How 2020 Reshaped The Retail Industry
From bare shelves to closed doors – 2020 in retail has been a year unlike any other. 2020 has been a year of extremes within the retail industry, and one where very unique purchasing patterns have emerged as customers grappled with new ways of living and working.
At the same time that the pandemic created huge shifts in the types of products we bought, and where we bought them from, other forces (that have been reshaping the retail industry in recent years) accelerated, leaving a retail landscape at the end of the year which has been transformed.
Expect the unexpected
The challenges faced this year by the retail industry, and the supply chain that feeds it, cannot be underestimated. After all, this is an industry that is based around forecasting – making educated guesses using historical data combined with predictions on where spending will be coming from.
The retail industry is not at all equipped to deal with the level of uncertainty that we saw in 2020, not to mention the dramatic changes to the way that we were forced to live (and work) this year in response to the pandemic.
It is not surprising, therefore, that there were gaps and shortages in the supply chain, especially at the beginning of the year where grocery retailers, in particular, struggled to keep up with demand in supermarkets.
This uncertainty has really characterized the whole of 2020 for the retail industry. In recent research by Capgemini, only 39% of retailers felt confident predicting their festive sales compared to 55% last year. It’s easy to understand their lack of confidence with ever-changing restrictions and lockdowns making footfall patterns and purchasing more erratic.
Giants tumble
Uncertainty is never good for retailers, and 2020 also claimed more than its fair share of large retail victims. The last few years have seen a series of high-profile losses across the retail industry, and this year was no different.
“The speed of change has surprised large and small retailers, and we are now seeing some high-profile casualties,” said Andrew Goodacre, chief executive of The British Independent Retailers Association.
According to the Centre for Retail Research, 52 retailers have closed in the UK this year so far, affecting 4,726 stores (more than 2018 and 2019 combined) and with a loss of 95,227 jobs.
Arcadia and Debenhams may be the biggest names to have run aground this year, but many other household names, from Bon Marche, Cath Kidston, TM Lewin, Laura Ashley, and Oasis and Warehouse all went into administration.
The pandemic hit many of these businesses hard, especially clothing companies that saw demand for fashion crumble. However, it is unlikely that the pandemic alone has been the sole culprit although it will certainly have been the nail in many a coffin.
Online becomes king
2020 was the year that online shopping, which for a long time has been the fastest-growing sector of the retail industry, really came into its own.
“The changes that we were already seeing (internet shopping) have been significantly accelerated due to Covid-19. Pre-Covid, 20% of all non-food sales were on-line. In July that figure was as high as 50% and is still above 40%” explains Goodacre.
With lockdowns and tier restrictions forcing non-essential retail to close at various points in the year, it is unsurprising that customers have turned to online shopping to get what they need. Home delivery has become more prevalent than ever, along with a growth in other low-contact purchasing methods such as click and collect.
Even discounters such as Aldi have been forced to explore more options as the customer seeks the convenience and safety of online purchasing.
“Shop small” gets bigger
With news of larger retailers crumbling and the growing popularity of online shopping, it may feel as if bricks and mortar stores have a very gloomy future indeed. However, what is missing from the picture painted by these two trends is that there has been a resurgence of interest in shopping locally and supporting small and independent businesses.
“Working from home has driven a movement to stay local and shop local,” said Daniel Whytock, chief executive officer at DownYourHighStreet.com – a shopping website featuring independent shops.
“Smaller retailers who are able to adapt have come out on top compared to larger retailers who are too big to pivot quickly enough” he explains.
Nick Brackenbury, founder of retail software company NearSt agrees:
“We've seen a big trend towards localism, and people going back to their local areas. We've all heard about the massive shift in behaviors online, but what's been missed in that shift is the massive growth in people going online to find things in the physical, offline world around them. Compared to our pre-pandemic baseline we've seen a sustained tripling in the number of people going online to check stock in their local stores, before visiting.”
With many independent retailers playing a vital role in supporting local communities during the pandemic, and with customers less willing to travel to larger shopping areas, the local shopping communities have seen a boost in visitors. This is particularly true for those who have learned to embrace their digital presence, and to use it to drive footfall.
As Goodacre summarises:
“Out of a crisis comes determination, urgency, and creativity. We have seen many independents change their business model and improve their digital footprint to reach out to those shoppers going on-line…Where the large city centers have lost out, the surrounding areas have benefitted, and these are the areas where independents tend to be located.”
The message is clear – this may have been a tough, unpredictable year for many businesses. But the lifestyle changes created by the pandemic have given a new lease of life to local retailers – especially those who are able to service their customers online as well as in their bricks and mortar stores. It will be interesting to see if this “shop local” approach continues to flourish as we move into 2021
This article was curated from Forbes
Image Credit: Free-Photos/Pixabay
