• by Sarah Mahoney  @mahoney_sarah, January 20, 2021

Deloitte just released its latest research on the fractured retail landscape, with some unexpected results. Those that survived 2020 are energetically pursuing more digital offers, shoring up their supply chain and making health and safety a priority. And while that may seem obvious, the results show that most companies’ tactics are the same, whether they are struggling or reporting record earnings.

"That was a huge surprise to us," says Rod Sides, Deloitte's vice chairman and head of its retail practice. He explains how the industry is changing.

Marketing Daily: It's been such a difficult year, with more than 50 bankruptcies. Can you generalize about the health of the largest retailers?

Rod Sides: No. Grocers, home improvement and mass merchants benefited from many changes in consumer behavior and are looking to drive more growth this year. But others, like apparel and department stores, struggled. They're approaching the upcoming year with a higher priority around cost-cutting.

Marketing Daily: Do you expect many more bankruptcies -- and if so, is that a good thing?

Sides: I'd conjecture we'll have about 20 more bankruptcies, and yes and no. We were overstored, so closures can be useful. Several years ago, Toys R Us closed and it seemed like bad news. But very quickly, many other stores stepped into the category.

Marketing Daily: In your report, you note that of the 50 executives you interviewed, many reported that they are using this crisis to make some big changes in digital, supply chain and safety, and realigning costs. What's the new digital mandate?

Sides: Differentiation. A mobile app, a website -- they're just expected. So there has to be more. It has to be frictionless.

Many of the digital natives, especially in direct-to-consumer, have figured out a way to do this, and they have to. Because if it comes down to price, we all know how to find the lowest price on anything in just a few clicks. Pricing is so transparent today.

And mobile is much more important not only for search and navigation, but for the shopping experience. We see much more intense use of augmented reality and QSR codes.

Marketing Daily: How about the supply chain? Before the pandemic, this was probably the most boring part of retail. Then, when we couldn't find yeast or beans or toilet paper, we noticed.

Sides: Yes, consumers understand it better now -- because they had to. Executives tell us that this past year clarifies that supply chain, inventory management, and digital user experience can no longer operate in separate silos. Customers want to know what products you have and whether they are available.

The big challenge we'll see now is the mix between the most cost-effective supply chain and the most resilient one. And they might not be the same.

Marketing Daily: So you mention health and safety, which surprises me a little. I'd have thought that by now, we'd all just come to expect constant sanitizing.

Sides: Yes. But there's more to it. For example, we know curbside pickup jumped dramatically in the fourth quarter. Sure, that's because people view it as being safer. But in many instances, it's faster and easier too. The smartest stores are adding trackers to their apps, for example, so customers can see how long a wait they have.

Marketing Daily: Finally, they mention costs. What's different?

Sides: So in this area, retailers who are struggling are behaving differently from those that are thriving.

Consumers now demand that every retailer be able to do it all -- they want an app and a website and delivery. And that's just a very expensive model to execute. The structural cost of the business has changed dramatically.

And yet retailers are competing for capital against tech companies with much higher profit margins. So I worry about the long-term impact of their ability to raise money and stay healthy as an industry.