The global crisis has only amplified the challenges for retail. Since March 2020, at least 347 American companies cited the pandemic as a factor in their decisions to file for bankruptcy. Among them is Guitar Center, whose executives have said its online sales cannot replace the experience of musicians trying out instruments in person. Some companies are finding new ways to cope – or perhaps can come out of the crisis in better shape than when they started. In 2021, it looks like a lot of retailers are set to change the way they do business.
MIT Technology Review Insights, in association with Oracle, surveyed 297 executives, mostly financial officers, executives, and information technology executives, about their organization’s plans for large enterprises. These include new business models, mergers and acquisitions and major technological changes, such as the automation of financial and risk management processes.
According to the study, 83% of executives across all industries feel optimistic about their company’s ultimate goal for 2021, hoping to thrive or transform, i.e. sell more products and services, or adopt new business practices or sales methodologies. Overall, 80% of organizations have taken a big step in 2020 or are planning at least one in 2021.
The way forward for retail
The buying process will be different in 2021, says Mike Robinson, head of retail operations at The Eighth Notch, a technology platform that connects shippers and retailers, and former digital business leader at Macy’s. Some of the tough questions retailers ask themselves are: “How can stores reassure people that it’s safe to go back to gather in places again?” How can consumers trust that the store is doing the right thing from a cleanliness standpoint? No one has definitive answers, Robinson points out, but at least they ask.
Other areas of particular concern for retail organizations in 2021 include cybersecurity risks for consumers and e-commerce. As cyber attacks become more bold and frequent, retailers need to think about how to protect their data, starting with preventing credit card fraud. While important to any mainstream business, Robinson says, the challenge of data protection has additional resonance for retailers. To provide customers with better, more personalized experiences, retailers need to collect more data for analysis, which puts them at greater risk of a data breach.
The supply chain – manufacturing, shipping and logistics – is also a key issue this year. The strain began to appear in 2020, when pandemic lockdowns spread across the globe, revealing weaknesses in production processes and supply chains. And the trade war between the United States and China has caused many companies to look beyond China to Southeast Asian countries like Vietnam or Thailand for production partners.
The supply chain is not just a financial concern. Robinson says ethical sourcing and manufacturing is becoming increasingly important as consumers increase their expectations for durability and worker safety. “This will continue to be more and more important as we move forward,” he adds.
Fortune favors the brave
It’s hard to plan for the long term in times of volatility, but that’s exactly what most companies in all industries are doing: more than half of organizations surveyed will increase their technology investments in 2021, and 40% plan to move. IT and business functions to the cloud (see Figure 1).
In some cases, the 2021 strategic plan is simply to increase the number of cases. Successful businesses that sell desks on conveyor belts or sweatpants don’t need to change their business models. Due to increased demand at a time of increased remote working, these retailers only need to refine manufacturing processes and develop shipping logistics.
But adapting to a new world means being open to new ideas. Business leaders ready to transform a business need to rethink everything: business models, product development, marketing processes, execution and metrics for success. As a result, 87% of organizations expecting business transformations in 2021 have planned some sort of big move.
Robinson believes the time to be bold is now, and retailers know it. “People will be rewarded for taking risks and will likely be forgiven if they are imperfect,” he says. When you are out of the usual options, try the unusual options.
“Business didn’t end just because of covid,” says Ashwat Panchal, vice president of internal audit at shoe retailer Skechers. “We are expanding our distribution centers. We are increasing our e-commerce footprint. We are implementing new point of sale systems. We are expanding into new territories. “
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This content was produced by Insights, the personalized content arm of MIT Technology Review. It was not written by the editorial staff of MIT Technology Review.