the future of retail mckinsey

Shoppers behaviors and expectations have changed dramaticallyand continue to evolve. Hispanics make up slightly less than 20 percent of the US population; Black Americans make up about 12 percent. Show, tell, engage. These are absolutely things that can be trained and measured. The critical omission that I made was quantum computing, which will take about another 20 years to unfurlbut in 20 years, stuff will definitely have happened. The Future of Retail Grocery in a Digital World Tyler Harris: During the pandemic, people have used curbside pickup, BOPIS, and self-checkout at much higher rates than in the past. Monica Toriello: In the past 18 months or so, youve probably bought something online, paid for something with your smartphone, or used a retail app. Thanks for being with us today, John. Before we get into it, what has return to the workplace looked like for you personally? Look no further than the much-discussed " Great Resignation ," also called the "Great Attrition" or "Big . McKinsey_Website_Accessibility@mckinsey.com. But our editorial integrity ensures our experts' opinions aren't influenced by compensation. My son is a high-school lacrosse goalie. McKinsey retail experts Tiffany Burns and Tyler Harris say there are five zeros that retailers should keep in mind as they plan for the future of stores. Frontline jobs have to be transformed to improve employee engagement and experiencebecause that frontline colleague has good alternatives now. Kelsey Robinson: For a customer walking into a store in 2030, I think it will feel really integratedmeaning, affirmations from social media or friends and family who arent even near me will somehow be integrated into that store. How do I match a pair of shoes with a dress so that it looks great? Is it as convenient for consumers to navigate the parking lot with these structures? February 7, 2020 8 minute read Shares The exciting promise of the future of personalization may not be here yet (at least not at scale), but it's not far off. And I get it: dyslexic people are on a mission, and were not going to listen to anything that anybody tells us. How do you translate that to your organization? How tech will revolutionize retail | McKinsey First, I am continually surprised by how organizations are not even 80 percent close to knowing what data theyve actually got. You might want to try and apply the same rules at the corporate level, but obviously there are a few more considerations you have to take into account. in the next few months. Thats been true for the past couple of years; people everywhere have collectively experienced things that weve never experienced before, including a global pandemic. Monica Toriello: Another thing Ive heard you say is that you wont invest in a company led by someone whos under 50. What they found was amazing: significant improvements among all those who actively engaged with the learning journeys. It should be game-changing. Full Report (83 pages) In 2022, the beauty marketdefined as skincare, fragrance, makeup, and haircaregenerated approximately $430 billion in revenue. Customers are also willing to make some trade-offs. Tyler has been on this podcast before, talking about the jewelry industrysince Tyler is a gemologist, among other things. 64% of . It might be coming out of the back room, it might meet you in your car, or it might meet you at home. Topics covered include strategy, technology, marketing, operations, and organization. The same goes for the six fundamental capabilities, which include self-awareness, perspective takingwhich is being able to hold multiple perspectives versus just simple stories of black or white and right or wrongand capabilities around well-being, which means taking care of ourselves mentally, physically, and spiritually. Probably not. But are consumers excited to see retailers putting a stake in the ground and saying they want to be more energy efficient? As retailers anticipate reopening, they need more than a checklist of sanitization practices. It was too crazy. Bryan Hancock: There are two things that are top of mind. Two decades of growing paper wealth Two decades of growing paper wealth 2. You asked about congestion. Because thats where Im going to place my betsthat level of engagement.. Kelsey Robinson: Dont try to win on every single element of the consumer experience. But we see some retailers saying, Were going to make shopping a seamless experiencefor you. June 16, 2020 RICARDO ARDUENGO/Getty Images Summary. Its not easy. Indeed, the nature of work has changed for almost everyone in the past year and a half, raising important questions about the future of the workplace and the workforce. And on the flip side, what are some of the most common mistakes that youre seeing companies make as they navigate this next normal? It used to be that a retail frontline job was a fairly flexible job: you could give preferences for the shifts you want to work and you could do part-time quite easily. The beauty market in 2023: A special State of Fashion report But that sounds so hard to do. On the front line, there are a range of assessments that you can use as people come in and as they progress. I said, I found a company we should buy. And he said, If were in a world where that separation starts to blur more, as it has in the pandemic, teaching people how to inject that time for reflection and transition and how to adapt their rituals are things that can very practically be done to help them adjust. If you work on the principle, which I do, that theres no such thing as a good idea but just better execution, then the executional side of itlooping back to the thousand times engagement piece I was talking about earlieris what its all about. Re-inventing retail and the future of data driven AI First, Snap bought a company thats manufacturing its new range of augmented XR glasses, so they will come into the mainstream. You can do that, too, but you can be more thoughtful about what the natural pathways are that build on the skills that people