Inside Outdoor Spring 2020 Issue

In-Season Inside Outdoor | SPRING 2020 22 T he online and digital realm tends to be viewed as an ever-growing network of users spread across a vast geograph- ic distance. After all, one of its primary superhero powers is the ability to provide brands af- fordable access to customers across the nation or even the globe. In the post-coronavirus world, how- ever, a physical retailer’s ability to le- verage its online presence at the local level could prove vastly more important than any access granted by the wid- est of webs. What’s more, the ability to leverage online assets to engage local customers could be a key element of survival. And make no mistake, online and digital capabilities, in general, have rapidly become increasingly important to physical retail as e-com- merce and omni-shopping behaviors have received a massive push forward from unprecedented market forces. Looking long term, a solid majority of retailers remain at least hopeful that in-store activity and traffic will return to the old, pre-coronavirus “normal” well before the holiday season kicks in, suggests an April survey by McK- insey & Co. That includes a return of some sort of in-store amenities such as fittings room, rentals, repairs and returns. Such a future still seems pos- sible, but with the looming threat of second surges and another flu and cold season around the corner, it’s also possible a significant percentage of customers will seek low- or no-touch interactions for many months to come. A surveyed released in early May by GlobalData, for instance, showed that 42 percent of consumers under 35-years-old, and 54 percent of con- sumers over 35-years-old still were “ex- tremely concerned” about coronavirus. All told, about one in five shoppers told McKinsey pollsters that they plan to decrease non-grocery in-store shopping once the pandemic passes. “Those over 35 will feel more cautious about returning to non-essential retail stores once they are able to re-open,” said Sofie Willmott, lead retail analyst at GlobalData, “and retailers will need to clearly communicate the safety measures they have in place to ease their worries.” For these customers, enhanced om- ni-retail services such as BOPIS, online look-up of in-store inventory, scheduled and personalized shopping experiences and digital-enabled transactions sud- denly become table-stake-type capa- bilities. In turn, brick-based retailers, it would seem, must quickly shift greater portions of the customer experience, from product discovery to final transac- tion, to online and digital channels. “The traditional way of looking only at ‘four-wall economics’ is outdated because it doesn’t account for the role that a store might play in generating e-commerce sales,” said McKinsey & Co. analysts in an April report. “To better understand a store’s true economic value, a retailer should modify the store P&L to include its e-commerce halo – for example, by ensuring that the store ‘gets credit’ for e- commerce sales in the local zip code.” Indeed, the vast majority of retailers surveyed by McKinsey believe COVID- 19-related shifts to e-commerce will remain “sticky” post-pandemic, with ap- parel retail executives, in particular, ex- pecting a 13 percent increase in online penetration. And according to McKinsey analysis, if online penetration increases by 10 percentage points and gross mar- gin falls by one percentage point, driven by increased pricing pressure, retailers could expect store profitability to decline by up to five percentage points if no cost-saving measures are taken or no overheard is shifted to cheaper online alternatives. “A hit to profitability of this By Martin Vilaboy Online Goes Local Physical retailers must invest in online capabilities in the post-pandemic reality