The following is a summary of a webinar about Merchandising Strategies for the New Normal where I was a guest with Tom Erskine, CEO of One Door. Available here, if you wish to see it.

    This has probably been the most disruptive yea for retail most of us have seen in our lifetime. COVID-19 fundamentally changed consumer behaviors and forced retailers to respond rapidly. The retailers who will survive will pivot to meet today’s market. Then adopt new merchandising strategies for the store of tomorrow. 

    I wanted to hear directly from retailers about how COVID impacts their merchandising, store design, space planning and customer experience. First, it was important to understand their current challenges.

    So, in August and September 2020, I interviewed leaders from over 20 retailers, including the two largest U.S. mass merchandisers, the largest U.S. dollar retailer, two rural farm suppliersbig box stores in the home improvement, consumer electronics, office supply and pet space, national drugstore retailers, three regional grocery chains, as well as a sampling of apparel, footwear and nutrition retailers.  

    How will retail bounce back in 2021? Here’s what I heard:

    Getting the Right Assortment Mix

    Retailers will need to recession-proof assortments. As during the 2008 recession, people are making choices driven by their budget. Although shoppers are making fewer trips to the store, we’ve seen larger basket sizes during the pandemic to load their pantries. This trend is likely to continue and become the new normal for the next 1-2 years.

    Importantly, retailers are making decisions on where to hold assortments. With more subscription and delivery models available, should inventory be housed in distribution centers or in stores? Do super premium brands still deserve a place on the shelf? Or should the focus be on core SKUs?

    We’re cutting back on assortment breadth. We won’t be carrying 5 different kinds of lice shampoo, for example.

    –National Drug Chain Merchant

    Only the agile will survive.

    Store Real Estate Fundamentals 

    Work-from-home has become the new norm, and all indications are that trend will continue long after the pandemic. Because they can work from anywhere, people are expressing a desire to leave populated urban and expensive suburban areas for more affordable, or more desirable, regions.

    So, where should retailers site stores in the future? Should they stop trying to penetrate urban locations or is that short-sighted? Can they expand into rural and secondary markets supported by a growing and wealthier population? What does that mean for long-term planning, construction costs, and malls? Leases are coming up for renewal fast and retailers will need to make critical decisions on their real estate portfolios.

    Planning the Store of the Future: Macro Space

    COVID has everyone rethinking their space. But, it’s important to separate permanent changes from short-term ones. Buy online pickup in store (BOPIS) and curbside pickup are here to stay. The people have spoken, and they sure love convenience. This will have lasting changes for how stores are planned and organized. 

    Sanitation is also a long-term trend. Stores will need to conspicuously demonstrate safety and provide customers with strong safety signals. Are you making it obvious that carts are being sanitized? A number of retailers questioned the value of touchpads fitted with antimicrobial protectors. The question is whether they are a proven Covid deterrent or whether their value is psychological.

    Limiting time in-store is another long-term trend. Apps to help shoppers find products in the store quickly through their phones will continue to be table stakes. Store-within-a-store, grab-n-go, and more formal queue management systems will almost always be incorporated into future store plans.

    More Precision in Micro Space Planning

    Inventory went through upheaval during the pandemic as more people adopted omnichannel shopping. As we move into 2021, micro space planning will have to be more precise than ever. Retailers will have to devote more shelf space to core items and they have already reduced the number of promotional locations in the store to promote more distancing between shoppers. With less shelf space available in 2021, and fewer promotional locations, retailers really need to understand and forecast the most effective SKUs that will satisfy their customers. 

    Gaps in Space Planning Technology 

    The pandemic revealed gaps in legacy space planning systems that many organizations weren’t aware of such as:

    1. Lack of store-specific planograms. 

    Many organizations discovered they have POGs that are sent to specific stores, but not store-specific POGs. As soon as they tried to connect planograms to mobile shopping locators, they realized their dilemma.

    2. No streamlined feedback mechanism.

    This perennial issue was magnified during COVID because most retailers deployed their planogramming systems for one-way communication. In other words, it is just execution directions to stores. Lacking precise, real-time feedback from stores back to company data systems has led to shopper disappointment and order picker inefficiencies when they aren’t finding items where they’re supposed to be. 

    It’s become clear that retailers need to more easily and seamlessly integrate a number of different systems, including customer mobile apps. Without a clear integration between assortment plans, allocation, planogramming, and replenishment – there is no way to give customers real-time visibility to products in stores and where they are located. So retailers who are going to win in the new normal must plan for a seamless digital ecosystem.

    3. Work-from-home access.

    Space planning data is massive. As space planners and visual merchandisers work from home, many are finding problems with bandwidth capacity, locked databases and connectivity issues. Despite promises of “cloud-based” space planning systems, the solutions that are most prevalent (I’m looking at you, Blue Yonder) are not truly meant to be accessed from anywhere on any device using a browser and “residential” internet connectivity. WFH is here to stay in the new normal. Demand better systems to support it. #SpacePlanningRevolution

    The pandemic is changing where people live, how they shop, and what they shop for. Brick and mortar stores are re-tooling their space and re-planning assortments, all while figuring out where stores should be located. Technology that might have worked 15 years ago is no longer meeting the needs and acceleration of change in the new normal of retail.Personally, I am excited to see the foment in our space planning industry.

    So here’s the good news. As we head into 2021, it’s clear that excellent merchandising and space planning can give retailers a competitive advantage in the market that will make a difference to their customers. question is: will you be a retailer who takes this opportunity to leapfrog? Or will you clutch onto doing things the way you did before? Because you’re kidding yourself if you think things will ever go “back ” to normal. It will be a new normal.