The time for retail to be re-imagined

2020 has seen retailers experience some of their most challenging times, an unprecedented fall or rise in demand during a global pandemic never before seen on this scale. As retailers grappled with their immediate response to Covid-19, it’s undoubtedly a once in a generation test of business continuity. As retailers put in place reopening strategies and prepare for life on the other side of the curve, there will be clear winners and losers depending on who chooses to see this as an opportunity to reimagine their business model, invest in technology and put in place both short, medium and longer-term digital-first strategies. As stores start to reopen, retailers need to quickly adapt to their new reality and understand how best they can support their customers, considering sustained changed purchasing behaviours. Recovery will vary by sub-sector. Take grocers; after a shaky start which saw a lack of stock, closed websites and an unavailability of delivery slots for those that needed it most, they quickly learnt to adapt, fixing supply chain issues and forging new partnerships to get products to people as and when they needed it. Even grocers less far along their digital journey such as M&S food and Aldi, have now joined forces with the likes of Deliveroo to ensure customers are catered for (though it remains to be seen how long past the crisis this lasts). Digital adoption from consumers has grown exponentially in just a few months – some retailers have seen a 600% increase in certain categories. As consumers of all ages adopt digital channels, their attitudes towards delivery and subscriptions have fundamentally changed. Grocery may now see a shift back to normalised shopping patterns, but the revenue shift to digital channels will continue long after the virus diminishes. Apparel has seen an unsurprisingly huge decline that will pick up again once people can venture further than their homes, but customers will demand a heightened omnichannel experience. Retailers need to understand that their response to dynamic customer behaviour starts and ends with data. We already have an endless supply of data but using it intelligently to make decisions on where and how to invest, and what the customer needs and values, is where we’ve seen traditional retailers struggle. By using technologies to maximise store efficiency, high volume businesses will find new ways to support customers popping in for necessities versus customers who make longer, considered purchases. Data will also, critically be used to create much greater agility in their supply chains. Next-generation AI/ML demand and supply planning will allow retailers to foresee product demand spikes for potential second waves – technologies that provide inventory visibility across the distribution network. Fulfilment optimisation and store-picking algorithms will allow retailers to deliver more products more efficiently - in terms of both price and customer experience. The purpose of a store will evolve quickly, with many acting as showrooms and micro-fulfilment centres - Zara had already reimagined some of their flagship UK stores for click and collect orders even before the crisis. This will further force businesses to break down the silos of their organisation as the they are forced to reduce costs and increase the flexibility of how stores service demand to cater for changing demand. This in turn will lead to greater investment in technologies to deliver the flexibility and efficiency. Initial investments will need to be in contactless tools, from RFID to facial recognition as the new form of authentication. Greater security and hygiene in store will lead to the focus shifting to improving store capacity in safe ways; appointment slotting, Ambient Intelligence, cashierless checkout or instore analytics, or more warehouse automation and robotics. The key to all these technologies will be a rapid test & learn approach that quickly validates the solution, but also helps businesses understand the economics of adopting them at scale across the business. The real situation is that no one really knows what will happen. Will consumers go back to normal behaviours; will there be a slow steady ramp back up to a “new normal”; what will that “new normal” exactly be; will there be a further peaks in infections and how will that effect things? Before Covid-19 we were already in a period of unprecedented change, and that level of change has just increased by an order of magnitude. The next few months and years will require a different mindset from the historically methodical approach prevalent in most retailers. Having worked with retailers for years to help them try to find that nimbleness, those who have succeeded will continue to thrive, the ones that can use the crisis to change will also see success, but those that can’t will fall by the wayside. It sounds simple, but to succeed requires bringing together previously siloed departments, people with different mindsets and skillsets, and getting them to collaborate to deliver outcomes for consumers and the business. To quote Dave Lewis from Tesco “We have changed more in a few weeks than in the past 10 years”. So retailers can rally around a crisis - the great ones will hold on to that level of change and collaboration and use it to be even more successful. Andy Halliwell Senior Director, Retail Strategy at digital consultancy Publicis Sapient

The time for retail to be re-imagined

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Today’s news in brief-21/2/25

Aldi to increase store assistants’ pay from March

Primark to open first standalone homewares store in March

UK retail sales rise by 1.7% in January

Aldi to invest £67m in existing stores in 2025

Frasers Group withdraws offer for Norway’s XXL ASA

Check out our free weekly podcast

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