Covid 19: The future health of the high street

The health of the high street is up for debate now more than ever. If retailers were struggling before coronavirus set its sights on our shores, following last week’s forced government closure of non-essential brick & mortar stores throughout the UK, it’s likely that many will have pulled down their shutters for the last time. Sadly, Covid-19 is accelerating the long-term closure of stores that were already identified as “at risk”. As retailers tackle their response to coronavirus, it’s proving to be a once-in-a-generation test of business continuity planning and supply chain flexibility. Along with store closures, we’ve quickly seen underlying weaknesses in business models, bottlenecks in current technology infrastructure, and those who are not fit for growth are being found out very quickly. No retailer seems immune to coronavirus. The sharp shift to digital We’re seeing greatly reduced real estate, huge drops in footfall to stores, and faltering digital infrastructure across the industry. After the current lockdown is lifted, I see this as only accelerating retail’s shift to a new equilibrium between their store and digital channels, from those who resisted digital to those who have embraced it. Whilst it’s impossible to say for every brand where the split between digital and stores will lie, the curve will likely accelerate sharply over the next 6 months before hitting its natural plateau. Grocers will attest to the huge increase in digital buying they’ve seen in the last quarter, and this will translate into other categories. Initially focussed on “essential goods and services” people will quickly bore and start purchasing home entertainment, DIY, QSR takeaway, consumables and products that support long-term working from home. How will consumers change? Expect a fundamental continual shift in people’s buying behaviours. The lockdown will create a far greater level of familiarity with online shopping across all age groups than consumers may have had in the past. As the crisis lessens and we return to a level of normality, people will look for excuses to get out of the house, but it will be for flagship experiences or important purchases. Commodity purchases of any kind will be completed with either online, of some kind of omni-channel proposition, as people become far more familiar with this mode of buying Mass acceptance of home-working means that we will see a dip in buying formal attire. People have been spooked by the panic buying we’ve seen at grocery stores. We’ll see a spike in purchasing through subscription services that takes the “risk” out of ensuring you get your weekly essentials Brands and businesses must react now Given shifting consumer attitudes, retail will find its new balance between store sales and digital channels, much earlier than previously predicted. This doesn’t mean the store is dead – far from it, going shopping will likely be the antidote to everyone’s cabin fever. But stores will need to adopt a more flexible role in the business, supporting digital propositions and acting as a collection / flagship rather than trying to drive revenue per sqft. Ensuring that store estate is “right-sized” for this is only part of the solution – people need to be trained to manage collections, ship from store and endless aisle fulfilment. Stores need the equipment to package and ship, and devices that people can browse central inventory from. Digital channels themselves will require a different set of technologies in the enterprise to ensure they can scale up and down to demand: A single view of inventory across inbound supply chain, warehouses and stores to help sell through and minimise working capital is ever more critical during these Black Swan events. Overstocks in inventory will need to be sold through digital, so digital efficiency is increasingly important. Warehouses will move to ever greater levels of robotics and automation to remove the human element from the business to help create greater business resilience during any future social crisis Using demand signalling from customer end-points back into manufacturing and allocations will ensure that stock levels can be managed closer to demand, and store is moved to be physically closer to consumers This is turn means a single view of all customer interactions with your brand, so that every interaction is personalised, and knows what transactions or communications the consumer has been exposed to so far, regardless of whether that was off platform, instore, or online Brands will have to work harder to be where their consumers spend time, and offer the ability to interact or transact with them in these locations – enabling buying in Instagram and Pinterest is a good start. But we will see retailers increasingly competing head to head with Consumer Goods companies own D2C offering in these places Ultimately, retailers with a strong foundation and strong online capability will likely be able to find a way through the coming weeks and months, including repurposing staff in support of digital channels. There are still many unknowns in this unprecedented situation, but we will see a huge swing to online in the retail sector pendulum post pandemic. Peoples’ expectations are now moving as fast as the virus itself, and how the industry responds (in real time) to meet the demands of consumers will be the ultimate endurance test. At Publicis Sapient, we hope you and your families are safe and healthy. Andy Halliwell, senior director Retail Strategy at digital consultancy Publicis Sapient

Covid 19: The future health of the high street

Check out our free weekly podcast

Read Next

Faire’s Charlotte Broadbent on making wholesale accessible

Plinc’s Stuart Russell on AI and personalised retail marketing

Theo Paphitis: The secrets behind his retail empire

The gift card revolution: insights from Anna Uprichard

Tradition meets innovation: Sam Walker’s vision for Walker & Ling

Faire’s Charlotte Broadbent on making wholesale accessible

Plinc’s Stuart Russell on AI and personalised retail marketing

Theo Paphitis: The secrets behind his retail empire

The gift card revolution: insights from Anna Uprichard

Tradition meets innovation: Sam Walker’s vision for Walker & Ling

Quiz proposes stock market exit amid financial difficulties

BRC warns of ‘spending squeeze’ in January

UK retail spending rises 2.3% ahead of Christmas, Visa finds

Boohoo offloads head office for £49.5m

UK economy heading for ‘worst of all worlds’, CBI warns

Faire’s Charlotte Broadbent on making wholesale accessible

Check out our free weekly podcast

Read Next

Faire’s Charlotte Broadbent on making wholesale accessible

Plinc’s Stuart Russell on AI and personalised retail marketing

Theo Paphitis: The secrets behind his retail empire

The gift card revolution: insights from Anna Uprichard

Tradition meets innovation: Sam Walker’s vision for Walker & Ling

Related Articles

Quiz proposes stock market exit amid financial difficulties

BRC warns of ‘spending squeeze’ in January

UK retail spending rises 2.3% ahead of Christmas, Visa finds

Boohoo offloads head office for £49.5m

UK economy heading for ‘worst of all worlds’, CBI warns

Faire’s Charlotte Broadbent on making wholesale accessible