Retail industry witnessing a transformative juncture in 2021, due to the combined impact of health, social, and economic crises forming a triad of challenges.
In the wake of the COVID-19 pandemic, businesses have had to adapt swiftly to the intertwined health, social, and economic challenges. Retailers, in particular, have faced unprecedented hurdles, with revenue streams drying up and the economy continuing to face unpredictable starts and stops.
The pandemic, which started in Asia and spread to Europe and the U.S. by mid-February, initially hit hard in states like Florida, New York, and California. By mid-March 2020, shutdowns, business closures, limited transportation options, and curfews were enforced, leading to a significant drop in foot traffic in brick-and-mortar stores.
However, the retail sector has shown resilience, with some stores and restaurants reopening during the summer of 2020. Yet, the fourth quarter of 2020 saw a resurgence of danger due to the virus mutation, rising case numbers, and colder weather, causing another round of closures in many areas.
Amid these challenges, retailers aiming to succeed in the post-pandemic "new normal" should focus on digital integration, value-driven offerings, experiential retail, supply chain agility, and workforce management.
One key strategy is digital-first and e-commerce enhancement. Prioritising online sales platforms and automation is crucial, as digital-first retailers like Amazon and Walmart continue to drive growth by meeting consumer demand for convenience and safety.
Another strategy is focusing on essential and value goods. Consumers have increasingly shifted spending towards essentials and value-oriented products, especially given inflation and economic uncertainty. Retailers combining essentials with digital and in-store offerings are more resilient.
Experiential and value-based in-store visits are also important. Foot traffic has risen notably in fitness, value dining, and entertainment sectors. Retailers can capitalise by enhancing affordable, value-oriented experiences coupled with convenience, fostering consumer confidence and engagement.
Retailers also face ongoing challenges from tariffs and supply chain disruptions. Leading firms are diversifying supply sources and retooling logistics to reduce cost impacts and maintain inventory flow.
Retail real estate optimisation is another crucial strategy. With store closures rising in weaker locations and high borrowing costs limiting new builds, retailers focus on well-located prime assets and reposition existing spaces to balance cost and customer reach effectively.
Workforce realignment and job cuts are necessary for retailers to align costs with the new demand realities. This requires strategic hiring and layoffs to maintain operational efficiency without compromising customer service.
Consumer-centric communication is also vital. Brands that clearly communicate their value proposition and build consumer trust through quality, affordability, and safety are more likely to maintain loyalty in a fragmented, cautious marketplace.
In summary, success involves combining digital and physical retail strengths, catering to value and essential needs, offering meaningful in-store experiences, and maintaining flexible operational models to navigate economic uncertainties while addressing evolving consumer preferences shaped by health and social considerations in the post-pandemic era.
Matt Katz, a managing partner at SSA & Company, a global firm advising companies on strategic execution, emphasises that the new models for retail will be led by agile thinkers and newly reskilled employees. He also notes that the topic of discussion is when retailers will return to a new normal, as the vaccine rollout is underway.
The past year has seen drastic changes to retail, including ten years of digital maturation, the growth of omnichannel offerings, the closure of thousands of stores, and the bankruptcy of iconic companies. Recovery has been a fit of starts and stops, with progress varying across regions and industries.
One positive note is the significant increase in technology usage among the elderly during the pandemic. As we move forward, it is crucial for retailers to consider these shifts as an opportunity to merge social, health, and economic solutions for future success.
- Retailers, targeting success in the post-pandemic era, are focusing on digital integration, experiential retail, value-driven offerings, supply chain agility, and workforce management.
- Prioritizing online sales platforms and automation, as digital-first retailers like Amazon and Walmart continue to drive growth, is a crucial strategy for retailers.
- Consumers have increasingly shifted spending towards essentials and value-oriented products, leading retailers combining essentials with digital and in-store offerings to be more resilient.
- Foot traffic has risen in sectors like fitness, value dining, and entertainment, with retailers enhancing affordable, value-oriented experiences and convenience to foster consumer confidence and engagement.
- Retailers face challenges from tariffs and supply chain disruptions, with leading firms diversifying supply sources and retooling logistics to reduce cost impacts and maintain inventory flow.
- Retail real estate optimization is crucial, with retailers focusing on well-located prime assets and repositioning existing spaces to balance cost and customer reach effectively.
- Workforce realignment and job cuts are necessary for retailers to align costs with new demand realities, requiring strategic hiring and layoffs to maintain operational efficiency without compromising customer service.
- Consumer-centric communication is vital for brands to maintain loyalty in a fragmented, cautious marketplace, with clear value proposition and building consumer trust through quality, affordability, and safety being key.
