Looking ahead to a stronger 2021
Many sectors have been hit hard by a tumultuous year in 2020 but few more than the retail industry. With the global health pandemic leading to a national lockdown back in the early spring, all but essential retailers had to close their doors
For those with no ecommerce presence it presented a significant challenge, and for those who had this to fall back on, it was a test of resilience like no other.
Of the many reflections that can be made of the retail industry, a key one is how it has demonstrated its capability to transform at speed.
With a potentially insurmountable combination of factors facing it, quick decisions have been made, investment diverted, operating models ripped up and re-written and digital platforms overhauled. It’s been relentless, but the industry is putting up a fight.
For some however, as has been seen this month with announcements from Debenhams and Arcadia Group, it simply hasn’t been enough. No doubt lessons will be learnt by the industry and beyond about what could or should have been done differently and in time, a new generation of retailers will be stronger because of the legacy these brands leave behind. For those still in the game, 2021 is going to be a pivotal year.
What the customer wants…
Looking ahead, this focus on customer needs and wants is going to be key. Despite an uncertain future ahead, retailers must continue to think innovatively and bravely about how they offer their products. As consumer finances recover from a difficult year of Covid-related impacts, and as the nation adjusts to the consequences of no longer being in Europe, retailers must find ways to hold the attention of distracted customers.
Retail Week research, based on a nationally representative survey of 1,000 consumers in August, suggested consumers will feel less confident about their personal finances in 2021. The survey found 40% of consumers feel less confident about their personal finances but on a more positive note, 58% expect to have the same income available for discretionary spend, suggesting that some will continue to shop.
Price is likely to be a key differentiator; value for money but without compromise on quality.
One of the most significant shifts has been online, with the lockdown period forcing even the most reluctant of consumers to venture online to fulfil their shopping needs. The growth has been exponential, with digital delivery far exceeding expectations for this point in time. Retailers must continue to face into this channel shift and ensure that ecommerce platforms are ready to cope with peak periods as well as day-to-day traffic.
Data from research intelligence agency The Smart Cube revealed a 6.6% uplift in average daily visitors to retail websites in the week beginning September 27, compared to two weeks previously. If this pattern continues, a third of all retail transactions could be on digital channels, potentially a 50% increase on last year’s volumes
The reality for retailers today is that they are expected to be online, and not just for the core transactional element of purchasing goods. Consumers want to interact in this space; engaging on social media, being part of an online community, hashtagging and reposting to increase their connection to a brand.
Ignore Digital at your peril
With the recent news of the downfall of Arcadia Group, many experts point to their reluctance to embrace digital innovation as a key factor contributing to a drop in sales, highlighted none more so than throughout the midst of the pandemic where online fashion powerhouses ASOS and Boohoo were primed and ready. Despite catering for the very same demographic that consume social media and smart devices the most, Arcadia Group brands like Topshop and Miss Selfridge never really embraced their online social presence.
“Digital commerce is constantly evolving, and retailers that maintain more of a transactional, versus experiential, online platform are falling behind fast.” - Harvey Morton, founder of social media agency Harvey Morton Digital
In the meantime, online pureplay brands like Boohoo Group and Pretty Little Things have emerged as social media darlings, hoovering up what should have been a retailer like TopShop’s market share. Today, young shoppers flock to online retailers like ASOS and Boohoo, which had eclipsed Topshop with their ruthlessly low prices, rapid turnover, and savvy influencer marketing strategies.
Terms like ‘customer journey’, ‘virtual customer service’ and ‘online experience’ are becoming everyday language and it’s important that there is a continued focus on making it easy, simple and engaging for consumers to transact in this space. More than this though, retailers who embrace their digital audience appropriately using the channels that matter to them in an innovative and creative way, are the ones who will thrive in 2021 and beyond.
Investing in the future
Change can be expensive, but it is those brands who have invested, and continue to invest, in meeting customer demands that are reaping the rewards. Buyer behaviours are changing and remain hugely unpredictable, so an ability to be flexible and agile is key. Whether looking at ecommerce capability, logistics network, marketing and advertising or physical bricks and mortar stores, standing still isn’t an option.
Ikea, for example, defied the lockdown impacts by continuing with planned store openings. Despite a dip in full-year sales, the DIY and homewares retailer opened 26 new locations across its global store estate during the year with new city-centre outlets in Shanghai, Seoul, Moscow and Tokyo. Ikea’s store visitor numbers fell only 15.8% during the year to 706 million despite weeks of closures across its global estate as shoppers used time at home as a chance to spruce up their living spaces.
Advances in AI and robotics are transforming how retail works in everything from the manufacturing and warehousing aspects right through to the customer experience. Connecting these technologies is enabling retailers to bring the convenience of online shopping to offline shops and stores, and the richly interactive environment of offline shopping to the world of ecommerce.
This shift towards a more technology-driven approach is something customers are increasingly expecting to benefit from, whether it’s faster delivery, the ability to check stock before ordering or being able to flex between on and offline as they make a purchasing decision. Retailers must leverage technology across both front and back office operations to maximise the benefits available and stand out from the competition.
Creating an experience for retailing
With online retailing growing in its presence and ease, visiting a physical store is now more of a choice than a necessity. As such, retailers in this space must work even harder to create a space and experience that fulfils more than just a transactional need to purchase something.
There are many levers to pull in this space; bricks and mortar stores have the advantage of being able to cerate a far more sensory experience, offering something that online simply cannot. Through physical elements, such as lighting, audio, fixtures and fittings as well as layout and the natural flow through a space, mood and ambience can be created and adjusted depending on in-day factors. Similarly, the use of scent and texture and other tactile elements can trigger equally strong reactions and responses, all designed to create an emotional connection to a product and/or brand.
Interesting times ahead
Over 20 Years Experience
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