Has 2020’s stress test been the wakeup call the retail world didn’t want but that had to happen? Economic hardships, evolving consumer behaviours and a global pandemic that is forcing the UK into a second lockdown is all forcing retailers to rethink what has historically been a formulaic retail model and, as a result, has forced retailers to shake up how they do things.
Change was inevitable, but circumstances have turbocharged the requirement to adapt and survive.
Here, Dropit’s Chief Operating Officer, Stuart Ford, shares his thoughts on how the retail industry has had to pivot and what retailers should do to keep up and futureproof.
Stuart Ford is well versed in the turbulent tale of retail. As a seasoned retail executive driven by a passion for innovation and strategic brand building, Stuart’s career has given him a profound understanding of the ever-evolving global retail landscape. Seeing Covid-19 as an eye-opening moment for the retail world, Stuart believes the pandemic has offered the industry a chance to reset and will force brands to really listen to what their customers are asking.
With a demand in all areas of the retail experience for efficiency, it should be no surprise that the last decade has seen more people swap the high street for high speed by shopping online. Now expanded beyond the purview of millennial and Gen Z consumer archetypes, many more brands are digitising their typical physical retail offerings to the benefit of the masses.
Despite this shift, a recent survey by Retail Dive showed that although online activity was increasing, shoppers much preferred the ability to see, touch, feel and try on items in real life. A 2019 report from online merchandising company First Insight found that during a typical shopping trip 54% of the 1000 people they surveyed in the US spend upwards of $50 (£39) online – but that rises to 71% when shopping in stores.
Recent global events have shaken up the physical vs digital experience, but may have opened the door to positive change
So, what does the future hold for retail?
Since 2016, Dropit has provided flexible and sustainable solutions for brands to help them respond to changing consumer expectations. As Chief Operating Officer, Stuart Ford discusses the difference between intent and action in consumer behaviour and how Dropit aims to help the entire retail ecosystem.
Retail’s Wake Up Call
Retail is an archaic business. Despite other economic troubles that the industry has faced, retail has never been forced to look at the way it operates at such a grand scale until today. While the onset of a global pandemic and second lockdown in the UK has accelerated e-commerce and digital models, a combination of a severely hit economy and consumer apprehension about visiting physical retail stores has given retailers, big and small, a dire survival need to reset.
For any business model, innovation and a rethink in strategy is commonplace. For retailers today though there are multiple challenges and uncertainties to combat that they may not have considered previously, making it a far more difficult landscape to navigate.
Data is key in predicting future trends and nuances, but retailers are having to change tactics based on imperfect data recorded from customers stating what they ‘intend’ to do rather than tracking what they actually end up doing. Stated intent and real-life actions are often not the same thing.
The main challenge is understanding what customers really want. While the Gen Z’s are driving this innovation within retail and have rallied a huge focus on instant gratification and advancements in technology, for retailers what they say is practically redundant, making it increasingly more difficult for them to provide meaningful solutions. Retailers rely a lot on surveys and reporting and the research is often based on intent rather than actual data of action. An example of this is from a recent Vogue Business article that says “Gen Z are often cited as the most sustainably minded generation. But for a large proportion of young consumers, it’s not easy to stop buying £9 dusty pink cropped lounge sweats.”
They are saying they want ease, convenience, simplicity, and safety, but is it really just that? From my years of working in retail I’ve come to learn that there needs to be experience, outstanding customer service and environments that create a sense of wellbeing. This all adds to the dopamine reward that is only acquired from a physical experience. In the online world it is difficult to render true colour, fit and feel. The full sensory experience of shopping is best enjoyed physically.
While the future of the high street and the fate of bricks and mortar stores is unclear, the physical attractiveness of big cities and shopping districts within these cities is diminishing. An increase in WFH and the increasing army of digital nomads has disrupted the commuter model and it is unlikely we’ll ever to return to what’s perceived as a ‘normal’ 9-5 again. We’re seeing a lot of cafes and service businesses within the city disappear and a rise in ‘mini’ cities’. These are often based around malls, with hotels, independents, cafes and leisure offerings all supporting one another. This is an evolving transformation of our traditional city ecosystem and can prove an opportunity for retailers looking to dial up localisation. A lot of brands are already merging online with offline and are implementing AR technologies to help digitise the store experience. At a time when we have been physically apart, there is a sense of community and personal interaction longed for. People may not want to commute anymore but there will still be a longing for city-like experiences and having access to latest real and virtual channels where they live.
If companies are to have any chance in keeping up with fluctuating customer demand, they are going to have to be flexible and agile, rather than focus on how to keep running archaic legacy systems. Retail needs to look outside of itself and cannot keep going round in circles and hiring the same talent, bringing in new blood and new ways of thinking will be key to how retail survives. Brands that do this have already started to expand into gaming, social-commerce, and AI. There is a plethora of opportunities, but it requires brave new thinking to access them
The supply chain model itself is also something that needs to be addressed based on this consumer demand and societal expectations. While there are players that are able to facilitate same day delivery effectively, problems that come with this is an influx in returns, and as a business if you’re stuck in your old ways and can’t manage simile things like distributed inventory then you’re really going to struggle. Retailers that can’t leverage their physical store network, multiple inventories and reach customers cost effectively both online and off are really going to struggle.
As a company that works with multiple retailers, logistic partners and amongst a varied group of sectors, Dropit has seen first-hand how the recent shake up has impacted supply chains. A lot of these businesses are monolithic and try to solve too many things with one solution or are tied to cumbersome legacy systems and processes. Dropit is more agile as a platform as it stitches various parts that are already out there, making it agile and flexible.
Customers will continue to look for reassurance from retailers that their products are safe. Our Handsfree model means that customers do not have to physically handle a lot of bags, which will come in handy ahead of the Christmas shopping period. They can sanitise on the way into stores and on the way out and Dropit works in line with the latest Government guidelines to ensure best practices are observed and social distancing is maintained, aiming to prevent any potential contamination.
What people are looking for today is a sense of normality and to feel safe within their community. People will start to identify more with specific brands through this and brands have certain values and makes them feel part of something. Therefore, creating a business that serves what their customer needs now but can pivot to what they may need tomorrow will be key. Customer consumption preferences and expectations have changed, and brands need to address their preferences efficiently in order to remain competitive.