We’ve spoken to dozens of retailers and industry experts about the implications of coronavirus for the sector, with consistent themes emerging. In our final Retail Pathways article, we look at the consensus views across categories that can help position retailers for the recovery.
In terms of market drivers, our series highlights that coronavirus sent well-established retail trends into overdrive, with new levels of intensity proving highly persistent. Most notably, the acceleration of online retail, the focus on adapting the in-store experience to changing shopper needs, and the right-sizing of store footprints and networks.
Despite the significant challenges facing the sector, many retailers have done a tremendous job at adapting. Looking at the shared characteristics and behaviours of stronger retailers, irrespective of their category, provides a window into crucial aspects of resilience.
These include adapting effectively to new customer behaviours, combining the right systems with an energised workforce to mobilise quickly, and using purpose as a competitive advantage.
While these factors have new dimensions in the coronavirus era, CommBank research in January 2020[1] showed these same traits to be crucial in separating stronger and weaker retailers before the pandemic. With retailers now faced with accelerating trends, they are likely to remain crucial into the future.
Adapting to shopper behaviours
After the pandemic took hold, consumers stepped up their online shopping and many tried it for the first time. A surge in online demand tested many retailers, as others sought to establish or strengthen their online presence to capture sales.
With new shoppers, and rapidly changing spending patterns among existing ones, many retailers mounted a response. As Hardware & General’s General Manager of Operations, Kevin Baker, put it, “we needed to be customer-centric and responsive to changes to our customers’ needs”.
To achieve this, retailers across categories deployed a range of strategies. Many had diversified their supply chains early in the pandemic and continue to work closely with suppliers to satisfy changing consumer tastes. Others were harnessing payments data to better identify, and cater to, new customers and fluctuating demand.
A premium on flexibility and agility
The ability to swiftly respond to change, and reshape the businesses’ operations in line with the external environment, proved to be a hallmark of resilient retailers. In some cases, this required retailers to reimagine the way they engage shoppers.
Many retailers we spoke to had invested in technology, systems and processes which provided the foundation for them to move quickly when the situation required it. Whether that was to speed up the launch of new products, manage stock and deliveries, or keep pace with market changes, retailers across categories relied on their infrastructure.
Every retailer we talked to also agreed that having engaged and motivated people was now more important than ever to underpin the businesses’ flexibility. Moving quickly requires the support of the team, and as Steven Marks, Founder and Global CEO of Guzman y Gomez says, taking care of your team “has an obvious impact on your people, your sales, and your brand presence.”
Mitigating uncertainty
The need for clarity has broad-ranging applications in an uncertain market environment. Most retailers that were effectively navigating the post-coronavirus landscape are clearly communicating across all aspects of their business.
For bricks and mortar retailers, clarity around new coronavirus measures has become a pre-requisite for a positive in-store experience. As Matt Newell, Partner and Chief Executive Officer at The General Store, says, “Retailers need clarity around the rules and consistency in their standards. If you get either one wrong, it can create friction in the store.”
Managing online shoppers’ expectations has been equally important, particularly given the potential for supply chain disruptions. Australia Post General Manager, Parcel and Express Services, Ben Franzi, says that means being upfront about postage costs, setting the right free shipping thresholds, and clearly communicating delivery times and returns policies to set expectations.
Moving ahead with purpose
The events that have unfolded since March have also led some shoppers to re-evaluate their pre-existing shopping habits. During lockdown, clothing and footwear sales came under pressure as people questioned the need for a new wardrobe amid fewer social events and remote working. As this occurred, speculation grew that consumers would favour quality products over more disposable items over the long term.
This sentiment was echoed by Jono Salfield, co-founder and marketing director of Afends, who says, “successful retailers within the clothing and footwear industry will make better quality, more sustainable products so that customers will potentially consume less but have better quality things.”
Matt Turner, Founder and Chief Executive Officer of Australia’s largest bicycle company, Pedal Group, added that motivating his team also came down to a shared passion for environmental sustainability.
Matt Newell summed it up well when he said that, “the top question should be what do retailers want to be famous for? During the course of the lockdown, shopping may not have been at the top of consumers’ agendas, and that’s created a blank canvas in people’s minds. I think this moment in time is opportune in terms of making an imprint on customers.”
So, the perennial traits of strong retailers have been those that have elevated the leaders in the sector during the coronavirus pandemic. They can also equip retailers to capture opportunities and manage the challenges that lie ahead, many of which relate to responding quickly to changing consumer behaviours. To help provide a deeper understanding of the factors driving consumer attitudes into the future, we’re making that the focus of our next research report. We encourage you to look out for its release in 2021.
