5 Retail Trends And The Required Rethink

Following the reopening of retail across England and other parts of the UK in April, what are we learning from the crucial first weeks of trading?

The ONS has reported that retail sales volumes grew in April 2021 with a monthly increase of 9.2%, which reflects the easing of coronavirus restrictions and the re-opening of all non-essential retail from 12 April in England and Wales and from 26 April in Scotland.

Business has been boosted by the vaccine roll-out programme and experts flag this as an essential step in driving business and consumer confidence. Michael Izza is Chief Executive of the Institute of Accountants (England and Wales) and like many financial commentators believes confidence in the vaccination roll-out will help business bounce-back: “The past year has been an unparalleled struggle for business, but the mass rollout of a vaccine and the UK-EU trade deal have provided the foundations for a recovery. Rising confidence among businesses is an encouraging sign of things to come and a predicted growth in employment is good news for people who have lost their jobs over the past year”

Yet consumers are not shopping in the same ways as they did pre-pandemic, and we know that the last 12 months have created a significant evolvement of retail that is here to stay. Here are some emerging trends that reflect the way we are shopping and will continue to shop in 2021 and beyond:

Online Is Here To Stay

In the UK, the ONS also reported that all retail sectors had seen a fall in their proportions of online sales as physical stores re-opened during the month of April; total proportion of sales online decreased to 30.0% in April 2021, down from 34.7% in March 2021.

Whilst there might be a slight shift of sales back to traditional bricks and mortar, most are anticipating that omni-channel shopping will continue to be a significant part of the retail mix – with major brands like John Lewis Partnership and Marks & Spencer highlighting this in turnaround strategies to streamline stores and invest more in developing their digital offers.

Research from Natwest Bank into how consumers would continue to shop post lockdown reported that 32% of consumers surveyed said they expect to continue with new e-commerce habits in the future, with that figure rising to 40% in 45-54 year-olds.

Artificial Intelligence (AI) Continues Online A More Human Experience

AI has been present in retail developments for many years, and of late we have seen more examples of seamless integration. Both online and in-store, AI has created the opportunity to remove pain-barriers and clunky transactions in favour of an enhanced and personalised shopping experience.

Could AI become the entire foundation for the ways in which we shop, socialise, work, rest and play?

One of the biggest retail headaches to solve in online shopping: returns? An estimated  30% + of all purchases are returned, with many of those returns being linked to fit and sizing. Organisations like TrueFit, Bold Metrics and Fit Analytics are collaborating with brands such as ASOS and Adidas to make millions of sizing recommendations every month.

With the growth of BOPIS (Buy Online Pay In Store) and more consumers wanting to receive greater service when they do visit traditional stores, the bricks and mortar store opportunity will need to sit as an added value differentiator for those that have already done so much online.

Smaller Format Stores Enhancing Discovery And Service

Retail stores are restructuring post-pandemic, during a time when even more department and larger format stores are struggling and closing.

The reinvention of physical retail is one which must ensure that it serves a purpose beyond that of the pure sales opportunity that is now available 24/7 online.

Creating smaller, more affordable to run sales outlets that can deliver on service rather than a warehousing of goods, can showcase concepts, provide human service and engagement opportunities and if appropriate, house experiences and social occasions – e.g. arts, activities and hospitality.

Social media has driven online discovery apace and DTC brands have benefited from influencers and micro-influencers creating attention and sales for brands that might not have reached full audience potential without that channel.

Even fashion was one of the most affected sectors for sales in 2020 and saw consumers become more intrigued with new and unfamiliar brands (44% of millennials and Gen Z tried new brands last year, according to McKinsey)

Smaller Towns Are Seeing Sales Return Sooner Than Big Cities

The retail landscape will also see more balance in where we return to shop, with smaller towns and cities benefitting faster, linked to the amount of people working locally rather than commuting back into bigger cities.

As many consumers are still staying away from physical shopping, the same also goes for places of work (UK’s Google’s Covid-19 Community Mobility study reported -29% against baseline for workplaces and -12% against baseline for retail and recreation)

Cities like London are finding that recovery is more sluggish than in some of the smaller towns, particularly in the North, in places such as Huddersfield, Blackburn and Middlesborough.

With bigger centres reliant on office workers returning to drive the recovery in spend there is a clear divide between towns and cities since non-essential retailers reopened.

Towns like Basildon and Birkenhead have enjoyed the benefit of spending rebounds whilst larger cities like Manchester and Birmingham have struggled (Spending data tracked by Centre for Cities)

The Threat Of Ongoing Store Closures

It is predicted that store closures could continue after brands like Debenhams and Arcadia have left high streets for good, and amidst giants like Marks & Spencer fulfilling store closure programmes.

The pressure point of an upcoming review of unpaid rent may also be the tipping point of further store closures.

The independent reports that a moratorium preventing commercial landlords from evicting tenants unable to pay their rent will come to an end on 30 June, and the British Retail Consortium (BRC) anticipates this might create a ‘tsunami of closures’ if more is not done.

The BRC’s survey reports that 80% of tenants said some landlords have given them less than a year to pay back rent arrears and without action, the end of the moratorium could see thousands of shops close.

The disparity between different towns and cities, behaviour across various demographics and pace of change when it comes to omni-channel may highlight the need for a localised approach to retail from the national brands. If physical stores are to survive, the same attention to detail that we see demonstrated from AI enhanced online experiences must be applied – the pressure is on for the continued rethink of retail spaces.

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