Retail Industry Overview 2021
CHANGE IS COMING. WE JUST CAN'T PICK THE DATE.
5 Key Insights
from Retail and Hospitality Industry Leaders
By: Stephen Hart - Founder & CEO of DedON | March 2021
Earlier this month we spoke with some of the biggest retailers across Canada and the US about the nearly tired topic of “What’s next in the COVID-19 environment”.
We had dialogs with companies from different segments and industries, but there was one factor they all have in common - they all have brick-and-mortar locations and all of them are trying to figure out what’s next for their physical spaces.
From our conversations, one thing was absolutely clear - “change is coming, we’re just not sure exactly when”. Other insights we gained from our discussion were fascinating, and we want to share them with you.
Here is what we found:
the change is easier now than ever before;
bricks-and-mortar stores are changing to be part of the online supply chain, not competing with it;
safety, privacy, and social distancing needs to be brand aligned;
post-COVID boom is coming.
Now let's dig deeper into each of them.
Any change may be easier now than ever before.
People learned to get used to change. The last year has taught us, that risky change is sometimes the safest route. We all had to adapt our entire lives to new reality over the past year, so a new store layout is nothing.
Customers expect changes to accommodate safety, social distancing, and privacy. Everyone just wants to get back to regular life, or as close to it as they can. If that means that the layout or signage of their favorite store must change, they will be more than fine with that. They may be surprised if it isn’t different. Thus, not changing may create a new risk as many people will expect to see some sort of adjustment to make them feel safe.
Bricks-and-mortar stores are changing to be part of the online supply chain, not competing with it.
In many brands, bricks-and-mortar were shut down or depleted while online became their primary selling channel. With this in mind, what to do with bricks-and-mortar spaces? In the short term, nothing, except pause new leases and possibly terminate leases that were ending during this time.
Long term, our partners spoke about the future of bricks-and-mortar alongside online, instead of competing with online. It sounds like many retailers are restructuring their organizations to allow the two, once adversary divisions, to work together in harmony.
Many brands use their bricks-and-mortar locations to provide more local delivery hubs. If you ship from a well-stocked store instead of a DC, then you could make the sale in-store or online - that won’t matter, but fulfillment will be enhanced either way. In-store inventory has been a challenge, and so has shipping long distances from DC to customer. But with the two sales channels working together, some retailers may finally solve the long-standing “last mile” challenge.
Bricks-and-mortar has and will continue to become a part of the online experience by providing a showroom for products, as well as giving up some of that underutilized sales space for increased customer pick-up or direct shipping of online orders. Win / Win.
Right-sizing. It’s not all about closures.
It’s hard to find a retailer who isn’t rethinking their physical space. Further to integrating online and bricks-and-mortar into a single supply chain, some retailers find themselves with the wrong size space. It’s not all closures and retractions either. Some brands needed more space for a growing business, more customer pick-ups, or new product or service offerings related to new customer behaviors or trends they were following for a while, while others thought better of downsizing their spaces.
For example, many banks are rethinking their bank branches as people were forced to use technology extensively. They will need to adjust to this new customer behavior and with a fleet of branches that don’t fit the current and future need. Right-sizing is coming - smaller branches, perhaps, fewer of them. Other brands seek out larger spaces in better locations as their sales rise. There was more talk of expansion than we anticipated, but many were talking about right-sizing.
Safety, privacy, and social distancing need to be brand-aligned.
Everyone believes that some of the COVID safety habits will stick around for some time. Safety is a key message that retailers, restaurants, and hotels are already focusing on in their advertising, trying to get people to return to their locations.
Further to that, the thinking is now shifting to how we integrate safety and brand. It’s time to come up with clever ways for safety equipment to exist in a brand-aligned way. Customized, on-brand safety equipment is the answer, but also is rethinking layouts to provide a natural solution to on-going customer health and safety concerns.
A Post COVID boom is coming - we just can’t pick a date.
Our final question, are you optimistic or pessimistic about the post-COVID economy? Every single person we spoke with gave us the same answer, almost word for word: “I’m very optimistic about the post-COVID economy because there is so much pent-up demand, but I have no idea when it will officially begin”.
Many companies are getting ready for that. Most of them have a list of must-do remodeling, changes, updates, simply cleaning up locations and getting them ready. Others are going further and conducting store surveys to have a head start when the moment comes. They are also aware that it won’t be business as usual, but they are ready to adjust the in-store environment to meet the increase in demand and to ensure their customers feel safe getting back out into the world.
The area of greater optimism and the most urgent need for restarting is entertainment - restaurants, theatres, and anything travel-related (ex. hotels).
We cannot wait for the moment we can sit on a crowded patio with family and friends!
The brands that can make the post-COVID world feel safe while making it a not too distant experience from the pre-pandemic, are the ones that will realize the most success.
DO RETAIL CHANGE RIGHT THE FIRST TIME.
If you are considering an in-store change - talk to DedON first.
Schedule a FREE CONSULTATION here.