| This week, how retailers are shifting their priorities to meet new consumer appetites. Plus, the mobility-investment landscape, and Angus Fletcher on how storytelling has the power to transform individuals—and businesses. |
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| Tech-tonic. After a year that has profoundly shaken up the retail industry and transformed consumer behavior, it’s clear that technology is continuing to revolutionize retail, with the pandemic packing a decade’s worth of digital acceleration into a matter of months. The most successful retailers will be those that connect with consumers in new ways by leaning into their digital, omnichannel, and in-store technology ambitions. |
| More in store. Many companies have taken time during the crisis to sharpen their customer propositions. The seemingly unstoppable rise of e-commerce, sophisticated customer analytics, personalized sounds and smells, digital mannequins that “know” your clothing preferences, automated home delivery—these are just some of the elements that will shape the shopping experience in the coming years. As Eric Hazan, a McKinsey senior partner, puts it, “We are entering the world of ‘phygital’—physical and digital at the same time, where there is not a physical world or digital world in retail, but rather a completely connected one.” |
| Calling all ‘revenge shoppers.’ These future-forward perks are likely to delight “revenge shoppers”—those eager to spend their cash on the latest luxury goods or other items after months of keeping their wallets closed. They may also entice shoppers who took to e-commerce during the pandemic, luring them back into physical stores. |
| Omnichannel. Either way, today’s consumers expect a seamless, connected shopping experience across channels. Younger consumers are especially interested in novel ways to shop, and more than a third of Americans have regularly used omnichannel features since the pandemic began. In addition, our research shows that Gen Z consumers increasingly evaluate brands based on the ease of their shopping experience. Retailers that have a clear understanding of how technology investments create value and that pursue a cohesive strategy are most likely to capture the benefits. |
| Dynamic pricing. Since it’s easier than ever for shoppers to figure out which retailer is offering the lowest available price, dynamic pricing is becoming a core capability for retailers seeking to stand out from the pack. Traditional retailers should focus on an item’s “out the door” price (including taxes, shipping, and fees) and refine their pricing strategy by using merchant-informed, data-driven algorithms that recommend price changes for selected products at some level of frequency. |
| Intense growth. Despite the supply-chain challenges and increases in manufacturing costs in 2020, consumer-packaged-goods brands experienced more absolute growth than in the previous four years combined. Indeed, our analysis of credit-card data revealed that, in 2020, retailers’ online sales grew 93 percent from the previous year. We expect to see continued elevated consumer demand, though with a great deal of variability. All the more reason for retailers to define their value proposition, giving consumers a reason to stay loyal. |
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| OFF THE CHARTS |
| Where are all the Black CEOs? |
| You’re probably aware that women and people of color are less likely to be promoted than other groups. However, it might surprise you to learn that there are only four Black CEOs leading today’s Fortune 500 companies. If representation were on par with the racial makeup of the United States, there would be 60. Our study found that companies led by the most diverse top teams were significantly more likely to have above-average profitability. |
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| INTERVIEW |
| Pulling Pakistan’s day laborers back from the brink |
| When Pakistan went into a nationwide lockdown in March 2020, millions of laborers and daily-wage earners were at risk of being unable to provide for themselves and their families. Sania Nishtar, the prime minister’s special assistant on poverty alleviation and social protection, led an effort to provide unconditional cash transfers to 12 million households through Pakistan’s federal social-protection program, Ehsaas. “Many people were living on the brink, and then they went into an abyss, and it was my role to get them something,” Nishtar told McKinsey. “It was the most challenging thing I have ever done.” |
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| What surprised you most in researching this book? |
| The thing that surprised me is how much both science and medicine back the power of literature. We’ve all had the experience of reading a poem and feeling better or reading a book and feeling less lonely. Literature can actually be therapeutic with multiple types of trauma. It can spark creativity, reduce stress and anxiety, and promote personal growth. There is neuroscience to back all these things. |
| What’s the value of storytelling to planning, strategizing, and even innovating? |
| Stories are the most powerful tools that we humans have ever invented. Every business plan, every new technology, every cultural or political movement gets started with a story about tomorrow. When we think about the power of stories, we often limit it to their powers of communication. We often say, “Oh, that’s the way that I communicate my vision,” or “That’s the way that I convince people to go along with me.” |
| The reason that stories are so powerful as tools of communication is because that’s actually the way that our brains think. That’s one of the great breakthroughs of modern neuroscience—to realize that our brains are primarily narrative. Stories plug into the action centers of our brain and move us. What that means is that stories are not just wonderful for communication but they’re also the way that we think, we plan, we plot. Those are the beginnings of innovation and creation. A lot of our focus is not on communication but on how we can develop new ways of strategizing, of planning, of pooling together our narrative abilities to change tomorrow. |
| Can literature make us better in business? |
| My advice to a businessperson would not be to read literature for its lessons. Instead, the reason to read literature is to stimulate the parts of your brain that you want to grow in your business. If you want to grow creativity in your business, it might be a good idea to hand out Winnie-the-Pooh to your employees. Simply reading a book like that would help nurture a culture of imagination. If you want to build products that promote growth or healing or creativity, you should look to books that grow those same qualities. |
| Our brains think in simple actions. If you want to develop a single sense of purpose, there’s nothing better that you can do than read the story of someone who shares that purpose. Someone who has the courage or the love or the empathy or the curiosity that you want to imitate in your own company. Find those stories, and give them to the people in your company. |
| This is an excerpt from a recent edition of our new Author Talks series on McKinsey.com. Check out other interviews in the series, as well as our exclusive lists of business bestsellers on our McKinsey on Books page. |
| — Edited by Belinda Yu |
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| BACKTALK |
| Have feedback or other ideas? We’d love to hear from you. |
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