Retail: the 2020 vision
Retail in 2020: all doom and gloom? The challenging year marked the end of the journey for some brands; yet for others it brought stories of financial success and increased customer loyalty. Our Retail sector team considers what those retailers who are bucking the trend have done well, the trends they have capitalised on, and what others might learn from them.
Same dog, new tricks
One factor that seems to feature prominently in all success stories is a willingness to embrace new technologies and find different ways of doing business. Most notably, we’re witnessing an acceleration of the switch to ‘digital first’ stores where the retail experience starts online and bricks and mortar stores play a secondary part.
The lockdowns of 2020 have demonstrated that even brands that have always relied on their store portfolios can embrace ‘digital first’ thinking. DIY group Kingfisher, owner of B&Q and Screwfix, revealed its ‘Powered by Kingfisher’ strategic plan, expanding on the ecommerce strategy that kept its stores open in lockdown. The strategy includes boosting the ecommerce operation from its current level of 8% of total group sales. The physical stores still play a major part, and the group is set to expand its click & collect service, which currently accounts for 62% of its ecommerce sales.
However, the traditional “click and collect” is now just that – traditional, if not old-fashioned. The concept is morphing. It’s no longer ‘collect in store’; increasingly, it’s collect on the high street where collection lockers and digital return kiosks are set to become a common feature.
Where we are going, we don’t need checkouts
Retail is widely predicted to see another big change – this time to the way we pay. Check out by waving your card, or your phone? We fully expect this to become old-fashioned in a not so distant future; in fact, why should you have to check out at all? Many retailers allow you to download a version of their ‘scan and go’ app on your phone and avoid the checkouts altogether.
Amazon Go stores are yet another level up; the buying process is entirely automated – you simply take what you need and go. So far this technology can only be found in the US, but it shouldn’t take long to reach Europe. The German discounter Aldi is the first European supermarket reported to be developing its own rival cashierless tech. In August 2020, it has placed an international call for automatic product recognition solutions, either through cameras in store, in shopping carts or via users’ smartphones.
‘Shop-within-a-shop’ is another trend that got an unexpected boost from changing consumer behaviours. The pandemic has seen people bundle multiple shops into a single trip, so retailers reacted by combining shops within shops.
It is not a new idea. We have seen Argos shops within Sainsbury’s stores, and Habitat within Homebase. In 2020, Asda teamed up with Kingfisher Group for a trial of B&Q shops within its supermarkets. The advantages are clear: attract shoppers to one brand, and they may buy from others within the same space, either out of convenience or curiosity. Moreover, as profit margins are squeezed and rents become unaffordable, ‘tenant’ brands may enjoy the greater flexibility of a smaller space and likely shorter commitment.
Another breakaway trend of 2020 is experiential shopping. Again, hardly new; we have long loved IKEA for the toys in its children’s areas and the frikadellen in its restaurants as much as for its furniture, lighting, home textiles, and more. In 2020, our hunger for new – socially distanced and Covid secure – experiences made farm shops and garden centres surprise winners of the destination venue trend. High street can learn from their experience of combining food and flower/plant shopping with cafés, crèches, gift shops, and Santa’s grottos at Christmas. Packaged this way, shopping is both a fun activity and a perfect way to support the local microeconomy by slimming down on the big names and engaging with local artisan retailers.
No going back
The seismic shift in retail has significantly affected UK consumer preferences. And it’s fair to assume that very few consumers will return to their old shopping habits.
It’s a testament to the adaptability of many retailers that they have been able to shift their business focus so quickly this year. Next up, 2021 – and many more advances in both technology and customer experience.
Read more from this edition of Ahead of the Curve
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