Retailers pursue innovation as pandemic shopping spree continues

By Layton Bonnici
Published December 6, 2021 | 3 min read

The rapid acceleration of digital commerce has proved a boost for online retailers but further challenges loom as supply chains strain to cope with pent-up demand

Resilience and flexibility have been key themes for retailers through the COVID-19 pandemic, with many forced to overhaul their business models after a sharp loss of in-store footfall.


Online growth to continue as stores re-open  

While lockdowns and social restrictions have tested the forte of bricks-and-mortar retailers, the pandemic has also proved a spur for online sales. Experts estimate COVID-19 has brought forward five years of e-commerce into a single year by pushing housebound consumers to shop on digital platforms.1 Panelists at the “New Retail Frontier” session at RBC Capital Markets’ Australian Technology Conference believe the pivot toward online retailing has much further to run, even as consumers reacquaint themselves with in-store shopping.

“The pandemic has definitely helped to introduce and train customers to adopt online retail faster than they otherwise would have,” said Dean Jones, co-founder and CEO of GlamCorner, an online fashion rental business.

“There are plenty of people who still very much prefer the idea of being able to go into a store and have a physical experience, depending on the product category. But I think there's still a lot more opportunity for further (online) penetration for sure.”


Delivering the personal touch

Consumers’ shift online has prompted retailers to bring forward digital commerce projects and consider adopting marketplace technologies that can help expand their range and manage inventory. Previously bricks-and-mortar businesses have transformed into omni-channel operations by driving sales through apps and social media accounts. One of their next challenges will be to offer more personalised services to retain and grow their customer base, said Rob Brown, Chief Financial Officer at Marketplacer, an online market software platform provider. The ability to capture and analyse consumer data will be key to providing this level of customisation.

“The strategic conversation starts to arise. How do you engage with that audience and how do you show authority in an online sense?” said Brown at the session moderated by Layton Bonnici, Managing Director, Global Investment Banking at RBC Capital Markets.

“What we've seen in huge ways is retailers, especially, utilising marketplace technology to expand their range at pace and provide customers with a heightened level of service — because ultimately, that's what the customer is seeking.”


Browsing the ‘endless aisle’

Growth brings its own challenges as retailers look to manage costs of warehousing, inventory and shipping. Consumers’ patience and loyalty can be tested quickly when unable to complete purchases on-demand or receive goods within their anticipated timeframes. More retailers are expected to adopt “endless aisle” solutions that allow customers to order in-store and ship directly when their purchases are unavailable on the shelf. Predictive analytics enabled by marketplace platforms will also help retailers “guess” what, when and how their customers want to purchase to better curate their product lines and adjust stock.

“It takes a long time to expand range and what we've seen certainly is an ability now, in a virtual sense, to provide that range to the customer and consolidate a fragmented market in terms of suppliers and sellers,” said Brown.

Rob Hango-Zada, co-founder and joint CEO of shipping platform Shippit, noted how ship-from-store technology had become an important asset for omni-channel retailers in the pandemic era.

“The two main trends that really helped save e-commerce industrial retail more generally through lockdown were decentralisation of shipping and also de-risk business operations by spreading the load across multiple carriers,” he said.


Supply chain snags seen lingering after peak Christmas period

The uncertainty caused by COVID-19 lockdowns has underlined the risks of relying on single delivery channels and encouraged more retailers to diversify their carriers or tap into shipping search engines to manage bottlenecks and spread volume more widely. Although lockdowns have lifted to allow Australian retailers to welcome more in-store customers, plenty of consumers remain reluctant to mix with crowds and will continue to shop online. This is placing supply chains under significant pressure in the lead up to Christmas and online sales events like “Black Friday”. Australia Post has warned delays in parcel delivery will continue as warehouse and distribution centres battle staff shortages.

The problems are expected to linger beyond Christmas and into the future so long as shippers remain reluctant to collaborate with competitors. “eCommerce has reached a tipping point and we will need to work collaboratively across the industry to come to a solution’ said Hango-Zada.

“Every carrier wants to deliver goods from start to finish, but to be efficient we need to leverage each other’s networks.”


Ecommerce is focusing on sustainability

Sustainability is also a growing consideration in supply chain management, with more consumers concerned about sustainable packaging and the carbon footprint generated by their purchasing decisions. While considerable inefficiencies remain, retailers should embrace the chance to share their sustainability plans with customers and bring stakeholders on board.

“Especially in fashion and apparel, it is the hot button topic that brands and businesses are focusing on in terms of de-risking and planning their business for the next three-to-five years,” said Jones.

“I can't see anything else in our industry right now that is considered more of a priority than impact and sustainability.”

1. Australian Financial Review (Oct 12, 2021) Retail convergence opens world of possibilities

Layton Bonnici

Layton Bonnici
Managing Director, Industrials and Technology
RBC Capital Markets, Australia