Retail and COVID-19: Planning for the Future
As the COVID-19 pandemic continues to affect society, more businesses are transitioning into digital stores and marketplaces. As society adapts to the new changes, retailers are forced to alter their strategies and be closer to consumers than before.
New data has been released, showing the severity of the ongoing pandemic by revealing that footfall in the UK has fallen by 81.4% compared to the previous year. The statistics have also revealed that high street locations are particularly vulnerable and have already seen an 84.4% drop-off in footfall. Retail parks have suffered a 71.5% decline in footfall, despite the presence of supermarkets.
What does COVID-19 mean for UK retail?
The strict protective measures are expected to continue across the UK and many other countries. Non-essential retailers have been forced to close doors to mitigate the spread, which has led to large-scale furloughs and business restructuring in the recent weeks.
Even property owners are struggling to find rental agreements that suit all parties involved, with Capital & Regional reporting that only 50% of rental fees will be collected from tenants as they seek ways to support high street businesses. Many other property giants are attempting to crack down on late rent payments to maintain profitability.
Many businesses have cancelled orders from suppliers to reduce costs and protect future investments. Some retailers may even be forced to shut permanently. Debenhams is one of the bigger retailers that has filed for administration amid uncertainty caused by the pandemic.
Changes to retail and consumer habits in 2020
High streets were already under pressure last year, created by Brexit uncertainty and competition from marketplaces and stores on the internet.
The shift into digital had already begun, as established restaurants were leveraging their services through apps such as Uber eats and Deliveroo to accommodate for the growth in popularity of online takeaways. Bigger retailers were breaking down operations to create more efficient end-to-end supply chain management in efforts to offer lower prices and faster fulfilment. Even Nike made big changes, reducing retail partners from 30,000 to just 40, gaining more control over its network.
The current pandemic is the catalyst for new business processes which have been forced upon companies that were reluctant to keep up. This will lead to temporary and permanent closures for some, but ultimately, companies will be forced to consider alternative delivery channels, fulfilment processes, customer service options and more.
What next?
The long-term effects on physical and digital sales are still unknown. However, retailers will have to consider the impact of COVID-19 on consumer behaviour and monitor patterns using reliable data to make decisions which will advance businesses forward.
Current trends are suggesting that consumers are interested in a personalised interaction with retailers, tailoring the product offerings to individual needs. Subscription retailers such as Birchbox have already risen in popularity, due to offering products based on unique customer preferences.
A balance in price and quality has been another major factor, not necessarily tied entirely to the events that have occurred in the last few months. Lidl and Aldi have showcased strong growth throughout recent years by offering cheaper prices for the same standard of products. This is mainly due to the strong position of the brands in owning supply chains which lower the costs of operating.
All the current trends were occurring before the current pandemic. The issues with personalisation, customisation, flexibility and proximity were already causing consumers to opt for online services. Going forward, it is more important than ever for retailers to understand their customers and how to enhance the shopping experience to offer the value which that customer seeks.
If businesses fail to analyse the data and use it to adjust their business models, it will become increasingly difficult to convert customers. Consumers will most likely be reluctant to spend frivolously even once this is over, and people will remember the interactions that companies have provided them during this period. This will also allow for new players that have a disruptive service to overtake some of the existing competitors
Acting now is key to engaging and connecting with customers, as retail markets will be drastically different following the end of the pandemic. For more information on how to prepare your business for ever-changing markets and thrive in digital spaces, contact us today for a free consultation.