At the time of writing a second more transmissible strain of Covid-19 is sweeping its way across the globe. With enforced retail closures and stay at home orders having been in place for much of 2020 and set to continue now into 2021, the industry has been forced to re-strategise and digitise operations in a fight for survival. There have already been several retail casualties along the way but with mass vaccination now in progress, the end is surely in sight. There is optimism for a return to some kind of “new normal” before the end of 2021, but what does this mean for the retail and consumer industry in the short & medium term?
The pandemic has no doubt shifted consumer behaviours with many trends that were predicted to take years having occurred in weeks and months. Consumers are spending more time at home and with that e-commerce and online delivery have thrived. Those that do venture out are now shopping much closer to home, with loyalty displaced in favour of product availability, value and a preference for shopping in stores with clearly visible Covid safety measures. Being able to accurately identify which trends will remain and those that will return will play a crucial role in determining the retailers and brands that come out on top.
Supply Chain Transformation
The pandemic was a wake-up call for those with a fragile supply chain. Retailers across the world have forensically examined every step of their global supply chain, making refinements to bolster resilience and reduce lead times. The momentum of these shifts will continue well into the next 12 months and with the move to online here to stay, investment in reverse logistics will be just as important as distribution. Retailers should continue to seek out ways to make online returns easy whilst minimising their associated costs.
AR is not new on the scene and many retailers have experimented with this technology already. With the closure of high street stores, it is now even more important to help consumers virtually try out products in the comfort of their own home. Not only does this encourage customers down the road to purchase but it also minimises the likelihood of returns. Those retailers that successfully engage with customers through immersive product visualisation will thrive in this challenging environment.
With widespread redundancies and many more on reduced wages or government subsidised furlough schemes, the industry has seen a considerable reduction in non-essential purchasing. Pay-over-time and subscription payment options are likely to see uptake in favour of the traditional credit and debit card methods. Shoppers want to try before they buy and with high street stores closed, “buy now pay later” providers such as Klarna and Clearpay will gain more ground with the next generation of shopper. As we move into 2021 it will be important for retailers to provide a variety of payment methods that cater to the individual needs of each and every customer.
Even for loyal customers sometimes a well written product description coupled with an Instagram inspired photo finish isn’t enough to convert online browsing into sales. With the majority of shopping in person currently off the table, retailers will need to find ways to physically connect with customers digitally in the same way they did in-store pre-pandemic. Live stream product demonstrations as well as one-to-one video consultations will help retain that personal brand connection that has historically been so important to maximising sales.
Return to the High Street
E-Commerce will no doubt lead the way in 2021 but we will eventually see a return to bricks-and-mortar retailing. For those retailers that do survive the pandemic, many will not return to the traditional high street store format. Businesses should take the time to re-evaluate their operating model and re-size their store footprint to compliment the needs of the future online shopper, whilst also making important changes to future store environments and services to give shoppers greater reasons to make a physical interaction. Furthermore, the future of click and collect and pick from store will demand a seamless in store experience with technology & processes optimised to minimise physical touchpoints and speed up the customer journey.
In All it looks like it’s going to be another fascinating year within Global Retail & Consumer Brand Markets. As ever we anticipate that there will continue to be winners and losers and the industry will continue to need to embrace change and innovation to stay close to consumers and capture spend and loyalty.
Q5 is the leading Global Organisational Design & Transformation Consultancy. Established in 2008 in London, we now have a team of over 200+ specialist consultants who advise over 100 clients annually, helping them transform their organisations: Strategy, Shape, Processes & Culture.
For more information please contact Daniel Upward and the team direct at: Daniel.Upward@q5partners.com
Daniel Upward is Q5’s Global lead for Retail & Consumer Goods, having spent his career at Tesco, Marks & Spencer, Coca Cola, Cadbury’s, House of Fraser, Harrods & Selfridges he now leads Q5’s Retail & Consumer Practice.
We look forward to hearing from you in 2021