• Skip to primary navigation
  • Skip to main content
Close
OEE - Home
  • 简体中文
    • English
    • Français
    • Deutsch
    • 繁體中文
SearchSearch
  • 主页
  • 专长领域
    • 银行与金融服务
    • 教育业
    • 医疗保健
    • 高科技外包
    • 保险业
    • 公共部门
    • 零售业
    • 旅游与运输
    • 公用事业
  • 服务
    • 咨询服务
    • 创新服务
    • 管理服务
    • 技术服务
    • 数据分析
    • 组织卓越模式
  • 见解
    • 最新消息
    • 专业洞见
    • 客户故事
  • 关于我们
    • 我们的价值观
    • 跨国技能
    • 咨询翘楚
  • 加入Gobeyond Partners
    • 全职员工招募
    • 项目性员工招募
  • 联系我们
  • Home
  • Our Thinking
  • Retail, but not as we know it

Retail, but not as we know it

Reading Time 7 mins

  • twitter Tweet
  • facebook Share
  • linkedin Recommend
  • Share via Email Pin

Non-essential retailers in many countries are reopening their doors following their toughest ever period of trading.

Vanessa Flather, Managing Director of Retail and Travel, looks at how the current situation might influence the future of retail and the transformation agenda over the coming months and years.

Some telling trends  

Adoption of ecommerce and mixed models such as click and collect has accelerated throughout the entire retail sector. This has led to a boom in areas such as home fitness, cycling, gardening, and DIY where many of these organisations simply have not had the stock levels or service capacity to meet demand.

For multichannel retailers, this digital growth has of course helped subsidise bricks and mortar revenue. But cutting through the hype, we need to be clear that most have been hugely negatively impacted by the current crisis.

Much media coverage has focused on the grocers and the initial spike of sales driven by panic and uncertainty. For many, sales were exponentially matched by the service levels needed to support them – in other words, orders became less profitable as cost-to-serve increased.

Two months on, with consumers’ cupboards fully stocked, most projections see sales levelling off to below pre-pandemic levels. Yet it is still hard to find a home delivery slot online, and many businesses are still experiencing high volumes of contact and capacity issues compounded by the struggle to play catch-up.

These combined challenges around stock levels and customer service have driven consumers to shop around. Perversely, this has provided a unique opportunity for the right organisations to acquire new customers, growing brand awareness and market share in a mature environment where short-term switching is usually driven purely by pricing and promotions. The common traits of these successful organisations are more established and robust digital channels, a modern and scalable attitude to customer service, and less exposure to costly store portfolios.

What do we think the future holds? 

In our crisis curve phases, we talk about ‘business as unusual’, being a phase where businesses recognise the longer-term impact of Government interventions, such as social distancing. This has a fundamental impact on retail, possibly more than any other. As we transition slowly through this phase and think about what the new normal might look like post-COVID, leadership teams will have some challenging decisions to make, based on limited insight.

As retailers begin to open their doors and consumers start to venture out to shop there are several factors to consider. Being hopeful, we may see some sales spikes due to pent-up demand. However, it is also likely that there will be some nervousness from consumers about returning to the shops, not to mention the impending impact of a global recession.

It’s important to realise that many bricks and mortar stores and even entire portfolios are already only just viable, and reduced footfall coupled with social distancing measures is going to render many more of these unprofitable. Continued Government intervention may help to subsidise these in the medium term, but as retailers use up their cash reserves, this is likely to drive insolvencies and consolidation of the market over the next few years. It will also fundamentally accelerate the changing face of the high-street as stores are either repurposed or disappear completely.

A few businesses will emerge winners. For example, over 50% of customers that have switched grocery providers during the crisis say they expect to stick to their new suppliers afterwards. Those companies who have an established digital or multichannel proposition, or can bring one to market quickly, will fare better. And those who can be brave enough to devise a way to reimagine their bricks and mortar portfolio, either through restructuring, or focusing on a more omnichannel or experiential usage, may survive and even thrive.

So what do retail leaders need to consider? 

There is no template for this journey. Retailers are going to have some difficult decisions to make on where to place their investment.

In a world that is already increasingly digital, COVID-19 has only accelerated these trends. Those organisations that were already behind the curve are going to suffer the most.

