As Coronavirus sweeps the globe and businesses are forced into lockdown, we take a look at 5 areas British retailers may have to address to survive.
The British high street has been on a roller coaster in 2020, some seeing brands on the brink of closure whilst others have been in the right place at the right time to see massive growth. Looking at our infographic, clothing is the hardest hit of the bricks and mortar retailers seeing a drop of 34.8% compared to the previous month. Although certain categories have enjoyed exponential growth and high order volumes, that won’t necessarily drop to the bottom line due to increased costs such as social distancing measures, overtime, courier surcharges and inefficiencies in adapting to a new normal.
Whilst the future remains uncertain, there are some things we can be certain of;
High street retail won’t disappear, but it may see a renaissance in independent brands.
Not so long ago it was common to hear people complaining that all high streets looked the same with the same brands occupying the areas of major footfall. That hasn’t changed overnight but rentals and lease commitments are crippling big brands across most sectors and could leave huge gaps on the high street. Unsurprisingly, other brands will be wary of taking those spaces as they exist due to the cumbersome overheads and lower footfall as a consequence of huge online growth. All of which could lead to landlords dividing up their properties into smaller spaces which might attract more independent and diverse brands, parcel shops, mini fulfilment centres and showrooms simply taking orders.
Online retailers are reaping the rewards of lower overheads.
Whilst the country went into lockdown, some online retailers realised now was the time to push their offers. Sales of cosmetics, puzzles, hair clippers, DIY, gardening, PPE and baking equipment all soared as consumers realised we were going to be indoors for the long haul. Online sales may well have peaked along with the effect of the virus, but reputable e-commerce retailers should see a lasting step change as traditional bricks and mortar customers have been converted to online shoppers.
Key to their success is the strength of their supply chain, both in delivery to the customer and in managing returns quickly and effectively.
High street shops will have to diversify.
This is nothing new but companies that specialise in a single category are at risk during recessions, changing consumer trends, terrorism, weather disruptions and now pandemics. Most bricks and mortar retailers also have an online presence, and many have diversified to increase Average Order Values. Primark for example, would be considered a fashion retailer but spend any time in one of their queues and you’ll find all sorts of products on offer from makeup to batteries. Lidl and Aldi are true experts of diversification with the now infamous middle aisles of mystery.
To mitigate scenarios such as the one we’re in, the high street needs to be creative to compete against each other off and online.
High street retailer supply chains need to be solid yet flexible.
You might have the best product, packaging and marketing but if a supplier is late in delivery and shelves are not full, your brand reputation will be at risk.
At the same time, the whole supply chain needs to have contingencies in place to adapt to circumstances like social distancing, extended hours, reworking shift patterns and having the correct equipment available for people to do their jobs safely.
If the current pandemic has taught us anything, it’s to be prepared for any scenario at any time and to be able to re-purpose overnight.
Customer service is king.
As e-commerce has really taken off it’s helped some retailers perform on a bigger platform than traditional retail would allow, smaller retailers can sell themselves just as well online as well established brands. They can even exploit their size and make their voice personal to the consumer. But without the direct relationship of bricks and mortar retail shops, customer service is even more important than ever.
Smaller businesses may find themselves swamped fulfilling orders themselves with a lot of labour-intensive processes. The result could be late deliveries, an exhausted workforce and unhappy customers expressing their dislike on social media channels. Larger brands may have more resources to hand but it’s still quite likely that they are relying on suppliers to deliver on time, fulfilment partners to react quickly and couriers to deliver packages on time and in good condition.
Customer service representatives need real-time knowledge of order statuses, inventory levels and returns to mitigate customer concerns or rectify any problems quickly.
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Whether you’re a small business selling online or a big retailer looking to streamline processes, e-commerce fulfilment by a third party could be a key component in your future operations.