With the pandemic forcing a new normal, the retail mindset must also evolve. Now is the time to radically re-imagine brand propositions. For those who don’t shift their mindset, it could be an uncomfortable future.
As High Street chains try to negotiate rent reductions and others announce they are going into administration, there can be no doubt the retail mindset and environment has changed for good.
Digital retail has been on the rise for years, but Covid-19 lockdown has seen this become the preferred channel of choice for many more people and we are yet to see if their habits will change back over time.
With hints that shops could begin opening in early summer, retailers of all varieties will have a difficult challenge balancing customers’ hopes, fears and needs with employee safety, process efficiency, cost management and ethical supply chain management. Failure to deliver on any of these areas will have a lasting and significant impact on trust in the brand and in turn, future growth opportunity, in an already highly competitive market.
Retailers are going to need to respond to this with a complete business model re-evaluation, that includes deep understanding of customers, rapid digital transformation and robust yet adaptable supply chain management.
Whilst there may be an initial peak of consumers rushing back to shopping centres and high streets, the reality is, fear and anxiety are likely to keep shoppers away for a long time yet. Lockdown has given people the chance to realise what they really “need” and to refocus their priorities and values. Attitudes to shopping will continue to change, as customers resume the trend of prioritising disposable income spend on “experiencing” rather than “owning”. For retailers, it will be critical to track and respond to customers’ income spending, hopes, fears and needs, each of which will drive different behaviours and expectations, some of which may well seem conflicting.
Retailers that use customer research and insight to understand all of these financial and emotional drivers and how they are changing over time will have the advantage. Engaging with customers to understand how they are feeling, behavioural tracking and observational techniques will all be critical to being able to rapidly respond to customers on and offline needs, all of which will have already, and continue to change as a direct consequence of lockdown.
Responding to these needs requires a complete business model re-evaluation, which will be one of the biggest challenges, for even the most successful retailers. Using the insight collected to understand where to remap and redesign processes and where and how to digitise the experience will be critical. “Bricks and clicks” will still be an important business model, but the shift in the time spent in each channel will be diverse, depending upon the type and value of the purchase. E-commerce optimisation will be critical not only for customers, but also to enable retailers to continue to operate, at low cost. Digital transformation initiatives will accelerate – both to elevate the customer experience but also to optimise retail process efficiency – and it will unleash the opportunity for radical innovation and multichannel retail engagement propositions, such as Live-Streaming, that are taking the Asian market by storm.
Logistics and delivery will become an even more critical part of the experience, not only in terms of supply chain robustness, but as part of the “branded” end-to-end experience. Expectations have already been set regarding home delivery grocery shopping, for example. And whilst consumers have a newfound sympathy for post office workers, there can be no doubt, as e-commerce increases further, they will not tolerate parcels abandoned on doorsteps in damaged boxes, that has been the hallmark of some of the larger delivery companies in the past.
For retailers with physical spaces, their ability to provide a safe environment for staff and customers will directly reflect on their brand. The supermarkets have set clear standards and guidelines, which in turn have created new common societal behaviours. Consumers and customers will expect no less from other retail stores and environments, where the challenge will be to deliver a safe space, in a cost effective way.
Staff in particular will be looking to their employers for reassurances of the safety of going to work. Where this isn’t provided, don’t be surprised to see public backlash and damage to the brand reputation, as has been the case with The Range. Optimal retailers will understand this cannot be handled on an ad-hoc basis, but that they will need to physically map out the “ideal store” environment to create, space, safety and reassurance, alongside an appealing in-store experience. There are significant opportunities to change the in-store experience for the better where retailers have the commitment to invest in this.
Alongside all of this, retailers will also need to ensure sustainable sourcing and ethical, community focused behaviour. Consumers and customers will be looking to align their changing personal values with the values of the organisations they engage with. There is increasing emphasis on community, locality and ethicality, which will favour local providers. To tap into this, larger retailers will need to map the end-to-end customer experience and understand where in the journey, they can meaningfully demonstrate their own values and ethics and reinforce the brand position.
There can be no doubt that this is one of the greatest shift-changes the retail environment has ever seen, however, there are clear opportunities for those that tune into their customer, employees and supply chain, work fast to re-evaluate their business model and are clear about their own brand and values.
Take a step further. Change the mindset. Seize the future!
Carpe Omnia.
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