actually do develop day-to-day in their roles. One interesting example on the sustainability side is around solar energy. And all [the store] will do is a confirmation of, Heres what must be out at home. And Ive seen so many organizations that think theyve got great amounts of data and then realize they cant format that data and extract it to put it into a data lake where it becomes usable. Monica Toriello: Shouldnt you be looking at character traits rather than a specific age? I think the majority of the problems come from the unwillingness, perhaps the fear, of investing in something that doesnt automatically bring a load of cash onto your balance sheet. As a consumer, when I go on the retailers website or app, I expect to see availability, a connection to whats in the store, and a way to order things that I can pick up in store. Im not gonna listen to people who tell me it cant be done, Im just gonna do it. So I do think those are certain personality indicators of very successful entrepreneurs. Tiffany has worked on large-scale transformation efforts at more than 15 of the biggest companies in the retail sector. It used to be that if you shopped at a grocery or department store, you really valued that personal interaction with a sales associate to help you check out. Definitelyand it will be good for business, people, and the planet. it? Tiffany Burns: And its a big part of the population to unlock innovation. The Future Of Retail Is Hybrid And Unified Around End-To-End Connected Experiences Brian Solis Contributor I study disruptive technology and its impact on business and society. Phygital is made up of "three I's" : Its a tremendous challenge for the consumer sector right now because there are so many compelling use cases for disruptive technology, whether its using AI to improve customer service or advanced robotics to make operations more efficient in stores and in warehouses. Ashish Kothari: If you look at any external surveys out there, theyre showing the same as what were seeing internally: burnout is at an all-time high. That time for processing and that separation between home and office have been shown to be healthy. Bryan Hancock: Were slowly opening up our office; were doing it in phases. One company took its top 250 leaders through a series of sessions to help them build these skills; the company also rolled out a digital training program for about 50,000 employees. Research has revealed that more than 70 percent of fashion brands' chief product officers (CPOs) expect supply chain digitization to be a key capability for suppliers. He leads our reenergizing organizations work, which is focused on helping consumer companies as they support employees in combating pandemic fatigueand increasing well-being. Its embedded in the fabric of who we are as a consumer population. Podcast October 8, 2020 - What will it take for US retailers to succeed post-COVID-19? What does it feel like? Thats what well be talking about on todays episode: specifically, well be discussing the evolving role of physical stores. In what format is it? Heres another statistic: Only 24 percent of the new businesses of big corporations become viable large-scale enterprises.. So its another layer of complexity for retailers. Whats the biggest mistake that you see retailers and consumer companies making when it comes to investment decisions about disruptive technology? There are skills and behaviors around building connection with each other, even through simple moments. So investing in scalable, digitally enabled training for these associates is really important. The future of shopping: Technology everywhere - McKinsey & Company We call this new approach to retail strategy "Win the Town." To explain how this approach works in practice, let's take a closer look at these eight strategic shiftsalong with some examples of retailers that are moving toward this future retail model. of the ways that consumers are interacting with technology in stores? Theyve both been there, seen it, done it, watched the video, ironed the T-shirt, that sort of thing. This can range from sustainability to a global movement. Key trends that will shape the sector this year include a gradual normalization of price and volume, a search for cheaper food, continued margin and cost pressure, a race for economies of scale, profitable online growth, retail media expansion, accelerated technology deployment, and intensified collaboration of grocers with their suppliers to drive sustainability. 1. The impact of the COVID19 pandemic on the sector had largely concluded by the end of the year. And how do we then segment into different roles and archetypes so that we can say, For this type of job, its OK to be home one or two days a week to do this kind of work. READ MORE Introducing the Store of Tomorrow To help accelerate the OMO model, Accenture has developed an innovative new concept for the Store of Tomorrow. Tyler Harris: I get really excited about the new products and new brands, especially with the DEI lens. Four McKinsey leaders envision the future of retail. Plus, its effective. That commute, for all its frustrations, had some good mental-health side effects. role they can play in encouraging change across the full value chain. What is Phygital? The Future of Retail - Confer With I heard a fantastic expression from Silicon Valley about four or five years ago. Today were excited to speak with an expert on disruptive technology who has worked with some of the worlds leading companies to turn technology into competitive advantage. Is there anything thats played out differently from what you expected? Advances in technology, data, and analytics will soon allow marketers to create much more personal and "human" experiences across moments, channels, and buying stages. The first thing any organization should do is know what data its got. By 2035, I think they will be quite substantial. Today, beauty is on an upward trajectory across all categories. I sat down and I talked to her, and she told me that shed been to Benidorm, a popular