Covid-19 has been extremely challenging for retail — but enlightening too. The pandemic may have been business as (un)usual for essential retailers (at least they were open), but for many more it’s been a question of survival. Now, as C-Suites grapple with squeezed cash flows and the need to re-order and reorganise for safer, more sustainable operations, here are five Flooid insights from 12 months of disruption.
1) Flexibility is everything
Covid caught everyone by surprise – and many are still playing catch-up. But the operators that turned the pandemic to their advantage all had something in common. Flexibility.
In supply chains
Grocers experienced huge peaks in demand for essentials … but some were left counting the cost of not being able to sell out of stock items because they couldn’t source them fast enough. Add the implications of continued lockdowns in different regions, slowed production and rising geo-political tensions, and it is clear that retailers need optimum flexibility in the way they source and secure stock, and scale demand up and down.
Retailers not primed for multichannel saw store closures and revenue collapse. But eCommerce ramped up: in the UK, online sales grew to 33.9% of market spend, with a similar spike in demand in North America. Direct-to-door delivery has boomed, causing a headache for those not ready to manage online orders or serve new customer journeys that might involve the fast return of a delivered item or Covid-safe pickup. But the future of multichannel is not just about taking orders via mobile or online. It’s about being flexible to offer a consistent, personalised experience in all channels.
Store layout has been impacted in two ways; the need to maintain social distancing, and the need to cater for a shift in the way we shop. Consumers and staff, naturally, have interacted less, requiring faster in-store journeys or the ability to check out independently – via self-service or hand-held checkouts or using their mobiles. We’ve also seen a shift towards mobile service at kerbside, as well as the need to reconfigure the way shoppers enter and use stores. With social distancing set to stay in some regions, the ability to offer self-serve options and move to mobile payments – and for bigger ticket items, too – will be integral to success.
2) Innovation hits warp speed
A big pandemic positive has been the faster pace at which industries imagined, innovated and deployed technology. IT projects that would have taken months pre-Covid have happened in days. Take home working. From one week to the next big businesses moved tens of thousands of workers to their kitchen tables. While in retail, some forward-thinkers used lockdown to scale at unimaginable speeds. For example, Flooid helped Hudson Group shave five months off of a transaction platform deployment rollout to more than 1,000 stores. IT departments have proved they can deliver faster; if the roadblocks are removed, partners are right, and underlying technology is in place. Retail needs to continue to innovate and speed up turning innovations into value.
3) Cloud drives success
Public or private, multi or hybrid, the pandemic has highlighted the power of building retail technology in the cloud. Cloud delivers many benefits:
- Flexibility on data sovereignty
- Quicker and less expensive to experiment
- Easier to use AI and automation for scenario testing
- Only paying for what you use
- Faster to scale
Retailers with a head start in cloud have proved more agile than competitors with legacy storage, silo systems and inflexible innovation environments. Cloud gives retailers agility, economy, and the ability to experiment with time, cost and labour-saving tech like automation and AI.
4) Mixed-merchandise wins
Multi-vertical retailers have been in a better position to either sell more during the pandemic or pivot their operations to survive. In North America ‘big-box’ retailers such as Walmart and Target attributed their pandemic success to their diverse mix of merchandise. As CNBC puts it: “In the early weeks of the pandemic, consumers flocked to stores to stock up on pantry staples and hand sanitiser. But as the pandemic stretched on, they shopped for bikes, puzzles, hair colour and other items to help them entertain themselves or adjust to more time at home.”
In the UK, Selfridges created a pop-up kitchen space to sell takeaways for the first time. Other department stores remained open because of their ‘essential retail’ food offer but swiftly reconfigured their store layouts to offer clothes and gifts beside the refrigerated aisles. Multi-vertical stores meant more options — and it will be interesting to see how this affects plans in the future.
5) Change is here to stay
Although the pandemic drove change, it is just one factor disrupting retail. Other mega trends continuing to impact the industry include:
- Generation Z is shopping – but preferably with brands that have purpose beyond profits
- Crypto-currencies continue to gain traction
- In Europe the full impact of Brexit is not yet clear
- Worldwide, the way we work is evolving, with employees no longer expected to commute every day – impacting town-centre retail
- Globalisation is creating a new dynamic, as retailers no longer compete locally but with operators in other continents
- Technology including AI, the IoT, and automation promises to alter the way retail businesses operate, and the way the world shops
Vaccine rollouts will help provide certainty on Covid, but retail will continue to evolve at incredible pace regardless. In this ever-changing landscape, only agile businesses will survive.
So, what do retailers need to stay relevant in the run up to 2025?
We think there are five key pillars:
- An adoption strategy and supportive partners for a realistic and staged journey from bricks and mortar to bricks and clicks and frictionless.
- An open, flexible, services-based innovation platform that allows retailers to use a mix of best-of-breed solutions, and easily integrate with third party / external or extensions developed in-house — thereby enabling an innovation ecosystem.
- Willingness to scale and save with the cloud, not through proxy or add-on extensions, but natively. Cloud journeys should be aligned with the retailer’s acceptable pace of modernisation, built on a strong foundation that allows migration at a manageable speed, AND the continual reinvestment of ROI.
- The ability to supply seamless and consistent journeys for consumers AND employees. Every interaction should be intuitive, based on user-preferences, and without the need for extensive training or unnatural habit changing.
- An approach that puts the voice of the customer first, coupled with investment in infrastructure that is driven and informed by the entire user community, via a flexible commercial option.
Flooid and its ecosystem of partners give retailers a flexible, scalable, future-proof innovation platform, meaning freedom to experiment, the ability to scale and deploy fast, and lower total cost of ownership.
To find out more, get in touch today.