Liquid Infrastructure

What's going on?

With fewer people going in person to physical shops, city hubs dwindled. As our Collective displacement trend shows, home has become the new storefront. But many people want the same immediate gratification and delight from a delivery experience that they got in a store—no matter where they are. Since people aren’t generally getting that from their deliveries this is a huge opportunity space.

New patterns in shopping behavior have cost retailers incidental spending and have created new expenses in cost to serve. People used to do much of their shopping at once and at the same places—like buying fruit and detergent at the same grocery store, or a dress and shoes at the same mall—meaning brands could enjoy efficiencies, and rely on a whole ecosystem of their own design and making. Now, ecosystems have become fragmented, generating extra costs including marketing, packaging, delivery, customer service and returns/restocking.

Customers' expectations are driving a number of important and pressing challenges that companies must work to address. They include how to get value from existing assets, how to play in the ecosystem with other business-to-business players, how to manage an experience the company is not in sole control of and how to design for resilience and uncertainty.

What’s next?

Companies need to rethink the position of supply chains within their business and expand the idea of what their assets are and how to use them. In the US, Lululemon Athletica, for instance, reopened its stores not for walk-in customers but for workers to fill online orders more quickly.

It’s also important to embrace strategic relationships that make the best use of existing assets. In Asia, JD.com has launched an “expert to domestic” initiative to let manufacturers open new stores on its platform and tap into its marketing, logistics and delivery services.

Companies should explore new business models and value propositions. Subscription models grew not just during lockdowns, but also after. Pret a Manger, for example, launched a coffee subscription scheme to lure customers back into spending.

Companies need to consider their supply chain as a growth driver. Demand for personalization presents an important opportunity—one that requires supply chains to be more flexible and responsive.

Finally, rethinking supply chains means companies have an opportunity to consider sustainable alternatives while they’re at it.

Organizations should build agility and resilience across their supply chains so they can adapt quickly to change. This isn't just about managing further shifts caused by the pandemic, however. Rather, it’s about futureproofing—notably for climate change.