VIEWPOINT - COVID ☛ WEB VERSION: Click Here
In the face of relentless disruption retailers need to keep innovating to stay ahead By Ed Bradley, Director and Founder of Virtualstock
B
efore Covid, many brands were playing catch up with Amazon and had not been investing in eCommerce, viewing it as
less profitable given the order fulfilment costs. However, all now recognise the direction of travel is irreversible. eCommerce sales are booming, particularly within grocery where online sales rose from 7 per cent of the total market to over 13 per cent following lockdown, according to Kantar.
In the face of fierce disruption and competition, many of the largest operators including M&S and Asda have made significant pledges to overhaul operations, double down on eCommerce, and set far reaching targets to increase online orders. With Amazon pushing into the online grocery sector by offering free grocery deliveries for Prime customers, M&S replacing Waitrose on Ocado’s site and Tesco saying it will create 16,000 new permanent jobs to bolster its online grocery business, the stakes couldn’t be higher.
Innovation will be key in the battle for online supremacy in this fiercely competitive environment. The grocers have realised the value in the ability of their larger store estates to fulfil online orders. Larger stores lend themselves well to online distribution with room for online order picking across a large range of products. They are also typically situated in prime locations in large population centres. This thinking has only recently evolved. Just a few years ago grocers were trying to reduce their exposure to large stores as the discounters were chipping away at their profitability. Many thought the online model would operate from central distribution hubs.
Non-food retailers should be looking to replicate this by leveraging store networks for use as online fulfilment centres, to service click & collect orders and returns. With footfall largely down in city centres the biggest challenge for retailers is to keep stores useful if they are not operating at a profitable level of turnover.
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Retailers like Boots and M&S which each have a large presence on the high street should look to group together with like-minded retailers to offer click and collect and returns out of their store networks. A great example of such a tie up was Co-op which recently began to offer stores in suburban areas as click and collect centres for John Lewis.
Despite the delivery and eCommerce boom some customers don’t want to pay extra for this service or for returns. Some don’t trust couriers with expensive items, especially phones and laptops. Click and collect and return to store provides an opportunity to cater for them whilst offering brands significant cost reduction, which is critical in this uncertain environment.
Prior to Covid, many retailers were trying to curate an experience to drive customers into stores using the USP of touching, feeling, and trying on product. In a post Covid world this is less compelling. Retailers need to move the experience online. Sales teams should look to host webinars and online events to showcase new product lines or offer virtual personal shopping trips.
Traditional high street retailers should also review their tech platforms to ensure they are match fit for this digital age. Many operate on platforms designed to support physical store networks, not eCommerce operations. The rise of eCommerce has become unassailable due to Covid, requiring that retailers retire outdated legacy systems and invest in leading tech platforms.
With Covid continuing to drive rapid and seismic change, to stay ahead of the curve retailers need to think ahead to future proof their businesses. Customers increasingly want speed, immediacy and choice. They can be highly fickle. If they can’t find what they want they go elsewhere. Retailers therefore need to be flexible, agile and to keep innovating to give customers what they demand.
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