The traits of strong retailers
In the current environment it is constructive to compare the investment focus among retailers that were significantly stronger than five years ago with those that were weaker. According to CommBank research, significantly stronger retailers were far more likely to be investing in their people, technology and brands.
Investment in these areas equipped them with crucial capabilities to quickly respond during the beginning stages of the coronavirus crisis and remains essential to navigate the retail sector’s ongoing recovery.
Namely, the investment in learning and development initiatives and employee engagement helped stronger retailers develop a culture that supported agility and mobilise the collective creativity within their workforce to rapidly innovate. Having more knowledgeable staff that are willing to go the extra mile is also important as the changing retail experience has increased shoppers’ reliance on good customer service.
In qualitative interviews, retailers confirmed that having the right technology, systems and processes helps deliver a better overall customer experience. And this remains relevant given the recent accelerated shift to online shopping discussed in previous Retail Pathways articles. Specifically, having strong digital capabilities, a responsive supply chain, and excellent last mile delivery capability aligned to the needs of customers, is crucial to compete.
The investment in their brands was also a notable hallmark of the stronger retailers which helped them excel in related areas such as brand purpose and reputation compared to others. And it’s this part of a retailer’s strategy that Matt Newell, Partner and Chief Executive Officer, The General Store, considers to be of particular importance in an environment that has brought stronger and weaker retailers closer together.
Levelling the playing field
According to Matt, the coronavirus lockdown has “bunched up the pack” for retailers. From here, he believes it will be retailers who make bold moves that will get ahead.
“What we have seen during the coronavirus process is that many retailers with strong momentum have lost it, and those that were falling behind were given some breathing room to improve their performance. Now that the playing field is more level, the next question is who will accelerate the fastest and how will they create strong momentum.”
Matt argues that this presents a unique opportunity. He says that most retailers are preoccupied with the question of what the consumer of the future wants. However, he thinks that’s the wrong question to be asking right now.
“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.”
“From here, retailers that make bold moves are the ones that will set the agenda moving forward. If you think about the opposite approach of following the lead of other retailers or consumers, then you have to be super agile, and that’s not a winning strategy.”
For many retailers, their survival depends on the strategy they adopt in coming months. Of course, there are other challenges to contend with given the unknown path of COVID-19 which makes the nature of the economic recovery highly uncertain. However, those traits that supported strong retailers over the past five years may now be more important than ever. Moreover, the events of recent months may have altered the competitive landscape, presenting an opportunity for a new set of strong retailers to emerge.