COVID-19 has taken retail to the edge. Commerce has shifted dramatically in just a handful of months. It’s been a struggle for brands and retailers, but many of them are now shifting their strategies towards a digital-first future.
A recent survey by McKinsey & Company revealed that many consumers intend to stick to their online shopping habits post COVID-19. The pandemic may have pushed more consumers online, but convenience and a seemingly limitless supply of shopping options are what will keep them there.
Brands and retailers are realizing that there’s been a shift in consumer behavior and are now restructuring their businesses to meet the post-COVID world of retail.
Under Armour — and the apparel category in general — was hit hard by the pandemic. In Q2, the company’s revenue was down 41% YoY, but its DTC revenue was only down 13%. As a result, Under Armour is reportedly cutting 600 corporate jobs as part of a restructuring initiative that will rebuild the Under Armour brand and prioritize DTC sales.
Under Armour’s strategy is to prioritize DTC. More and more, consumers are going straight to brand websites for online purchases. DTC was on the rise before the pandemic, but like all things e-commerce, its rise was accelerated as brick-and-mortar stores were forced to temporarily close.
Bed Bath & Beyond
In what’s being called a major re-alignment towards digital-first, Bed Bath & Beyond is in the process of cutting 2,800 positions in an effort to strengthen its “omni-always” shopping experience. The company’s new structure will heavily focus on delivering a hybrid shopping experience to shoppers through buy-online-pickup-in-store (BOPIS) and curbside pickup.
Bed Bath & Beyond is embracing a more omnichannel approach, giving consumers more options and bridging gaps between e-commerce and brick and mortar. Curbside pickup and buy-online-pickup-in-store are great for consumers that want to shop online without having to wait two or three days for delivery.
Omnichannel isn’t new. In fact, it’s been considered best practice for some time now, but established brands have been slow to fully embrace an omnichannel existence. COVID-19 has been painful for retailers and brands, but Bed Bath & Beyond is an example of a retailer that’s taking this opportunity to move in a more omnichannel direction. This type of strategy covers the needs of every type of shopper, something that will pay off during and post COVID-19.
Walmart has been working for years to become a more serious competitor against Amazon. This year, Walmart made significant changes to its business to become more heavily focused on e-commerce. In July, Walmart reportedly made cuts across its corporate workforce in areas related to brick and mortar — merchandising, real estate, and store planning. Shortly after, the company announced the launch of Walmart+, a paid membership program meant to compete with Amazon Prime. Walmart+ will launch on September 15.
Amazon and Walmart both experienced massive surges in e-commerce sales due to the pandemic. Online marketplaces offer consumers convenience and a seemingly endless variety of brands and products to choose from. For a long time, Amazon has been the only major online marketplace that offers shoppers a membership program. Walmart+ is Walmart’s response to Amazon Prime, and it shows that the retailer is shifting its focus to become a more serious online retailer.
What we can learn from these changes
Each of these businesses is restructuring to be digital-first in a different way. There isn’t a cookie-cutter solution for going digital-first. A hybrid approach is best for a retailer like Bed Bath & Beyond, but DTC is better for a brand like Under Armour.
This is a soul-searching moment for brands and retailers. In many cases, restructuring is messy and it hurts, but it needs to be done. Finding the best approach to digital-first means taking a step back, understanding how your audience has changed, and shifting your strategy to meet that audience.