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26 May

Enabling the New Normal: The Importance of Technology for Physical Retail

Retail Technology

It’s impossible to escape the impact of the Covid-19 pandemic on both physical and online retail. Different verticals have been impacted in various ways – be it a dramatic and unprecedented surge in demand for groceries, declining volumes in fuel retail, the complete closure and loss of revenue for hospitality or the entire shift online for ‘non-essential’ retail like fashion. The unavoidable truth is that the world has changed. And I believe retailers need to respond with greater flexibility to succeed in this strange new world.

New Challenges, Evolved Response

The dystopian commentary suggesting a permanent structural change in retail is too simplistic. The real picture is more nuanced. And careful analysis of the evolving political, cultural and societal response to the Covid-19 crisis is required to ensure retailers continue to interpret the situation accurately and fine tune their response and strategy.  

In this changing and complex landscape, retailers must double down on the key business tenets of customer experience and employee satisfaction to survive and thrive. Because, while the rules of engagement may have changed, the ultimate goals – to keep staff and customers happy, satisfied and engaged with the brand – remain fundamentally the same. 

The simple truth is that consumers will only be enticed back into physical stores if they feel safe and secure. Where products can be purchased online, the in-store interaction with the item or the service provided by retail staff must significantly enrich the customer experience to drive footfall.

So what next for physical retail? The Covid-19 pandemic will require retailers to implement new processes, procedures and solutions to operate in the new normal. 

The initial focus has been the implementation of basic requirements to reopen and trade safely. This has involved changes to store layout and new signage to enforce social distancing alongside other health and safety measures – like monitoring and managing the volume of customers physically in store. Given the speed at which these adaptations have been made, the initial wave of change is managed by adapting people and processes rather than through the deployment of new technology.

However, I think the focus will quickly shift to identifying ways to best enable flexibility throughout retailers’ operations. If Covid-19 has one positive outcome for the retail industry, it will be that it highlights the importance of being able to pivot and change business models. 

Nowhere is this more true than in physical retail. And it’s technology that will play a critical role in empowering retailers to flexibly manage stock, deploy staff and enable different customer journeys and interactions.

A New Approach to Stock Management

Retailers have long sought a flexible supply chain to enable responsiveness to uncertain time frames, ensure effective management of supply and demand and make inventory work harder. 

The best example of this during the Covid-19 pandemic are the many retailers who have used their physical stores as mini distribution centres to fulfil orders. Retailers as diverse as fashion giant Levis, bookseller Blackwell’s and Majestic Wine have used their store portfolio to support their change to a fully online business model. They are effectively using ‘dark stores’ in much the same way as the likes of grocers Tesco, Sainsburys and Asda in the UK, to support their online business as part of normal trade.

As lockdown lifts across the globe, the extreme conditions that have forced this pivot will begin to dissolve. Retailers will need to reduce the amount of stock they hold, which for many has been accumulating during the enforced interval caused by the pandemic. 

It’s likely that the fulfil-from-store model will gain more traction as retailers who have set their stores up using the approach will continue to find it a useful tool after the crisis. Similarly, other retailers will aim to implement the model to enable new, advantageous fulfilment options, a better use of inventory and to maximise the return from their physical estate. Technology will be crucial in achieving this outcome, resulting in an increased requirement for unified commerce platforms with strong order management and organisational capabilities.

Greater Flexibility Around Staff Deployment

The Covid-19 pandemic has put flexible working at the forefront of the government’s economic response across the globe. The “work at home if possible” mantra of the UK government has obvious limitations for front-line retail workers who can only work in-store. As lockdown is lifted across the globe and retail slowly reopens, ensuring flexibility for the workforce will be vital for employers. 

In the middle of the pandemic, we saw dramatic shifts in the workforce. Vast swathes of industry – like the hospitality sector – were forced to furlough staff. While other areas – like grocery – experienced an unprecedented spike in demand with companies like Tesco hiring up to 45,000 temporary workers. 

The Covid-19 pandemic has also accelerated broader social trends and the move towards the flexibility offered by the ‘gig economy’. While I believe that employers should provide secure jobs where there is a need, the ‘new normal’ is likely to increase the trend for greater flexibility. Workers, businesses and consumers will all seek adaptability in many forms including flexible:

  • shift patterns to allow staff to work varying hours so they can avoid peak travel on public transport 
  • locations to deploy staff to different stores closer to their homes to limit travel
  • roles so staff can multi-task and keep the business running effectively

In addition, retailers will need to put the health and safety of their staff front and centre and ensure they act as brand champions to entice customers back into store. Communication with staff will also become even more crucial as to help them understand best practice and to implement the right policies and processes as Government advice on how to operate and trade in the ‘new normal’ changes. 

The only way to underpin this level of change and additional agility is to introduce vital technology like effective workforce management, task and communication tools to serve both employees and employers. 

Employee and employer using technology

Creating New Customer Journeys

How customers respond to the new normal will be carefully monitored by the retail sector. Early indications from countries where lockdown conditions are gradually lifting and stores reopening show promise. Markets like Germany and Australia report a high volume of sales. But only time will tell if this is an initial bump or a continued trend. And whether what happens in one country will apply to another.

To support the transition back to in-store shopping, retailers must ensure that customers feel safe and secure. Tailored shop fits, like protective screens, have already been deployed as well as new processes and policies, like social distancing, that put health and safety at the forefront of retailers’ operating models. 

But how will businesses know whether their efforts are deemed to be effective by their customers? To ensure retailers remain connected to customer opinion, I believe it’s vital to have excellent in-store feedback mechanisms. New, non-invasive, low-effort, digital technology solutions can capture the ‘softer’ aspects of customer experience while building up a clear picture of the perceived effectiveness of the retailer’s safeguarding approach. 

As consumer confidence builds, retailers will need to enhance and build out more flexible customer journeys. For some businesses, this will include enabling a highly personalised experience through in-store appointments or digital concierges which enable a bespoke interaction without increasing social contact beyond one employee. 

New normal shopping using technology

For other retailers, it will include the introduction of contactless pickup, curb-side delivery or other click and collect solutions. Retailers will achieve this through collaboration and partnering and examples already exist among firms like Co-op, Shell and BP that have started to use home delivery platforms or developed their own propositions. This trend will be accelerated post the pandemic.

Whichever route retailers take, they will require innovative and flexible technology solutions that empower the retailer to adapt and innovate their proposition. 

Flexibility has long been the holy grail of retail technology and operations. And with society and the retail landscape changing more rapidly than at any time in the past 100 years, the need to enable agility has become urgent. The ability to rapidly adapt will become a crucial success factor for retailers. From managing stock and deploying staff to engaging the customer, businesses must achieve all of this sustainably and at scale. And the only way all this can be achieved is through the right technology solutions. 

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