Exclusive Q&A: Retailers must adapt to changing online demand  

A former Nordstrom executive sees a new post-COVID-19 digital landscape with significant growth potential for retailers.

Chain Store Age recently spoke with Kathy Gersch, executive VP at strategy execution and change management firm Kotter, about how the “new normal” of e-commerce presents opportunities for retailers who properly anticipate and react to consumer trends. Gersch’s almost-30-year executive career includes a four-year stint as VP of finance, strategic planning & administration at Nordstrom.

How have the benchmarks for e-commerce success shifted as a result of COVID-19?

“Retail leaders should be increasing e-commerce success benchmarks across the board—from sales, to site traffic, to time on site, and other metrics. If you are just meeting the goals you had set prior to the pandemic, you are likely falling behind. You should be raising the bar due to the surge in online shopping during the pandemic. The volume retailers would have expected under normal circumstances is no longer sufficient.”

How has consumer demand changed during the pandemic, and how should e-commerce retailers respond?

“After record lows in April; May retail sales have rebounded nearly 18%. Yet certain buying behaviors have changed dramatically, including a shift to more online shopping. U.S. e-commerce jumped 49% in April, compared to baseline periods prior to shelter-in-place restrictions going into effect.

“As families spend more time at home, we are seeing greater interest in categories like leisure & outdoor, home goods & décor, and electronics, while categories like workwear and luxury accessories have become less relevant. Clothing and accessories have also taken a hit, with sales in March 2020 coming in at $8.4 billion—less than half of what was sold in March 2019, at $22.9 billion. Anytime there is economic uncertainty, you will see reductions in discretionary spending, as people focus more on needs versus wants.

“Retailers to some degree have to respond with what they have. In some cases, this has led to discounting products to incent people to buy more and move inventory sooner. It’s not as easy as flipping a switch and focusing on a new category, if you don’t have inventory to support that shift.

“For many retailers who rely heavily on China and other global manufacturing hot spots for inventory, we are seeing a disruption in supply chains, calling for a need to diversify the supply chain and create a much greater degree of agility and flexibility.”

During the shutdown and likely following recession, what type of e-commerce innovation should retailers pursue?

“To survive the crisis and thrive in the ensuing economic contraction, investing in innovation—both customer-facing and back-end—will be crucial, especially for e-commerce retailers looking to adapt to the new dynamics re-shaping the industry. This could include speeding time to market, supply chain innovations, personalization initiatives, seamless channel integration, and customer experience improvements. Engaging customers online through personalized and customized initiatives will be important, leveraging social media channels to increase interest in products and inspire shoppers.”

What steps should e-commerce retailers take to communicate with customers and employees during the pandemic?

“Fear is the biggest driver of our crisis response—and it is often fueled by lack of predictability, lack of control and a lack of an end in sight. With mounting economic uncertainty, social unrest, and a climbing COVID-19 death toll, it is no surprise that emotions like anxiety and worry are magnified.

“Scenario planning can help e-commerce leaders shine a light into the darkness. Asking, ‘What scenarios could manifest amid this crisis?’ and ‘How can we educate employees based on those potential realities?’ is a great place to start. While no one can predict the duration of COVID-19 or the severity of the ensuing economic contraction, e-commerce leaders can help re-establish a sense of control among their people by helping employees and managers differentiate between what they can and cannot control, thereby helping them to refocus on what is in their power. 

“Frequent, planned communications and strong feedback channels will be critical to keeping employees engaged and ensuring their voices are heard. In the months to come, employees will continue to crave a leader who communicates authentically and transparently, rather than simply “telling them what they want to hear.”