‘It’s better done than perfect’ – the new retail mantra
Back in August last year we wrote a blog about the impact of the pandemic on the retail sector and the new behaviours that it was helping to drive. Six months on and as we enter a new year, we’re looking at the key areas of focus for retailers in order to survive the current lockdown but more importantly, flourish in the longer term, as the virus is brought under control and we shift to something that feels more like normal.
And ‘flourish’ is the right word. There’s a huge amount of pent-up consumer demand, especially amongst the 13m people classed as ‘clinically extremely vulnerable’ whose lives have been on hold even more than most. While OBR is predicting unemployment is set to rise to 7.5% by the middle of the year, the average household has added £7k to their savings in the past 12months, meaning that both value retailers and those focusing on more discretionary purchases stand to prosper. And as catering, culture and entertainment sectors begin to emerge, expect to see a bounce in fashion retail as the nation opens their collective wardrobe to find only lounge-ware.
Physical products, stock management and complex supply chains have historically been cited as barriers to agility within the category however a new breed of challenger brands that emerged over the past decade defied this convention.
Typically, retailers fall into two camps; agile or fragile and the pandemic exposed the latter and acted as a catalyst for their inevitable demise. Those businesses, which for years have been too slow to adopt and invest in, technology and their customers’ needs and expectations, were too far behind the curve to survive.
For others, the pandemic has forced their business to operate in different ways, reducing bureaucracy, changing processes, driving innovation and rebuilding leaner supply chains. And once such a mindset is adopted, people have shifted from their comfort zone and the benefits begin to be felt, the continuation of this new approach is a no brainer.
Kingfisher CEO, Thierry Garnier, succinctly sums up this new mindset as ‘It's better done than perfect’.
Over the past 12 months there have been numerous innovations across; delivery (Greggs rollerskaters anyone?), customer support (Dixons Carphone’s ShopLive) and distribution (Russian supermarket Vkusvill’s placing of vending machines, containing their products in large apartment blocks). More will follow in the next 12months as the future retailer model beings to emerge. And it’s clear that those who can adapt at pace, get ideas and products to market quickly and take a test and learn approach will be this year’s winners.
Expect to see big investment in technology, automation and data.
Probably the single biggest shift in behaviour in the past 12months has been the mass adoption of WFH.
Businesses who said it wasn’t possible and bosses who said it would damage production have largely been proved wrong. And for many, there’s no going back. The longer people have worked remotely, the more ingrained the behaviour has become. Many businesses are now offering ‘work from anywhere’ as a permanent, future solution and those employees who seek greater flexibility and don’t miss the commute are jumping at the option.
Latest research indicates 1 in 4 will work remotely, permanently and this stands to have a massive impact on many facets of the way people will shop and what they will buy.
Firstly, the drop in commuter traffic will have a huge impact on our city centres. With many retailers not returning to their flagship stores, there is the opportunity to reconfigure the high street in a very different way. As the need for central office space reduces, we may see a shift to more city-centre living and a transition from store-led highstreets to lifestyle solutions with gyms, medical centres, community hubs and greater pedestrian areas and useful outside spaces emerging.
Secondly, the city-centres loss will be the local community’s gain. With approximately 25% more people working in the communities where they live, local businesses are set to thrive. This is further supported by the increase in people actively looking to support independent and local businesses.
Thirdly, those who do opt for WFH have greater flexibility to accept deliveries, further pushing up the adoption and expansion of home shopping and retail subscription services. In addition, more time spent in the home will lead to more investment in the home. Music to the ears of DIY, home furnishing and home electrical brands.
The first lockdown saw the vast majority of retailers scramble to optimise, or in some cases, set up digital platforms and services in order to cope with the huge spike in customers turning to ecommerce and self-serve solutions.
While the inroads made by many have been admirable, those who focused exclusively on driving up conversion rates without full consideration of supply chain and fulfillment, will now need to invest in the end to end experience to avoid alienating customers further.
In the last 2 weeks alone my own online shopping exploits with a number of retailers, I’ve come across; instances where I’ve bought products only to be informed a day before delivery that they are no longer in stock, chatbot only solutions for customer services, 14-day delivery times as standard and the need to physically sign for a product delivery (didn’t know this still existed!). All forgivable in the first lockdown but fast forward 10months and they are bigger points of friction, that further differentiate them from those retailers who have invested in all aspects of the customer experience. In contrast, Tesco is a great example of a winner here, increasing weekly delivery slots from 600k to 1.5m during this period.
And while many like to prophesise about the end of physical retails stores, this isn’t a theory we subscribe to. While footfall may never get back to quite the same level we saw in 2019 and retail estates will shrink, the smart businesses will now be investing in a more omnichannel experience, recognising that the demarcation between the physical and digital experiences will become increasingly blurred and interchangeable and that the end to end journey will often span multiple channels and touchpoints.
The latest lockdown, which threatens to become stricter this week, the increased likelihood of a double-dip recession and the impact of Brexit, indicate that 2021 stands to be even more challenging than 2020.
That said, this year, there is a light at the end of the tunnel, and for those businesses who continue to embrace change and transform their outlook, business models and CX, the future is very bright.