With the easing of pandemic restrictions, many retailers and analysts have started assessing the overall impact of the lockdown while at the same time looking at ways to recuperate some of the lost ground by introducing new services and offers designed specifically for the “new normal”. Let’s look at some stories of aftermath doom and gloom and a little bit of hope and creative innovation.
Starting off with the lockdown impacts, Covid-19 has pushed the retail job loss count to over 125,000 in 2020. Most of the redundancies have come from store closures and reorganisation of admin roles to cut costs. The period that brought about a profound change to brick and mortar has been a blessing for online sales – the British Retail Consortium (BRC) numbers showcase both sides of the coin with online non-food sales increasing by 44% YoY in August while in-store sales still going down by 17.8% compared to 2019. The boom in online commerce had been gathering strength even before the pandemic, but Covid-19 really supercharged its growth with more and more analysts predicting this would be a permanent shift in consumer habits.
Time will tell if this trend will be able to offset the pandemic aftershocks on the industry, but retailers have already started gearing up for a new shopping reality. Take for example Morrisons and Iceland who have announced the permanent hiring of thousands of their temporary lockdown workers – a big part in this decision plays the increased online demand and the need to fulfil orders. Making such a move can definitely be interpreted as retailers firmly trusting that the magnitude of the shift toward online shopping is here to stay even if physical stores are now re-opening. This creates another question to answer – what should happen with the retail brick and mortar? Perhaps they should switch to more experiential / engagement venues for customers. Or they can serve demands for convenience and availability which were exacerbated during the lockdown – as shown by Coop’s decision to create 1000 permanent jobs due to the expansion of their convenience store footprint. Coop still acknowledges the growth in its online operations, but also stresses on the need to service city dwellers when it comes to buying food and other essentials in your local store. Alternatively, repurposing store space as convenient click-and-collect centres could improve the value of physical retail space as eCommerce transactions make up a growing proportion of sales – IMRG this week reported that retailers such as B&Q, Dunelm, and Toolstation benefitted greatly from this store format during the Covid-19 pandemic and are planning to adopt these store formats long-term. It is very likely that the new role of the physical retail store will depend on the brand’s strategy and vision about how to engage and sell to customers with very different needs and desires – it is up to the retail leaders to define these new parameters that would help them survive the crisis and grow.
And some are already on the job! Pret has designed a new subscription offer to lock in some fresh customer spend and nurture loyalty in the middle of a steep decline in footfall in their restaurants as city workers still prefer to work from home. A bold and creative move, this is Pret’s answer to loyalty amidst a pandemic and it is a promising one. With a price tag of only £20 per month for up to 5 barista drinks per day, its YourPret Barista subscription is sure to make consumers seriously consider it even if forecasts warn us of potential financial unpredictability as the government support scheme ends in October and Brexit looms on the horizon. The lockdown period has shown that in such times of uncertainty customers want stability in terms of what they buy and how easy they can buy it. Perhaps locking in £20 per month on quality coffee-based refreshments is not that bad.
Speaking of easing the purchasing process, Tesco is making huge strides towards revolutionising delivery services in Britain by trailing drone deliveries. Aiming at the on-demand small basket segment, the biggest British retailer is seeing this as an opportunity to capitalise on the increased need for convenience when doing groceries. At the same time one of the first businesses to trial drone deliveries in the past, Amazon is pushing it even further by investing heavily in the development of an autonomous delivery fleet. It seems like the experience of fulfilling all our shopping needs from the comfort and safety of our homes will continue to become more automated, seamless, slicker and only a single click or tap away. The lockdown aftermath is showing that online, convenience and new services tailored to such needs will be shaping retail and consumer habits in the foreseeable future and will be some of the hot topics retailers will need to address if ground lost during the restriction period is to be recovered.
Senior Consultant, Customer Engagement