Prior to Christmas we published the first in a series of blogs exploring the impact that the COVID-19 pandemic has had on the retail sector. Despite an extremely challenging year for the majority of the industry, we discussed how the resourcefulness and innovation shown by retailers throughout 2020 provided reason for optimism in 2021. While the third national lockdown certainly curtailed that positive feeling to a certain extent, the announcement of a vaccine and its subsequent roll out means that there is finally light at the end of the tunnel. The second instalment in this series addresses the specific challenges retailers are confronted by as we move deeper into the new year. The Christmas spike is over, lockdown has resumed, and the January sales are being conducted online. So, where does this leave retail?
What are the challenges?
The COVID pandemic has created or exacerbated a range of issues for the retail and hospitality sectors, the most significant of which is the downturn in sales caused by the reduced footfall in store. This has prompted the majority of businesses to invest in alternative means of delivering services and products that were traditionally sold over the counter. There is an argument to suggest consumer habits were trending in this direction already, but the pandemic has certainly steepened the trajectory significantly. Research conducted by IMRG shows that growth for online shopping is up 34.9% compared to last year, when it grew by just 6.7%.
Other challenges include:
Back to basics
Most research and nearly all the statistics out there tell us that retaining customers is significantly cheaper than acquiring new ones. The pandemic may have shifted consumer spending habits slightly, but this general rule still remains true for most organisations. Businesses need to refocus their efforts on improving the overall experience for their customers and consolidating existing relationships, but with footfall in stores drastically falling, this means retailers investing in digital channels and platforms as their primary mechanism for collecting orders and delivering their products and services. For many, this is the only way they will realistically survive.
The organisations who survive the COVID crisis will be the ones who approached it with a willingness to adapt, evolve and roll with the times (and punches). Leveraging technology to accelerate innovation of digital and online channels, supply chains and marketing activities will ensure competitiveness in the market through cheaper prices and a better experience for their customers.
The most common examples of this are technologies that facilitate supply chain collaboration and automation. With a third national lockdown now upon us, and no guarantees that normal service will resume until the vaccine roll-out has concluded, retailers will likely focus their attention on digital sales as shoppers reach for their smart devices rather than their coat and bag-for-life. The additional pressure this puts on a supply chain will expose any weaknesses an organisation might have in this area of their business. Whether you’re trying to get your hands on the new PlayStation 5 or just a decent supply of toilet paper, the last thing you want to see is ‘Out of Stock’ when you hit the ‘Checkout’ button.
Other technologies that we understand to be in high demand, to name a handful, include:
Reserving capital for investments in technology, whether to power innovation, facilitate effective remote working, or to secure sensitive customer data and comply with GDPR, remains a priority even during these uncertain times. The ability and willingness to adapt decisively will be critical to establishing and maintaining a competitive advantage.
What is next? Doing more with less
One thing that has become clear is that leveraging technology and data effectively is critical to the success of an organisation’s strategy for surviving COVID, not to mention then thriving in its aftermath. It is also fair to suggest that those organisations who had already embarked upon their digital transformation journey are likely better equipped to deal with continued disruption.
In most instances, IT leaders are being asked to deliver more than ever without the proportionate increase in budget or resource. The challenge is prioritising an ever increasing list of demands. Funds need to be invested wisely and with the primary objective of resolving issues created by the pandemic, but with an eye on a future that is unlikely to bear much resemblance to the one lost to COVID. This is where the focus needs to be:
Technology and data can facilitate or accelerate innovation to keep an organisation ahead of the competition, while laying the foundations to evolve and adapt as the disruption caused by the pandemic continues late into the year. Retailers will be forced to make sacrifices, but most would be wise to double-down on digital channels such as click-and-collect, home deliveries, return and cancellation systems, revamped membership and loyalty schemes, and targeted advertising for third-party partners or outside vendors.
Building a strong digital foundation
The next blog in the series – 5 ways to to build a strong digital foundation – will provide a deeper dive into the solutions and strategies organisations should be considering if they’re looking to create and consolidate a competitive advantage for their business using technology. We’ll be covering everything from supply chain optimisation and cloud migration to disaster recovery and business continuity strategies. Check back soon!
If you’d like to chat to us in the meantime then please get in touch here and a member of the team would be happy to help.