Looking back on 2020 and speaking to numerous retail leaders, there’s no question that retail covered five years of strategic planning in a year. Retailers have lived and died by their e-commerce models, agile supply chains and more flexible delivery models.
My biggest observation was that the speed of change curtailed the amount of time retailers had to respond to the competition let alone the situation. In normal times, copy-cat services and introducing new ways of shopping would have been finely tuned, but no one had that luxury. The consequence was that several large retailers went into administration and many well-known brands left the high street. If you couldn’t keep up you really were left behind.
Much of this is related to the store to head office feedback loops that management teams rely on. Retailers need the ‘frontline’ to help assess performance and gauge the success of offers and marketing – word of mouth from store teams and customers is helpful to apply to statistics. But it simply hasn’t been possible or practical and it’s been telling as to which had the best models to adapt, be agile and perform.
Of course, online retailers were quick to swing into action and those that were already operating strongly in this space with established and robust systems in place took centre stage. The smart retailers didn’t let retail closures stop them and switched tack by using the store footprint to act as mini distribution centres or teamed up with brands that could stay open to provide a click and collect service overnight.
That form of innovation is an indicator that just as there were losers, there were also winners. Lockdown played into the hands of grocery, bike and outdoor retailers, home improvement, craft and gardening sectors, and pushed other sectors into innovation such as Michelin star food to go. The other upside was that local shops saw a resurgence with many benefiting from customers not wanting to travel and switching allegiance to the under-dog.
What’s in store for 2021? Five things stand out:
Looking ahead to next year there are some big challenges ahead:
1. Firstly Brexit. Already a huge challenge for those selling products sourced in Europe but even more so as we still don’t have a deal to plan against. Things like imports and tax will be all consuming and it would be naive to say there won’t be teething problems (an understatement…). And if you’re in the tax free shopping market and reliant on tourists you’ve got to assume you’ll have a tough start to the year.
2. Next year will be all about the survival of the fittest. If you’ve made it this far then you’ve been doing something right, but it’s still up hill until things stabilise. When customers are allowed to travel and engage in the high street again then I suspect they will in the droves. It’s a fabric of life that’s been missing for so many people and it’s this that presents an opportunity for retailers to re-engage and remind their customers, new and old, of their values, and how exciting shopping is. It also goes without saying that there will also be incremental revenue opportunities for the retailers who survived as they fill the gap left by the retailers who have closed permanently.
3. Online will continue to dominate things so retailers need to consider the change in consumer behaviour as a more permanent fixture – pandemic or not – and accelerate the delivery of a ‘seamless’ customer experience. Online has been on all of their agendas for some time, now there is no excuse not to make it happen properly.
That said, online won’t take over entirely. Instead, we’ll see a re-balancing so stores will make the majority of sales in the future but online will make up a greater share of revenue than before 2020. This re-balancing will happen as things ease, and in the way retailers respond with pop-up shops and ‘experiential’ strategies.
4. Without doubt successful retailers will really know and understand their visiting customer and will deliver a service that matches and surpasses expectation.
That will most likely influence where their shops are located too – can they capitalise on being close to the bigger destination stores even if it’s in a very small unit? Will people reconsidering car use and where they work make a difference to where stores are? How is footfall likely to change in the future as things re-set? Using technology and insight to understand this context will be vital. (We have developed a tool to help with this)
5. While there will be many people chomping at the bit to go carefree shopping there will also be those more reluctant. Town centres need to think about what they can do to give these people the confidence to return to the high street and keep the community of local shops alive – it might be free parking during quieter times of the day, or better cycle provision. All of these things have been talked about for a long time but now there is a pressing need to make them happen and to compensate for the shift towards online.
Independent shops will likely come together to tackle this themselves too. Many customers are appreciative of how the local shop responded to this year’s challenges so this works to their advantage. However, they need to continue to provide something unique, great service and engagement so that the momentum keeps going, and make sure online services are in place should they come to rely on them for weeks at a time.
If you need help defining a strategy or want to find out more about our services and tools then please get in touch.