tourist destination in Spain. investments, and M&A strategiesthen make bold moves to transform themselves. If communications or teamwork or what some people call power skills and others call soft skills are what will be important, track those. Shed been there 27 times in 30 years, and she knew where the best ladies toilet was in Benidorm. In the past year and a half, weve seen a broadening of the things that matter to consumers. What are you seeing and hearing? Kelsey Robinson: Is a store just about a transaction? John Straw: Building a business is hard. What are companies doing right? Interview McKinsey has been a major proponent of agile working and prototyping, and Ive done quite a lot of prototyping myself, which is when you get a product into the hands of the consumer and the consumers engagement with it becomes really high, really quickly. So its more a matter of defining the skills you want to track and being intentional about creating the process to track and credential. Article Retail Reimagined August 5, 2020 - Everybody needs to rethink both digital and in-store sales. Tiffany Burns is a partner in McKinseys Atlanta office, and Tyler Harris is an associate partner in the Washington, DC, office. So, as you say, there continues to be a role for storesbut that role is evolving, and its because consumers are evolving. Historically, a big part of what the sales force had to do was to visit retail accounts at least once a week, look behind the shelf, take inventory, and put it into their systems. Thats where you know how to place your bets. Its where retailers need to double down and be distinctive. So, ten years from now, for certain product categories, the main part of the sale will be online, and you will only have flagshipsfor showroomingin physical retail. I think it came out with AR, augmented reality, built into the phone for the very first time. But do so at your perilinvesting in talent management, or the way that your organization attracts, retains, and develops its employees (sometimes referred to as "talent" or "human capital") can give your company an edge. An edited transcript of their conversation follows. You cant install technology and just let it ride; you need some oversight from an associate because when the machine behaves badly or if you hit the wrong button, not having someone there to help is just as frustrating as waiting in a long line. Those of you who listen to the McKinsey Talks Talent podcast will already be familiar with Bryan. Have you started traveling again? The future of retail, according to John Straw, belongs to retailers that boldly invest in cutting-edge technologynot worrying about how it affects the P&L but about how its going to affect the value of the business to the consumer. In this episode of the McKinsey on Consumer and Retail podcast, Straw, a senior adviser to McKinsey, spoke with executive editor Monica Toriello about the lessons hes learned as a business builder and the most promising new retail technologies. But the really big news is that next year, Apple is going to launch its XR glasses. experience requirements in order to win and remain relevant. Youve had lots of experience helping incumbent companies build new businesses. If you can learn those skills in retail and then transport them to healthcare, which is going to have huge growth, thats where the next unlock is. Article In Store VR in Retail: The Future of Shopping Is Virtual and Augmented Published Jul 31, 2018 By: Lisa Terry There are many things consumers have long disliked about shopping, from poorly lit dressing rooms to lack of information to pushy salespeople. Now, thats because the store associate is incented on revenue that comes through the door. If its important to pick up certain technical or digital skills, track those too. I was thinking about buying something and going back and forth saying, Hmm, maybe not now; maybe later. I was about to leave the store and the associate, to their credit, went through the full selling process and tried to make a strong close and get me to buy it in that moment. consumer-packaged-goods companies can take advantage. that originated as a sourcing alliance in the early 20. authors discuss how to better support Black brands and serve Black consumers. John Straw: For retail, the opportunities are immense for showcasing, for XR capability, for digitally enhanced shopping baskets, et cetera. I really thought that wed see a whole slew of new products coming into the marketplace, and material science was going to change what we could actually do with these 3-D printers. Tiffany Burns: Weve seen such a drastic evolution in self-service. Subscribe to the podcast. But Im sticking to this one. Tiffany Burns is a partner in our Atlanta office. I can capture that information and send it back to the main sales office.. The future of shopping: Technology everywhere, Retail speaks: Seven imperatives for the industry, Reimagining stores for retails next normal, Retailers as experience designers: Brian Solis on shopping in 2030, not coming back at the same frequency they used to, shift away from opening new brick-and-mortar stores, whats going to make them come to the store. Pick the couple of areas where your brand can really stand out. That means consistency and connectivity between all those channels will be really important. Major retail companies, such as Amazon and Walmart, as well as advertisers are looking into leveraging retail media networks to grow their revenue, reach new audiences, and diversify their revenue streams. They measured the skills, through both participants inputs as well as inputs from others who these individuals worked with. In many ways, COVID-19 has accelerated some things that we were already on a path toward. But I cant now because Im in my 60s, so there are some limitations there. They could take a job in the gig workforce and have complete flexibility. Im sort of glad that I wont be around. by investments in advanced analyticscould be critical to keeping pace. It was wonderful to be able to see