At long last summer weather has arrived in the UK! With people feeling more optimistic and with the re-opening of large parts of the economy in April and May, our consumption behaviours and decisions have undergone a dramatic change over the last month and a half.
This sudden (but not unexpected) shift has had a profound effect on the fortunes of retail business as well. Retail sales jumped 9.2% in April as the shops reopened with fashion and clothing businesses being the biggest winners with an increase of 70% compared to March. All this pent-up demand during the lockdown promises some impressive short-term gains as we embark on a more positive summer. However, most of this ‘growth’ is really recovering to pre-pandemic levels of sales. The question that really needs answering is how can growth be sustained in the longer-term as we are emerging out of lockdown, but also what has changed with purchasing behaviours.
During the pandemic there was a lot of talk about if and how consumer behaviours would change in the long run. One of the trending topics around the future of retail was the expected cultural shift towards ethical sourcing and purposeful consumption. And while for many years prior to the pandemic ‘sustainability’ was little more than a PR exercise to boost brand image, it is now becoming one of the cornerstones of post-lockdown recovery. It is only natural that currently every retail business is enticed to pursue quick reclamation of ground lost during the pandemic by boosting supply chain, marketing, sales and delivery to bring as many products and services to consumers as quickly as possible. However, such short-term gains should not come at the cost of increasing the environmental and societal footprint of retail uncontrollably. A lot of recent research shows that consumers are more willing to move away from brands that employ unsustainable practices to make a quick return to the pre-pandemic glory days. Thus, retail businesses might have to reassess their ambitions to surpass competition in the race to recovery and put in place a longer-term ambition to guide their post-lockdown effort in line with broader sustainability efforts – just look at IKEA or Unilever and how they are tying their recovery roadmaps to their longer-term net-zero and carbon reduction pledges and strategies. We can hope that IKEA and Unilever are leading broader change in the industry and that they will look to expand their sustainability efforts into their IT infrastructure – an area where there is huge potential for carbon footprint reduction, as detailed in the recent Capgemini Sustainable IT CRI report.
Another great example of picking up where we left it before the pandemic and making the driving force of recovery is Waitrose – expanding on its ‘Unpacked’ refillable concept in response to growing customer demand after the lockdown. A concept piloted in 2019, it seems to be gaining even more momentum now that consumers are making more mindful choices about what they buy. It is such initiatives that are very likely to become the core of longer-term growth after the pandemic and Waitrose has already set a firm foundation on which to build further.
Another big topic which we were pondering over during the long cold lockdown months was what would become of the physical stores after the pandemic. The new shopping experience debate had been raging even before the pandemic began, but (as all the other topics we are discussing) it has gained even more significance and pace now. But it is not to say that we have all the answers or that one size would fit all types of retail businesses – further testing and refinement is needed of the ideas floating around about what to do with the retail physical spaces. To find the right answers, Harvey Nichols has opened an experimental retail space in Hong Kong called Sandbox. The idea, as the name suggests it, is exactly to replicate in real life the safe isolated environment used for developing and testing new software solutions. The store will act as the playground for new ideas, concepts and tech to be trialled with real consumers. This reinforces our own beliefs and efforts here at Capgemini aimed at helping clients build the future retail shopping experience through our own ‘sandbox’ called CornerShop which is exploring the key topics mentioned above and more – the role of sustainability in the retail recovery, staying safe in crowded stores through technology, merging the online and offline experience, transforming physical spaces from transactional to experiential venues and so on.
Thank you everyone – here is to a warm and positive summer ahead both for us consumers and retailers! Stay safe.