As the world enters stage three of the pandemic, agility will be essential to navigating disruption ahead, according to David Bassuk, global retail practice leader and Sonia Lapinsky, managing director at consulting firm AlixPartners.
Bassuk compared the stages of the pandemic to riding a roller coaster with its initial climb, anticipation for a big drop and multiple loops.
“We’ve actually been on a roller coaster in a similar way for the last 18 months,” said Bassuk. “If we look back, pre-pandemic, we were all kind of climbing up that hill and in hindsight, it was pretty straightforward and pretty easy compared to what we’re living with today. Then we hit the lockdown, and of course, the rebound. And we’ve gotten through that but now we’re in stage three. And I can tell you that there’s a lot of loops ahead.”
The answer for how to handle the “craziness” ahead Bassuk and Lapinsky said will be a retailer’s agility. The phrase has been a key word throughout the duration of the pandemic and as Bassuk pointed out means many different things to many different people.
“In our world, there are three aspects of agility,” said Bassuk. “First is breaking down silos or rethinking the teams and the structures. The second is you’ve got to operate fast. And third is you have to integrate insights, new data and new insights and we’ll talk about how to do that. But within those three areas, there are 12 key strategies and actions and levers you need to employ.”
In working with hundreds of retailers through disruption, AlixPartners has coined the term Agility EQ, “which is a quantifiable and actionable metric that allows a company to measure and understand their ability to respond in this crazy world and really operate with agility.”
“We’ve been studying this for a number of years, not only studying it, but we’ve been working with companies and being inside and seeing how this works for a number of years,” said Bassuk. “And we’ve done that through talking to hundreds of executives pulling apart the data from many retailers and helping to really understand what is it that you know is working or not. What we’ve seen is there are many aspects of agility that many companies in the industry have really gained a lot of ground in and there’s a number of other areas that were falling way short and we’re not getting there.”
“If we look at the first back pre-pandemic, it was pretty clear,” he said. “The leaders were really gaining ground [and] they were pulling ahead and agility was really working. In stage two during the pandemic and the disruption we faced, it was a humongous change and those agile companies, unsurprisingly, really outperformed their traditional counterparts.”
In today’s environment, some surprising results are starting to emerge where companies’ lines are converging — meaning either leaders are reverting back to old practices or traditional companies have come around to new practices. “Either way, what we really need to appreciate is that the combination of strategies that worked in the past no longer works,” said Bassuk. “There’s a whole new recipe, a whole new combination.”
Looking at phase three of the pandemic, Lapinsky said the pandemic had continued to evolve the consumer journey and develop new consumer behaviors.
“The pandemic absolutely shook consumers, it accelerated trends that are likely unlikely to revert and it puts the consumer in the power seat it gave them a digitally savvier experience and gave them many more options of how they wanted to buy,” said Lapinsky. “What we see and what we’ve created is a consumer that expects more than ever before, and they give back just about nothing in terms of loyalty.”
Moreover, she said, the consumer expects true personalization — they want you to know how to talk to them and what they want before they do. And they’re also demanding a true seamless experience — they want to tell you what they want, when they want to buy it and even when they want to pay for it. Notably, Lapinsky said the penetration of buy now, pay later has increased from 38 percent to 56 percent in just one year.
To unlock true performance to navigate this new consumer, AlixPartners’ Agility EQ looks at three columns that break down 12 behaviors. In total, there are more than 20,000 combinations of agility behaviors.
Looking at an example of unlocking consumer-centric agility, Lapinsky pointed out that a consumer-focused strategy is nothing new, but what has been missing is a formula, or the specific behaviors that the retailer needs to deploy, to unlock true customer-centricity.
“It’s not some of these behaviors, it’s all of them,” said Lapinsky. “To unlock true customer-centricity, you need to demonstrate all four. When we look at the data, though, what we find is that most retailers aren’t there. They might have been able to accelerate insights, they might have quick decision-making, but they’re not doing it all together.”
This happens in other areas, too. In another example, Lapinsky showed how some retailers had chosen speed over operational excellence at the top of the pandemic. “It was the right decision to make at the time, but when we stood back and looked at the profitability, operational profits suffer, we tanked it. There’s no way this is a repeatable formula going into phase four. You’ve got to change the metrics account for not only how you’re executing on the seamless experience but that you’re operationally sound and driving profitability at the same time.”
Every retailer will have its own “secret sauce” or Agility EQ combination that will resonate uniquely. As the pandemic continues, Lapinsky encouraged every retailer to become a roller-coaster enthusiast, saying the ride is not over.
“We’ve got a long way to go,” said Lapinsky. “But what we do know is that the data tells us that there is an agility combination to get through this. It will drive growth and profitability. Once you dial [your combination] in, embrace those behaviors, integrate them across the entire organization, focus ruthlessly — [you’ll] watch the results soar.”