In the second installment of WWD’s special webinar series, “Crisis Management and the Coronavirus,” Jim Shea, chief commercial officer at First Insight Inc., Diane Ellis, a veteran retail executive, and Steve Riordan, consumer practice leader at Kalypso, discussed supply chain, technology and infrastructure. The purpose of the webinar was to not only emphasize a sense of community and togetherness as industries continue to fight uncertainty but also to identify solutions.
During the COVID-19 pandemic, headlines have been increasingly alarming. Last week saw more than 3 million unemployment claims in the U.S. alone and retailers have extended store closures with fear of uncertain timelines. It is a time where many industries feel under duress.
Without question, consumer behavior has been rapidly altered by the new normal created by the coronavirus. To better understand how shopping behaviors are changing First Insight conducted two consumer studies in the U.S. over the course of three weeks, first on Feb. 28 and then again on March 17. Unsurprisingly, consumers proved to be very concerned. Within the second study, First Insight found 71 percent of respondents were worried about coronavirus, up significantly from Feb. 28. And 98 percent said they believed there would be an impact on the economy.
Influenced by these perceptions, 75 percent of consumers admitted personal shopping behavior had been impacted. Notably, sentiment varied between generations. Millennials continued to show the most concern about coronavirus at 80 percent, compared to only 33 percent of Baby Boomers responding with concern in the first survey. At the time of the second study, concern had increased with 73 percent of Baby Boomers saying coronavirus had impacted shopping behaviors.
First Insight will be continuing to take these consumer pulse surveys to further inform companies as the coronavirus pandemic persists.
“We have talked to a lot of executives, retail executives, [chief executive officers] in the last couple of weeks and the amount of disruption is obviously very high,” Shea said. “Retailers are trying to balance a number of things. We’re trying to figure out what orders to cancel right now, what product to buy for the holiday and what the consumer is going to value for holiday and what to develop for next year with some product lines.”
Consumers, Shea said, are expected to be reacting and buying by the fall — though hopefully sooner. The consumer demand value equation is going to change, putting an emphasis on the importance of understanding what that value will be. According to Shea, the challenge is time, knowing that many decisions will need to be made within the next few weeks.
“It’s speed and there’s no room for error, the accuracy has to be really high in these decisions,” Shea said. “Digital decision-making is going to be really important.”
While COVID-19 is the latest trigger for departing from the traditional product development model, data from Kalypso shows the industry had already begun moving away from these models. Other recent triggers include the rising cost of production in Asia, the impact of trade wars, and social unrest in Hong Kong.
“What we’ve been seeing as a catalyst for a lot of this transformation or change is that their product leaders have been employing four sets of technologies to try the movement away from a traditional model,” Riordan said. As noted by Riordan, these transformation technologies include advanced analytics, digital product creation, foundational product technology and smart connected supply chain.
“If you get the results of the coronavirus, we start to think about what the future state model is going to look like,” Riordan said. “A new product suite this future model, a digital product development model will be characterized by faster digital product development cycles, enabled via 3-D and advanced analytics such as First Insight and done in dramatically shorter time frames.”
To take steps toward that future model, Riordan laid out eight tactics, all conducting within the context of the calendar execution. The first is to make fewer, more meaningful, binding decision points and within that making streamlined decision rights to move quickly through empowered decisions.
The third is to focus on a narrower assortment, being clear about what products you want to bring forward. Fourth is to test with consumers early and often, ideally getting upfront as early as design for early adoption decisions. Next would be to leverage existing materials to keep things simple and leveraging vendors and third parties for the use of 3-D capabilities, assets or platform. Seventh is continuous hindsight through both digital and traditional methods. And last, using a sustainability lens, keeping in mind what coronavirus has shown to be nonessential.
“As an industry, we need to get faster at bringing products to market and being able to focus immediately on those things that help us move in that direction and soon also focus on adopting new models,” Riordan said.
Further, as companies reorganize and adjust, Ellis shared the importance of leadership during this time. “I was looking at a quote this morning from Brian Cornell at Target where he said there is no playbook for this,” Ellis said. “And so as leaders, sitting in the seat I think that’s one of the biggest challenges. Stepping up to the level of leadership that’s required to take your organization and your team through uncharted waters. The importance of a calm and steady hand at the helm is really important. At times like this communication cannot be overemphasized.”
Ellis pointed to Riordan’s steps and the importance of streamlining decision-making to move forward and out of a state of crisis. To do this, Ellis said, a move from a democratic or inclusive decision-making model would now benefit from a more autonomous model, empowering a small team to make decisions.
Moreover, Ellis shared the importance of the insight discussed by Shea and Riordan to have confidence in making these decisions. “In the absence of that it’s really only emotion and opinion,” Ellis said. “The importance of leveraging tools to get information and get real-time consumer insight becomes critical.”
The third “Crisis Management and the Coronavirus” webinar from WWD will focus on consumer spending and behavior and is set for April 2.