Developing a sustainable Retail business in a turbulent market
Many commentators believe that 2020 and 2021 will be seen in time to come as formative years in modern, 21st century retailing. COVID-19 disrupted the status quo and became the instigator and accelerator of change in a sector that needed to adapt both structurally and technologically. As the roll-out of the vaccine programme signals renewed positivity for many within the sector, how can progressive Irish retailers develop a sustainable business model in 2021 and beyond?
Staying engaged with the customer
As we all emerge from our lock-down cocoons, we will seek the experience and social interaction involved in traditional in-store shopping. However, physical distancing and health and safety will continue to have conscious resonance in how we shop, how we move around stores and how we are served. The customer preference to use card and contactless will endure. Click-and-collect will form an essential element of a retailer’s sales and fulfillment channel given the prohibitive costs associated with a pure online and delivery method. The use of social media led events/sales, virtual appointments/consultations, and a strong after-sales service will distinguish progressive retailers from the crowd.
Online retailing and services have found a new, wider audience over the past year – their discovery and adoption of this new way of shopping will become ingrained in their future routines. Retailers will need to ensure that they meet their expectations consistently and that this captive audience is retained. While technology has provided good solutions for the transactional aspects of online shopping (displaying products and payment platforms), in many cases it has failed to deliver a great experience. The online journey needs to be as frictionless as possible for the customer – eliminating out of stocks, efficient/flexible delivery and return options and personalisation of the offering for recurring customers will all support enhanced customer acquisition and more importantly, retention.
Whilst online has been a lifeline for many Irish retailers during the pandemic, the importance of physical stores should never be underestimated. Results from Ipsos’ Global Trends Survey 2020 showed that friction with e-commerce has grown during the pandemic; the percentage of even Gen Z respondents finding online more difficult than shopping in traditional stores rose from 26% in 2019 to 37% in 2020. Retailers need to take a pragmatic approach in respect of their physical store network – don’t pull up the tram tracks just yet – a physical store presence will remain key to gain/maintain visibility and build up direct relationships with the Irish consumer in the years ahead. Opportunities to activate pop-up stores, brand within in a brand outlets etc should emerge for Irish retailers in 2021 as landlords seek to re-invigorate and re-imagine prominent high-street locations vacated by UK fashion brands in recent months.
Irish retailers have been proactive and innovative; adapting themselves to meet the immediate needs of consumers, for example, improving safety measures, bringing the store to the home (e.g. personal shopper video calls etc) and offering alternative services. But as engagement with the consumer evolves post COVID-19, retailers will need to re-think the economics of stores as an integral part of the customer journey. They will look to create places that inspire, entertain and educate, while also fulfilling other operational and logistical needs, such as Click & Collect, service points and our home working requirements. Retailers will aim to deliver a “New Retail” model, combining the best of digital and physical to produce a genuine, valuable omnichannel experience for us the Irish consumer.
Retailers with no existing online or delivery channel will struggle to survive in a competitive landscape in the future. Companies now need to be good at not just buying and selling products, but also at things like online fulfillment, home delivery, data analytics, AI, machine learning and process automation. Retailers should be looking to re-focus on the core retail fundamentals of buying and selling whilst examining partnership options to deliver the other required skills. A multi-partnership platform model may help deliver some of those important capabilities into the future, which may involve a partnership structure between retailers driving mutual benefits, whether through shared distribution channels, shared sales space (in-store and online), or shared customers. Partnerships with specialists from outside of the sector will also prove essential if retailers are to realise their digital potential particularly from data analytics.
Sustainability & Community
Over the past number of months it has become clear that retailers are being judged by their actions and their purpose. The COVID-19 crisis has accelerated a trend that was already well underway – a recent PwC Global survey outlined that over 40% of respondents considered the environment/sustainability in choosing their Christmas presents in 2020. Retailers will need to consider how to transition to a zero carbon model via an acceleration of efforts to de-carbonise operations, supply-chain and products. Many retailers have made commitments in respect of these initiatives – the Irish consumer will now seek demonstrable action in this regard.
COVID-19 and the associated growth in people working remotely/from home has led to a renaissance in local shopping. This trend is expected to continue in 2021 as we all seek to support the vibrancy of our local economies. However being “local” is not sufficient – proactive engagement and support of community initiatives will be vital for retailers to demonstrate their bona-fides in this regard. This aligned with consistent service, standards, quality and value will ensure that loyalty is generated and lifeline shoppers ultimately become lifetime customers.
As Irish retailers consider their business models in these uncertain times, I am reminded of a famous John F Kennedy quote ”Change is the law of life and those who only look to the past or the present are certain to miss the future”. Let’s all support our local retailers as best we can in the coming months to enable them to successfully implement these changes and meet the future with renewed hope and optimism.
Owen Clifford: Head of Retail Sector – Bank of Ireland