- Like Post
Commerce and COVID-19: discover the new rules of retail
With lockdown restrictions reduced, it’s time for the high street to make a comeback. But how can store owners survive a radically different retail landscape?
The COVID-19 outbreak has had a profound impact across industries and economies. UK GDP crashed by a massive 20.4% in April – the largest decline on record. And according to a study conducted by the Office for National Statistics at the beginning of August, 28% of businesses are still generating at least 20% lower turnover than expected at this time of year.
One of the industries most impacted by the outbreak has been retail. With physical stores forced to close, retailers have been given a choice between shuttering-up and weathering the storm or creating new business models more suited to the current climate. Some have thrived this way. Most have not. And now, a new challenge looms.
As the high street has reopened its doors, stores have re-emerged into a very different world than the one they knew before. Adapting to that world and knowing what to expect from it will be key to survival.
As part of our partnership with Retail Week, we’ve been exploring the challenges this reimagined high street is likely to pose – and have come up with three analytics and insight-based tips to help retailers thrive in this unprecedented time.
The three big challenges of post-COVID commerce
- Knowing what customers want
A huge amount has changed over the past few months, and those changes have fundamentally altered shopping behaviours and customer preferences – at least for the foreseeable future, and possibly longer-term.
For physical retailers without an online presence, keeping track of these changes has been next to impossible. With stores closed, shifts in customer behaviour will have gone under the radar, and that could mean some huge surprises as doors re-open.
It’s impossible to speculate what these changes will look like. Will online shopping now be the go-to choice, having come to the rescue during the pandemic? Or will people jump at the chance to browse physical stores again? Has the impact on the economy given people less disposable income to play with? And if so, how long will that trend last?
To understand these things, retailers need to start looking beyond the traditional sales and performance metrics. Unstructured data sources such as social media, online searches and platform engagement levels can help retailers start to understand the issues on customers’ minds, and the actions they’re taking around them.
- Developing new merchandising strategies
Customers are emerging from a period of reduced choice. Many have happily embraced an ‘I’ll take what I can get now’ mentality, but the doors have now been blown wide open for those who’ve been limited to essential purchases and online retail. With consumers facing more freedom and choice, now is the time for stores to start rethinking merchandising and stock strategies.
Retailers need to consider where stock is located, what range of products is appropriate for the new normal, and what specific products may see peaks and troughs in demand. For instance, in the short term at least, health-related products are likely to be more popular than luxury products, as seen after China’s SARS epidemic.
Developing a merchandising strategy for the next few months will require in-depth insights into inventories, supply chains, demand forecasts, new customer behaviours and a range of other factors. In many cases, that’s going to require analysing new kinds of data across physical and digital touchpoints, and applying new kinds of insights derived to inform strategies decisions.
- Rethinking the physical footprint
It’s too soon to know exactly how customers will react to a fully operational high street. We can presume some will embrace it, while others will be extremely cautious about public spaces for some time to come. What is certain, is that the physical layouts of stores will have to change.
For a while at least, social distancing will still be enforced. And even after those rules are lifted, they will likely remain at the forefront of people’s minds. This means retailers will have to reconsider the layout of their stores to ensure customer wellbeing and comfort.
This change will have two major impacts: for retailers who have previously used data science to evaluate the best store layouts and product configurations, the bad news is a lot of the models they’ve created will have to be adapted, with a whole new set of rules and considerations in mind. Secondly, creating more space for people to move means less room for products. This will factor into the merchandising strategies discussed above.
Three steps to success
For retailers about to take their first tentative steps into this new world, there are no certainties. However, there are three things they can do to give themselves the best shot at successfully navigating this challenging time.
- Invest in capabilities. The latest technologies, like advanced machine learning capabilities, can be used to extract insights from large quantities of unstructured data. This can play a vital role in helping to identify what customers really think and feel about re-entering the world of physical retail, and what their movement and preferences are likely to look like once they’re comfortably back in the swing of physical shopping.
- Put yourself in your customers’ shoes. Re-examining and rebuilding merchandising strategies for this new climate is essential. Retailers need to consider how new customer expectations around personal safety will affect sales. And how demand for certain products may shift. For many retailers, there is no precedent for how they should respond. To find the best path forward, they must empathise with customers, and use new insights from unstructured data sets to shape new retail experiences aligned with current customer concerns and demands.
- Use digital retail as your guide. By examining data from digital commerce platforms, retailers can gain vital insights from those that have continued to operate over the last three months. Store owners need to look at factors like which products have been selling online and consider how they can best place and promote those products to ensure success.
Over the past few weeks, Retail Week and The Smart Cube have been combining their advanced data capabilities and sector expertise to provide fresh insights into the COVID-19 crisis. Explore the latest Coronavirus Consumer Pulse reports to see what we’ve uncovered.
At The Smart Cube, we combine advanced analytics, data science and technology to solve our customers’ most pressing problems, helping them to thrive in today’s competitive environment. Find out more about our Retail solutions.
Rachit Khare is the Vice-President of Client Solutions for the Data Analytics Practice at The Smart Cube. Rachit designs data solutions for complex client engagements and develops analytics strategy for retail business leaders.
Rachit has been with The Smart Cube for seven years and outside of work is a keen martial arts enthusiast and currently working towards his purple belt in Brazilian Jiu Jitsu.