Every industry is undeniably affected by the changing circumstances caused by COVID-19, and retail can be one of the industries most affected by global events. Retail will always exist, people have always sold things and always will – the industry just needs to adapt, as it always has. Retailers should not sit back and wait for the storm to pass; they need to learn from every situation and learn how to ride the wave. It is said that large ships take longer to turn, many smaller retailers have been able to pivot quickly in the crisis, but are oversized retailers capable of reconfiguring themselves to meet these new challenges? Smart thinking retailers can make the most of the situation and come out of the perfect storm as the strongest survivors if they have the agility and flexibility to adapt to the situation.
Does size matter?
The biggest thing driving retail success is adaptation – agility is everything. Agility is generally easier to achieve with smaller businesses who are able to react timelier and effectively to the crisis.
Karl and Lindsay’s Bond gin, produced in a family-run distillery adapted to not being able to sell at restaurants and department stores by producing hand sanitizer and delivering groceries and Lyon’s Seafood and Wine Bar in North London came up with a streamlined delivery menu, adapting to the everchanging situation.
When you compare this to a large multi store retailer such as Debenhams, who have over 220 stores in over 20 countries (at time of writing), it is unsurprising it is more challenging to alter business structures like this. The pandemic has highlighted a huge warning – the cost of not having an omnichannel presence. Primark, for example, has seen sales plummet from £650m a month to zero since the start of the lockdown due to their lack of online presence. Although bricks-and-mortar stores are at a disadvantage without footfall, they need to be tactical – adapt and plan for 40% of their retail sales to be made online at the peak of coronavirus. David Jinks, the Head of Consumer Research at ParcelHero said: “Retailers need to gear omnichannel sales towards e-commerce and plan for the decline in store purchases.”
Can we really argue less is more?
Retailers of any size need to take note of what these local retailers are doing well, as well as their online sales capability and their supply chain. Although size can affect flexibility, sophistication does not always mean static. Retail as an industry is constantly evolving and innovating, so each organisation needs to rethink how to navigate new tides. According to Richard Lim, the Chief Executive of Retail Economics “businesses with sophisticated warehousing and who have invested in streamlining distribution and logistics will have a massive competitive advantage.” Amazon was one of the first to offer contactless delivery, adapting rapidly to the situation and who have thrived during this period.
With growth, keeping sight of customer values might become more challenging, but it is not inevitable. John Lewis has managed to sustain their “inner trader” with an 84% boost in online sales and putting customer values at the forefront of what they’re doing, truly being “your partners through it all”. They have provided virtual services where customers can book one-to-one video appointments for setting up nurseries, interior design and personal styling. They have even been supporting the NHS by teaming up with the British Medical Association and sending care packages to NHS workers.
Does agility correlate with diversification?
Next initially stopped their online orders to protect their warehouse staff but they have been successful with their partial reopening, which Drapers suggests is down to their wider product offering. This poses the question around a wider product offering, and whether this is one of the reasons why online retail sales across the sector rose by 22% in certain product lines (Internet Retailing) in the first week of April, despite the pandemic?
When the industries that are seeing the most significant growth are beauty (140%), electricals (90%) and alcohol, with clothing has dropping by 20%, it is hard to deny diversification can aid retailers along their sustainable journey. Paul Martin, the UK Head of Retail at KPMG has stated: “lockdown has prompted a fundamental rethink of what is deemed essential.” Businesses are having to adapt because their customers are adapting to life under lockdown. Consumers are switching their leisure time to indoor pursuits so the retailers who can pull insights in real time have been able to optimise their stock and navigation.
Supply chain diversification is really the key, rather than a simplistic focus on products. ASOS have been able to leverage their assets in this time, outperforming their less agile competitors and building on their strong digital foundations for an even more future-proof business model. Their share price has almost doubled in April and they are using Artificial Reality effectively to offer their customers a simulated view of up to 500 products each week on six real-life models.
Change for the future
Retailers do need to crisis manage and do what they can in these times, but they also need to think ahead if they want to be one of the stronger survivors. Retailers who are too set in their ways are in danger of being overtaken by more agile competitors, regardless of size. Those who are selling the right products, innovating their delivery and keeping the customer at the heart of their operations are going to be the ones who conquer any challenges put in their way.
As brick-and-mortar stores are allowed to reopen, retailers need to “give us confidence to shop with their safety measures” according to Helen Dickinson, Chief Executive of the British Retail Consortium. Will retailers keep up their online efforts? Customers who have tried online shopping for the first time, especially those who remain high-risk are likely to continue to shop in this way.
Thinking outside the box is more paramount than ever, communicating and reaching customers, whether it is restaurants providing recipes or gyms providing home workouts, using technology and applying data can help navigate uncertainty. Technologies that provide inventory visibility across a distribution network allow moving supply to the greatest areas of need.
Regardless of COVID-19, retail will always evolve and regenerate. The pandemic may seem like a threat to the retail industry, but so have many other crises. Retail looked different 30 years ago and will look completely different in another 30 years, pandemic or no pandemic. The purpose it is serving is to push retailers out of their comfort zones and forcing them to innovate at an extremely accelerated rate, but it will not sink the ship. It is a real test of the business continuity planning and supply chain flexibility retailers have. Retailers need to be able to work with their large infrastructure, even if it is challenging, to be flexible and reactive. With data and knowledge, retail needs to be predictive and respond to trends and the peaks and troughs in sales. Large ships, small ships and everything in between need to see the silver linings in the dark times and reach the light at the end of the tunnel.
At Retail247, our technology solutions and services are focused on helping you to achieve this agility, supporting retailers across the spectrum along their journey to sustainable change, which is more important now than ever.