The retail sector has been affected more than most by the restrictions imposed by the emergence of the COVID-19 pandemic. While sub-sectors have shown growth, non-food retailers have generally seen significant declines in sales as stores closed and retail employees were furloughed.
Government support schemes that were applicable across sectors, along with bounce-back loans, rates holidays and legislation to prevent landlords enforcing non-payment of rents has enabled many retailers to survive, but with significantly higher geared balance sheets. Elsewhere, some landlords have provided rent holidays to retail tenants in recognition that insolvency would lead to empty properties.
The pandemic has forever changed society as we know it. As organisations begin to navigate through a possible return to more ‘routine’ retail, adapting to the following factors will be an essential part of business planning:
We were already seeing a seismic shift to online which has accelerated since lockdown. Changing consumer buying patterns may prompt fear among retailers with large store portfolios. We are also starting to see some ingenious ways that data is being used to influence buying decisions through to promotions and not just by large multinationals.
It is easy to focus on the difficulties around the pandemic and to overlook the impact of Brexit on supply chains. The current uncertainty around whether or not a deal will be forthcoming really just highlights that retailers need to have a strategy for dealing with interruptions in their supply chain. What happens to the price of the goods if customs duties are imposed post 31 December? Do retailers need to stock up ahead of then but how is that to be financed?
The key for retailers is to develop a strategy that adapts their business model to the changing retail landscape. There have been surges in online shopping for items from groceries to home furnishings to toys on the one hand, while demand for cosmetics has fallen.
Crises can lead to strong, positive, community-focused efforts and buying behaviours have shifted to support local retailers as consumers recognise that their local high street stores will only survive with their support, along with recognition for the role local shops have played during the crisis.
Ethical retail continues to sit high on consumer agendas. Consumers are identifying with those retailers that support the local community, the NHS and key workers. This, coupled with social media, particularly where retailers clearly detail their response actions during the crisis, influence buying patterns leading to strong advocacy amongst that retailer’s customer base and support for their brand. Retailers should engage positively with social trends and communicating with their customers, as well as their employees, in a simple, transparent way will breed better results.
COVID-19 related webinars
Jeremy Cooper, Partner and Head of Retail at Crowe, said:
"The pandemic has forever changed society as we know it. Successful retailers are going to be the ones that adapt while remembering the fundamentals of retail: deliver what the customer wants."
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