Lockdown 3.0 and the road ahead

Hello and welcome to This Week in Retail. With 2021 well underway, the first few weeks of the New Year offers a period of reflection on last year’s performance and forecasting the biggest trends for the year ahead.

We start our weekly roundup by revisiting one of the most prominent retail sagas from last year with news that a consortium, that includes High Street giants Next, is in pole position to buy Sir Philip Green’s Topshop empire out of administration. If victorious, it is expected that the Next consortium will work with Arcadia’s existing management. According to the Sunday Times, one of the potential solutions to recovery for Topshop would be to switch to a turnover based rent model.

Whilst turn-over based rent isn’t a new thing, a recent report by Savills found that 82% of retailers in the UK were looking to rejig their lease agreements to include a turnover rent provision in the future. Considering that Lockdown 3.0 doesn’t appear to be ending anytime soon, this type of rent agreement would provide retailers a short-term solution and increased control over property costs whilst non-essential stores remain closed.

If reviewing High Street lease agreements offers a short-term fix, news that retail workers could be among the next phase of the vaccine rollout offers a far more sustainable and longer-term solution to the ongoing closure of the High Street. This news comes in conjunction with the announcement that an ASDA supermarket in Birmingham will host a vaccination centre from 25^th January with the capacity to administer 250 Pfizer-BioNTech jabs every day. ASDA has also offered the full use of its 238 in-store pharmacies to support the roll out of the Oxford, AstraZeneca vaccine.

In addition, widespread vaccination plans could be supported by Aldi’s automated traffic light entry systems which could be used at to vaccinations sites across the UK. Introduced last May, the automated system tracks the number of people in store and informs those queuing when it’s safe to enter.

Aldi US has also announced a vaccination proposal which aims at “removing obstacles” so its employees can get access to the vaccine. In additions to offering all hourly workers paid time off to receive the vaccine, the grocer is also exploring ways in which it can deploy on-site vaccination clinics at its warehouse and office locations for its employees. Keeping with the US, this week marks the second week of the Retail Big Show hosted by the National Retail Federation. Usually in New York, the conference will be hosted virtually for the first time with this year’s focus on the future of retail in a post Covid-19 environment.

Also this week, Asos has reported a 36% increase in UK sales in the four months to December 31 and Boohoo are expected to see a 36% to 38% growth in revenue for the financial year to February 28^th 2021 – indicating that having a strong e-commerce presence in the pandemic is key.

We finish this week’s round up looking at two exciting announcements in the AI space from Google and the new formed AI business, Algonomy (following the merger of Manhattan Software and RichRelevance). Google have launched a Recommendations AI engine which will support retailers to deliver highly personalised product recommendations at scale and across websites and applications.  Similarly, with the rapid evolution of the retail industry, Algonomy’s AI platform allows retailers to place ‘digital’ at the core of their business through unifying customer data into a single platform for real-time AI-based decisions. With retailers such as Walmart, eBay, Burberry and McDonald’s already buying into Algonomy’s platform, boasting over 300 pre-built algorithms, it will be interesting to see how AI shapes consumer habits throughout the year.

Thanks for reading and have a good weekend!

Peter Flood

Software Engineer Lead, Technology Services