The five zeroes transforming retail – McKinsey – DC Initiative on Racial Equity
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Shoppers are reshaping the retail landscape faster than ever before. Nearly 40 percent have switched brands or retailers during the pandemic, and more than 80 percent have new shopping behaviors. More than half of those who used a new channel or service such as “buy online, pickup in store,” for example, said they would continue the practice post-COVID-19. As such, the omnichannel consumer has never been more powerful. They make purchases 70 percent more often and spend about 34 percent more than people who shop exclusively in stores. 1 Based on the above, we expect cross-channel shopping to continue even as the pandemic fades.

However, consumers today are likely to be looking for more than convenience and cross-channel connectivity. As one 20-something shopper told us, “I don’t spend money in places I don’t believe in.” According to our survey of 999 American consumers in 2021, 45 percent of all consumers and more than half of Gen Z, millennial, and Black consumers believe companies should support Black-owned businesses. Among our survey respondents who agreed that companies should pledge to support Black-owned brands, more than 40 percent intentionally buy from Black-owned brands and are bigger spenders overall, doling out an average of 30 percent more on holiday shopping. 2

The implications for retailers are profound. As the shopper continues to change—and expects retailers to do the same—customer experience, store operations, and talent become more inextricably linked on the journey to keep pace with customer preferences.

A great customer experience, in store and online, now requires end-to-end product availability and visibility, which in turn requires first-rate operations: talent in IT, logistics, procurement, fulfillment, and other functions. Similarly, in-store staff need to recognize when customers need help—and when they don’t. And with high employee turnover and the need to keep up with rapid changes in the marketplace, retailers must train new hires and longtime employees quickly, effectively, and at scale.

In case that to-do list doesn’t seem long enough, consider that one in three shoppers now expects same-day delivery—a share that will accelerate as fast-moving retail giants and nimble start-ups compete in the realm of customer experience.

One thing is clear: shoppers aren’t just browsing—they’re taking sides. To win their loyalty, retailers will need to keep raising their games.

How retailers can meet rising challenges

The margins for error in retailing are shrinking toward zero in five areas: shopping channels, customer assistance, delivery times, equity and sustainability, and talent (exhibit). We believe retailers will have to bend, reinvent, and innovate to meet customers where they are—and where they’re going.

Exhibit

Five ‘zeros’ are transforming the role of stores.

We


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