In A Decade of Digital Transformation in 12 Months, 46 C-suite executives spoke with PYMNTS for its Q2 eBook on what the world will look like as recovery rolls on and the next iteration of normal rolls out. In this excerpt, Manish Jain, global solutions head of J.P. Morgan, discusses how the pandemic required retailers of all sizes to ramp up their digital presence as consumers quickly shifted their shopping behaviors online, thus pushing businesses across the globe into a period of rapid digital transformation.
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Digitization in the retail industry was already underway prior to the global pandemic. Nearly all major retailers had an online presence, and consumer adoption varied depending on the nature of goods sold. Consumer packaged goods (CPG) companies were also experimenting with direct-to-consumer (D2C) models. However, widespread adoption of these new sales channels was elusive.
Then the sudden shutdown precipitated by the pandemic upended the flow of goods and services, and 94 percent of Fortune 1000 companies experienced supply chain disruption. Retailers of all sizes needed to ramp up their digital presence or risked going out of business, and consumers quickly shifted their shopping behaviors online. All of this pushed businesses across the globe into a period of rapid digital transformation, achieving four years’ worth of progress in as little as a few months.4 During this transition toward digital-first business models, CPG companies doubled down on their D2C models to fill the void left by the small retailers, and marketplaces emerged that were geared toward customers and small retailers.
This digital acceleration forced corporate treasuries to build new processes almost overnight. They leaned on their banks and FinTechs for merchant services, seller settlements and wallet solutions. Corporate treasury teams did an excellent job of digitizing their businesses in a limited period of time, and now they recognize the importance of maintaining this momentum.
By digitizing distribution and supply chain models, treasurers are now engaging directly with a larger base of buyers, vendors and other partners. Providing a best-in-class user experience to all of their gig workers, third-party sellers, drivers, vendors, employees and social media influencers is now pivotal to growing a business. As such, businesses turned to real-time payments, digital wallets and buy now, pay later (BNPL) to help build a superior payments experience. With cell phones and new payment methods, even a small retailer can now conduct business without having to handle cash.
With more digitization throughout businesses and an expanded list of counterparties, the risk of fraud has also increased, and information security is key. Thanks to advanced techniques like blockchain and artificial intelligence (AI), we are seeing stronger forms of account validation, tokenization and other tools to secure personal and payment data of all counterparties.
As we emerge from the pandemic, all signs point to continued digitization. More than two-thirds of consumers plan to continue shopping online,5 suggesting that online marketplaces will become a sales channel that is just as important as physical stores. There will also be an increased focus on managing liquidity and cash forecasting through virtual account management and artificial intelligence (AI) to streamline and strengthen financial processes. And businesses will keep growing by intensifying their focus on small retailers and the workforce through small business financing, early wage access, real-time payments and other tools. Sustainability and circular commerce are now must-haves to attract Gen Z and post-Gen Z buyers, so corporates will intensify their focus on achieving ESG goals.
The events over the past 18 months have undoubtedly ushered in a new way of doing business for the retail and CPG industry.