The online market is going to become even more competitive, so those brands who rely on their people, in-store experience and merchandising – such as luxury fashion - are going to need to understand how to recreate brand and human experiences digitally and/or how to reimagine their bricks and mortar stores.

With balance sheets already under attack, P&Ls are not going to fare any better. New digital customers are going to need additional support which could increase cost to serve in the short term , and with a recession on the way, people are not going to expect to pay more for the privilege. A key lever to consider is the overall operating model for customer service. A clear customer contact strategy , incorporating demand deflection from low value interactions, underpinned by AI and intelligent automation will be absolutely critical, but it must start with the customer – customer centricity is as critical as ever to understand new needs and also enable improved resilience for the future. In cases where human support is still required, it needs to be delivered by the right people, with the right training, in the right location.

In summary, the key considerations are:

  1. Many legacy multichannel retailers are set up with separate retail and digital teams, which is long overdue a rethink. Now is the time to embrace a truly omnichannel operating model and organisational design, breaking down silos once and for all and ensuring the customer really does come first
  2. A wholesale move to digital is inevitable for many, but it will be easy to get this wrong in haste by layering digital onto an outdated operating model and/or “broken” customer journeys. The critical point is to understand your new-world customer journeys and re-design and re-build, rather than assume that pre- or during- COVID is valid . The effort you put into understanding these and re-engineering them will be rewarded in the long-term
  3. Bricks and mortar will become significantly less profitable (but it may not be possible or desirable to exit this channel rapidly) and digital marketing costs will rise as competition increases. Therefore cost-to-serve will become a major lever for profitability, as will the re-purposing of retail outlets to ensure omnichannel relevance. There has never been a more critical time for retailers to harness the power of their data to understand channel costs and their role in the overall customer journey – and how these play into cost-of-acquisition, basket size, and lifetime value
  4. Balancing experience and efficiency has never been more critical. In a world moving away from physical interactions, you need to think about how your brand promise can be differentiated and delivered effectively through your online and telephony channels
  5. Delivering seamless, consistent service through a blended home/office model is critical and will be a difficult balance to strike. Employees and customers have been relatively understanding as companies have navigated this unprecedented change, but moving forward they will become less forgiving. Being human and transparent with your people and your customers has never been more important – whilst at the same time having a laser-focus on performance management and repeatable customer experience, irrespective of location and model

Some of these considerations will seem like a tall order for those retailers with limited transformation funds, who are only just embarking on their omnichannel journeys, and are already reeling from the current shock.

As is often the case, the solution to these problems is nothing new. One of the first lessons in retail is to start with an innate understanding of your customers, and whilst data and insight have never been more prolific, the power of these assets remains under-utilised. Harnessing this insight is the critical starting point for retailers to succeed on their omnichannel journey.

Close
Would you like to get in touch with us?
Please complete our contact form.

关注我们,及时获取最新动态

我们将依照隐私政策和合理用途程序存储您的数据,且不会与任何第三方共享您的个人信息。

我们的见解

Insight
Fraud in the NHS – The hidden risks to your organisation

Pressures on clinical teams across the NHS have never been higher, but it’s not just the pandemic that is to blame.

Find Out More
Insight
Whitepaper: How to nudge your CX and transform your business

Richard Chataway gives a glimpse of how your organization can optimize its customer experience (CX) with the power of pioneering behavioral science.

Find Out More
News
Gobeyond Partners announces 2023 charity partner to support the end of hunger in low-income communities

Gobeyond Partners continues its commitment to provide support to communities in need.

Find Out More

The Future of Service Forum

The Future of Service Forum brings together like-minded organisations from across the service sector. Each is committed to improving operations, creating networking opportunities and providing access to insight and content contributors.

Explore the Forum
Close
Would you like to get in touch with us?
Please complete our contact form.
  • 网站导览
  • Cookies
  • 隐私
  • 使用条款
  • 可访问性
  • 客户投诉政策

info@gobeyondpartners.com

44 Great Marlborough St, Carnaby
London
W1F 7JL

  • LinkedIn
  • Twitter
  • Glassdoor
  • English (英语)
  • Français (法语)
  • Deutsch (德语)
  • 简体中文
  • 繁體中文 (繁体中文)