Published Monday 8th February 2021
It goes without saying that the retail space has been massively affected by the Covid-19 pandemic and the resulting lockdowns and restrictions. There are lots of stories of doom and gloom in the press – just look at the stories on Debenhams, Arcadia and others. The loss of those businesses is terribly sad, particularly for all the hardworking staff who have lost their jobs at the worst possible time. Over 175,000 retail jobs were lost in 2020.
But the future of retail is not purely about those stores forced to close, all of which were struggling pre-Covid. There is no doubt the pandemic and lockdowns hugely accelerated the end of these businesses. There’s a chance that they would have been rescued were it not for Covid, but most retail experts would agree that they were all on their way out, with or without Covid.
An obvious success story in retail has been for the essential retailers, which we now know doesn’t just include food retailers, but also garden centres, builders merchants, off licences and a few others. These businesses have been able to stay open almost consistently throughout. Even in fashion retail, the likes of Next and River Island have performed well.
Another clear success story has been the online retailers. Amazon is currently worth around $1.6T, whereas in March 2020 it was ‘only’ worth $900B.
So, what about the rest? Well, it’s very much a mixed bag but there is a clear divide that’s quite easy to see. Those that are doing well have done one or more of the following…
They have upped their online game. We have seen retailers move from 90% physical 10% online to the opposite – 90% online and 10% physical. These retailers either had great systems in place for their online offering or have moved very fast to improve those systems. We have helped them implement new payment solutions, better packaging systems, improved distribution systems and enhanced their communications platforms. Those that have moved fast and early have done well and continue to do well.
ERA is well placed to help retailers in many of these areas
Payments
New payment regulations have been introduced for non-UK cards already, with UK cards set to follow suit in the late Spring. See our Payment Team’s article in this issue.
Packaging
Consumers are demanding sustainable low-cost packaging that does its job in protecting the goods.
Distribution
All the major couriers are having to increase capacity; this had led to increasing costs and service issues during peaks.
Communications
Platforms that link messaging across different channels can be hugely valuable to retailers looking to make their customers’ experience better.
There are still risks ahead for retail. We have seen a lot of redundancies and there are real concerns about the future – there could be lots more redundancies and a long-term recession will obviously depress demand.
But there are positives for retailers. Over £150bn was saved into cash accounts in 2020. A lot of that relates to money that people were unable to spend due to the restrictions. Some of that will go to retail when the restrictions ease off.
The retailers that adapt will be the ones that thrive.
About the Author: Keith McGregor, is part of a team who enables organisations to save money and boost business performance through effective procurement, improved supplier management and smarter spending habits.