them. Is it a combination of all of those things? In this edition. It's really hard. Much will depend on their digital and analytics capabilities. Therefore, your virtual assistants are going to be quite interactive then. The Markle Foundationwith McKinsey, the Atlanta Fed [Federal Reserve Bank of Atlanta], and a group of other organizationshas put forward a report as part of the Rework America Alliance. Monica Toriello: I dont know about you not being around in 20 years. We define adaptability and resilience as the ability to bounce forward not necessarily just bounce back. A survey of 278 executives by McKinsey in August 2020 found that on average, they planned to reduce office space by . The past couple of years have given us the time and the data to confirm that: omnichannel customers shop 1.7 times more than single-channel shoppers. Tiffany Burns: The expectations for speed have significantly advanced. 10 Apparel brands and retailers are seeking solutions for end-to-end process management and supply chain transparency that will be aided by digitization. The Future of Online Luxury Retail - Luxe Digital This is investing in human capital. It being Apple, it will be a category creator. Monica Toriello: How can the retail and consumer-goods industry attract data scientists and engineers, when its competing against pretty much every other industry? Years ago, McKinsey developed the retail pentagon as a framework to highlight five key elements to benchmark players on: 1) price, 2) service, 3) convenience, 4) shopping experience and 5). You worked hard for us; you let in a lot of goals, but, win or lose, were going to go get youso you see lacrosse teams run to their goalie. Monica Toriello: Bryan, one thing Ive heard you talk about is your experience at your first jobbagging groceriesand the skills you learned in that job, like customer service and empathy. Theres a lot of training and nuance that goes into making that work well. choices to find success in this shifting and increasingly competitive landscape. Over the longer term, as automation and digitization advance, how can retailers and consumer companies take on the reskilling challenge? Talk a bit about how retailers can avoid swinging the pendulum too far the other way: you can imagine some customers not wanting to shop at a store that just has technology and no people. Thats the flip side for retailers: figuring out what is worth the wait and making those experiences and products really treasured, because theres a magic to that in a world where youve got all of this instant noise. One of the big problems in high-ticket retail is the fact that you cant try before you buy. The commute home is a time to reflect, decompress, and process the day. But if we do hire in those tech hubs, then how do we create the right connections? At the corporate level, have it as part of the annual performance conversation. McKinsey & Co.'s "Store of the Future" Yields Retailing - Forbes Forward-thinking companies are creating thoughtful guidelines for hybrid work environments, training employees in adaptability and resilience, and proactively reskilling their workforces. Phygital is a portmanteau of physical and digital, which blend offline and online environments to deliver an enhanced customer experience. Now its about speed and convenience. Implicit in that definition is this core ability to learn. One of the themes that keeps coming back is the following: We knew before the pandemic that a flexible working arrangement was one of the top benefits that employees wanted, so how do we manage expectations and set the right rationale for why were bringing people back to the office? Very few want to be in the office 100 percent of the time. Monica Toriello is an executive editor in the New York office. You also were completely fine ordering your Friday night pizza and waiting 90 minutes for it; you werent sitting in front of your phone and watching the dot as it turned down your street and stopped at the red light. Our future world is going to be a fundamentally more volatile and unpredictable world, so how do we build skills around adaptability and an ability to learn continuously? The seemingly unstoppable rise of e-commerce, sophisticated customer analytics, personalized sounds and smells, digital mannequins that "know" your clothing preferences, automated home deliverythese are just some of the elements that will shape the shopping experience in the coming years. Paint a picture for us: What does the tech-enabled retail customer experience look like in 2030? Since the birth of the first modern supermarket in Memphis, Tennessee in . Terms may apply to offers listed on this page. John Straw: Up until COVID-19, I spent most of my time on a plane, going to places like Australia for lunch. So I would think about how his coach talks to him and what he teaches him, which includes some meditative practices but also the rituals the team has. It's how we make money. Tyler Harris: A few years ago, we had thought that omnichannel customerswere going to be much more valuable than single-channel shoppers. With the disruption being caused by COVID-19, a lot of data engineers want the excitement of working on something new and shiny, but they also want the security of working for a major organization with very deep pockets. and serve customers better. McKinsey: The Future of Personalization - theCustomer Number one is really building that customer relationship and doing suggestive sales: Heres what else is selling at other customers; these are the best-selling products. Number two is competitive intelligence: Now that I dont have to worry about how much of my stuff is on the shelf, I can keep my eye out for promotions that competitors are running and interesting displays that theyre putting on the shelf. There are two other capabilities: one around purposedefining the organizational reason for existingand tying that to an individual purposeand one around creating more psychologically safeenvironments.
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