A year ago cosmetics retailer Lush was in the midst of improving its new in-store pickup program, trying to fix issues that were slowing down the ordering process for customers.
Then the COVID-19 pandemic hit.
“Those early days were all about firefighting,” Terra Cochrane, the head of Lush’s digital operations and e-commerce in North America, said in an interview. The company had to set aside its pickup program to deal with skyrocketing call centre volumes, and the logistics of temporarily shuttering stores and having employees work from home. It also had to make sure its e-commerce operations – now more critical than ever – were running as smoothly as possible.
“COVID-19 didn’t change the focus in terms of what we wanted to do with the digital experience, but it exposed issues that weren’t as visible when we weren’t scaling as high,” Cochrane said, pointing to challenges in logistics and back-end systems.
“You see those warts more obviously when you’re scaling at higher volumes.”
Lush’s experience through the pandemic has been one that retailers around the world have been grappling with – how to adjust supply chains and logistics to handle unprecedented e-commerce volumes.
The COVID-19 pandemic has divided retailers into a list of winners and losers, with the key separation between the two coming down to investments in e-commerce. A seamless digital experience is more important than ever, a report from global consulting firm McKinsey says.
“As retailers look to the future, they will need to contend with consumers’ expectation for seamless omnichannel fulfillment, as well as retailers’ own increasing productivity pressures,” the McKinsey report said.
Doug Stephens, founder of Toronto-based consultant firm Retail Prophet, says the retailers that have been thriving in e-commerce through the pandemic have invested in digital operations for years, not months or weeks. He points to Nike as an example.
“The seeds were planted long ago for Nike, shifting from wholesale sales to more direct-to-consumer. That was the first real underpinnings of their transformation,” he said in an interview.
“That brought an intense focus on customer experience and massive investments in digital and supply chain technology, so they could properly serve consumers directly at scale.”
What retailers are doing right
Aritzia is another retailer that has posted strong results throughout the pandemic, thanks in large part to its quick shift to digital in the early days of COVID-19 and consistent e-commerce investments. CIBC World Markets analyst Mark Petrie wrote in a note to clients in January after Aritiza posted third quarter results that the company “is well positioned to reach new heights on the other side of COVID.”
“Sales grew, profits barely dropped and cash flows surged as e-commerce sustained and store productivity improved,” Petrie wrote.
“The consistent e-commerce growth with only modest decline in store productivity shows strength in these times.”
Unlike many retailers, curbside pickup has not become a critical service for Aritiza through the pandemic. Chief executive Brian Hill told analysts on a conference call recently that that’s due in part to the company’s strength in e-commerce.
“Our e-commerce is so effective,” Hill said.
“If you’re in Toronto and you order something before noon today, you could potentially get it by tomorrow morning. So we’ve just found that our e-commerce channel is so efficient that people prefer that meaningfully over curbside pickup.”
For Lush, Cochrane said the key part in the early days of the pandemic was removing friction from the online ordering process. For example, the company improved its inventory visibility on its website, so customers know which items are available for in-store pickup or online shipping before they get to checkout.
“We needed to find ways for customers to get their orders faster. That quickly became the No. 1 priority,” she said. Lush was recently listed as one of the top retailers in Canada when it came to online experience, according to the Wow Digital survey conducted by Leger. The web survey polled nearly 14,000 Canadians ages 15 and older who had recently visited at least one website or app. Leger said 173 websites and apps were considered, with 300 respondents evaluated each one.
Alicja Siekierska is a senior reporter at Yahoo Finance Canada. Follow her on Twitter @alicjawithaj.