions. 188% month over month; increased orders 152% and
conversions by 109% month over month.
2021 Retail Excellence Playbook05 | Next-Gen Retail Workforce
Essential frontline,
remote leadership.
2021 Retail Excellence PlaybookNEXT-GEN WORKFORCE Collaboration Data Democratization Consumer-Grade CX
Enabling the Next-Gen
Improve cross-functional Ensure frontline and corporate
Retail Workforce internal collaboration, especially teams utilize a single source of
Enable employees to use tools
and platforms they are most
The events of 2020 thrust retail for functions such as product customer, inventory and order comfortable with - bring your
store teams into the frontline. They development, sourcing and data. own device, bring your own
were asked to do more - learn new merchandising. platforms.
procedures, keep stores safe and
ful ll more online orders - with
fewer resources in an uncertain
Enable greater coordination Enable secure, role-based Ensure enterprise software is as
economic climate. between corporate and frontline access while mitigating risks user-friendly, mobile optimized
teams, especially around brought about by the need to and platform agnostic as the
Corporate executives found promotions, customer service, expose sensitive enterprise data best consumer apps.
themselves reluctantly remote, and assortment localization. in a largely remote setting.
having to unlearn old habits while
managing new responsibilities.
In 2021, retailers will need to invest
Empower store associates with Enable the workforce to work Design resilient, robust
in three key capabilities: greater
the tools to be able to more smarter, not harder, through enterprise applications that
internal and external collaboration,
easily manage a greater best-in-class insights, deliver consistently high
insights-led decision-making, and complexity of operations - from visualization and alerts. performance, even during peak
a best-in-class employee labor scheduling to task load.
technology experience. management.
2021 Retail Excellence Playbook06 | Technology Foundation
Technology re-architecture for a
digital-first world order.
2021 Retail Excellence PlaybookTECHNOLOGY FOUNDATION Modern Open Intelligent
Technology Leadership
Innovate quickly and cost- Integrate with existing and new
for Sustained e ectively: cloud-native third party systems seamlessly:
Develop an inter-connected mesh
of enterprise and customer data,
Innovation architecture for faster deployment, Open APIs for easy extensibility and using advanced IOT and AI
increased agility and lower cost. integration with existing or new technologies.
The "Strategic Flywheel" is moot third party systems.
without a modern, open and
intelligent technology foundation.
Be it building an agile supply chain Deliver best-in-class experience Adapt your technology platforms to Leverage vast stores of data to
or transforming stores to be across deployment platforms: your business strategy, not the identify trends and codify
ful llment hubs, key aspects of Support a user-centric, intuitive other way around: Modular algorithms to improve customer
experience across multiple form microservices architecture that experience while protecting
retailers’ digital transformation
factors and operating systems, and allows any service or function to be margin.
rely on technology leadership. devices. deployed independently.
Technology leadership in 2021 will
be about simplifying
transformation architecture, Ensure high performance, Support business needs faster Use predictive intelligence to power
lowering implementation risk and especially at times of peak demand: through rapid new feature anomaly detection use cases across
cost, and building competitive Automatically scale up or down to development: Be able to use the enterprise such as loss
advantage through better use of any capacity in real time without existing services out of the box, prevention, returns optimization
disrupted service, and without any extend them or develop entirely and automatic replenishment.
data.
advanced planning. new ones quickly that run
alongside existing deployed base
code.
2021 Retail Excellence PlaybookIncisiv's 2021 Retail SURVEY METHODOLOGY
Excellence Playbook is
Incisiv's industry benchmark surveys are conducted using a
based on insights from its hybrid online + Computer Aided Telephonic Interview (CATI)
Consumer Industries Data methodology.
Pool, including aggregated
Respondent Distribution by Role Respondent Distribution by Region
data from surveys spanning
1,019 retail executives.
Technology 28% USA 64%
Supply Chain 32% EMEA 23%
NEXT STEPS
Digital / Omnichannel 23% APAC 13%
• Rethink the new realities of retail with Avanade: Store Operations 17%
Follow di erent priority paths and move through
three manageable phases of recovery to rethink
the way you do business.
• Dive deeper with Incisiv: Book a meeting with an
Respondent Distribution by Annual Revenue Respondent Distribution by Level
Incisiv analyst to discuss key ndings
$100 MM - $499 MM 12% Manager 17%
$500 MM - $1 B 35% Director 35%
$1 B - $2.5 B 31% VP / SVP 29%
$2.5 B + 22% EVP / C-Level 19%
2021 Retail Excellence PlaybookIncisiv's Consumer Industries Data Pool
Incisiv's Data Pool is comprised of a holistic combination of shopper,
executive and enterprise data
Shopper Research Data Executive Survey Data Digital Maturity Assessments
Ongoing multi-industry, multi- Targeted exploration of key business Observational and mystery-shopper
geography shopper scan spanning executive challenges, priorities & plans. based audits of digital commerce,
100,000+ consumers. marketing and service.
8 million 5 million 200+
data points from shopper surveys data points from 12 executive surveys digital maturity attributes
conducted through the year. conducted through the year. benchmarked for global enterprises
across consumer industries.
2021 Retail Excellence PlaybookIN PARTNERSHIP WITH IN PARTNERSHIP WITH
ABOUT INCISIV ABOUT AVANADE ABOUT MICROSOFT
Incisiv is a peer-to-peer executive Avanade is the leading provider of Microsoft enables retailers to deliver
network and industry insights rm for innovative digital and cloud services, personal, seamless, and di erentiated
customer experiences by empowering
consumer industry executives navigating business solutions and design-led
people, enabling digital transformation,
digital disruption. experiences for its clients, delivered
and capturing data-based insights to drive
through the power of people and the
growth.
Incisiv o ers curated executive learning, Microsoft ecosystem.
digital maturity benchmarks and Learn more about intelligent retail at:
prescriptive transformation insights to Learn more at: microsoft.com/retail
clients across the consumer and avanade.com/retail
technology industry spectrum.
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