Did Pandemic-Related Retail Tech Investments Pay Off?

When the world shut down in the early months of 2020 many retailers looked to technology to keep their businesses afloat. E-commerce investments, lifestream selling, and curbside pickup became key strategies for those that had the money to put into them. But did these pandemic-related investments pay off? Let’s take a look.

According to a survey by CB Insights, investment in retail technology tripled in the first quarter of 2021 from the previous year. “Omnichannel” was the buzzword as merchants invested in all sorts of digital and in-store selling.

Among our client base, those who were slow to invest in e-commerce before the pandemic began to ramp up their investments by building out their websites and employing communication tools to keep in contact with core customers. For some, these investments helped build a revenue bridge until customers returned to their stores, but for others the efforts were too little too late.

“In general, e-commerce takes a long time to build up momentum, and it’s not for everyone” says Blacks Retail President Steve Pruitt.  “It helps to have unique products and not be competing with your vendors’ online offerings.”

Pruitt notes, however, that even merchants with very unique products can have a hard time making gains online because customers simply wanted to touch, feel, and try on the pieces before making a large purchase.

So, it’s not that surprising that by the first quarter of 2022 retail tech funding dropped by 11%, according to Retail Dive.

In the broader retail world, other pandemic-fueled ideas are losing steam. Instagram, for instance, is killing its “live shopping” initiative for lack of interest. And stores that put effort and staff time into live streaming about new products have found that now that customers can safely come back to their stores there’s no need.

In fact, “social commerce,” as it is called, only made up 5% of total e-commerce sales in 2022, according to Insider Intelligence.

So, what did work?

Client stores that had multiple locations and a broad customer base were able to successfully leverage their e-commerce investments, making them a core part of their current revenue. This was especially true for women’s wear.

“For many women’s stores e-commerce was an easy way to re-engage fashion retail early, ” Pruitt says.

“Also, keep in mind that women have been more engaged with fashion from the git-go.”

Clients who invested in communication tools that allowed salespeople to easily communicate and track customers interactions, also saw benefits. And of course, email marketing also continues to be an important part of the retailer’s toolkit.

“Since we deal exclusively with specialty stores, the technology investments that have been the most successful are those that allow retailers to add their personal touch,” Pruitt adds. These could be  inventory tools that help them carefully curate products, client outreach technology like Customer Relationship Management (CRM) systems, or even product education.

But for the time being, customers still crave that in-person experience and the tech that is paying off the most right now tends to facilitate our merchant/customer relationships rather than replace them all together.