Like many traditionally in-person events, the 2021 ICR Conference looked a bit different this year — virtual instead of face-to-face. But it turns out, this year’s unique virtual platform provided more opportunities than ever, with more than 300 presenting companies (the most in conference history), a record-breaking 3,500 attendees, and more than 2,000 meetings within the conference platform.
Despite the change of scenery, a myriad of both public and private companies attended and spoke about current trends and expectations in the Consumer, Retail and Digital Commerce sectors.
While many consumer companies struggled early on in the year, the winners coming out of 2020 were those that quickly pivoted their business strategies and upped their financial discipline to meet evolving customer behavior. These changes will benefit them in the new year. Teams pivoted to areas and strategies that maximized revenue and accelerated digital capabilities to connect with customers to make them feel comfortable, all while reducing expenses and adding liquidity.
Consumer companies that saw strong performance in 2020 have powerful tools to engage with consumers to drive repeat purchases in 2021, and companies that lagged will benefit as the vaccine becomes widely distributed. In fact, some are calling 2021 the start of the “Roaring 20s” as consumer companies will rush to meet steadily increasing demand. As businesses continue to stabilize, consumer companies will begin to re-evaluate dividends and share overall capital allocation.
With January off to a solid start, partly due to the impact of stimulus benefits, uncertainty still remains. Although much is unknown as we venture into the new year, management teams are ready. They know they can operate under different scenarios and know how to zig/zag to maximize performance through 2021 and beyond.
Outlined below are common themes touched upon during this year’s presentations:
- Digital Acceleration: Arguably the most significant takeaway was the acceleration in digital demand. During the pandemic, leveraging and expanding digital capabilities quickly became of paramount importance. Companies’ efforts to stay connected with customers resulted in a dramatic shift in marketing spend, largely toward digital platforms. Although it remains unclear to what level store traffic will rebound once a vaccine is widely distributed, the accelerated digital shift likely represents a permanent change.
- Digital is Here to Stay: Companies know more about their customers’ shopping preferences and have better tools to connect with them to encourage repeat purchases and drive lifetime value. Importantly, many companies saw an uptick in new customers in 2020.
- Importance of Omni-Channel: Once stores began to reopen, the demand for safety and convenience significantly elevated the importance of offering omni-channel capabilities, such as BOPIS and curbside pickup. Not only have these capabilities resulted in strong demand while building brand loyalty, but they are a more cost-effective way of fulfilling online demand. With physical locations now being operated as hybrid store/fulfillment centers, management teams took a more measured approach to providing go-forward new store activity.
- Holiday Results: A number of companies pre-announced earnings prior to the ICR Conference, noting better-than-anticipated holiday sales helped in part by stimulus payments. Expectedly, trending brands and categories, such as comfort and athleisure, have continued to outperform during the holiday season, with e-commerce growth as the biggest sales driver.
- Lean Inventory Driving Higher Margins: Supply chain disruption was a common theme in 2020, one that resulted in a more strategic and thoughtful approach to inventory management. The approach fueled more full-price selling and a reduction in promotions which resulted in higher margins. Despite many retailers noting stronger-than-anticipated holiday sales, 2021 inventory planning remains conservative with a greater focus on the strong margin trends carrying into the new year.
- Recovery in the Back Half of 2021: Companies are taking a moderate approach as they head into 2021, with recovery expected to begin in the third quarter. Rising cases and current restrictions are still short-term concerns, but there remains optimism around stimulus benefits and an opening of the economy in the back half of the year. Retailers are also expecting vaccine distribution to improve store traffic, especially if there is a pivot away from the stay-at-home lifestyle. Management teams are ready, they know they can operate under various scenarios and they understand how to be flexible to maximize performance. Nevertheless, labor and freight/shipping costs are expected to remain as headwinds in 2021.
Overall, while the pandemic added uncertainty, 2020 gave us valuable insight and proved that companies have the ability to change, pivot, and reimagine strategy all while increasing financial discipline.
If you missed the 2021 ICR Conference, you still have the opportunity to access all conference presentations and panels on-demand. Register here to receive full access.
