Updated: Aug 7, 2020
Whether this situation lasts months or quarters, it is clear this virus has fundamentally changed the reality for retailers. It's time to start adapting.
The industry has acted rapidly and decisively to ensure business continuity amid panic buying and employee absences. As we now emerge into the 'new normal' we are facing a time of early recovery and a lasting shift in customer relationships and competitive dynamics.
According to Forrester an expected €260 billion fall (-10.4% on 2019) is anticipated across the EU-5 – UK, France, Spain, Germany and Italy for 2020. With a predication that the loss in the retail sector will likely take four years to recover. Offline sales will see a 20% decline in growth overall, while e-commerce growth will remain mostly neutral.
There are challenging times ahead to say the least, but there are also great opportunities for businesses to evolve at speed. We can use this moment as a call to action to create businesses that are more efficient and relevant. To become better than we were yesterday. To do so leadership teams need to devote more time to planning for recovery and retooling. Exploring how to adapt their value proposition, their capabilities and their ways of working to the new realities of the market.
We’re starting to get a sense of how Covid-19 is likely to change consumer behaviour or accelerate existing trends. Our increased reliance on e-commerce is very apparent however the other consumer trends that need to be considered include an increased demand for ultra-convenience, greater price sensitivity and a more favorable climate for local brands. Covid-19, 40% of people switched stores and brands during the crisis, and many may choose to keep their new habits.
Retailers and consumer-goods companies need to ensure that they are strategically positioned to capture growth from these significant trends. Doing so may require investing further in existing capabilities such as e-commerce or innovation or in a new set of capabilities—for example, flexible supply chains, omnichannel sales capabilities, and more accelerated DD&A.
It will also include rethinking marketing strategy, capabilities, and spending to better engage with changing consumer sentiments and habits. Organisations may consider pursuing mergers & acquisitions to rapidly gain priority capabilities: the environment is changing quickly, and winners will be out in front.
Key adoption considerations:
Retailers have risen to the challenge of protecting employees at stores, head offices and distribution centres. Now they need to ensure they are taking decisive action to protect customers, installing “sneeze guards” at checkouts, creating one-way aisles to assist social distancing and encouraging card payments.
Reset the 2020 plan with new objectives, budgets and operational plans (plus a renewed commitment to silo-busting).
Retailers need to plan for a much swifter transition to profitable e-commerce. The imbalance between online demand and delivery capacity (and the stress it causes customers).
Focus top-line initiatives on e-commerce. Divert marketing spending to attract traffic to online stores. Use social media and other channels to test ways of improving conversion. Be creative in increasing online fulfillment capacity.
Stay relevant to customers (through smart CRM plays, digital marketing and engaging editorial content) is vital, particularly for retailers enduring store closures.
Winners and losers will likely be decided on who can execute these new ventures best. And they will ultimately shape the future of retail.