The New Rules Of Retail
2020: The year when shopping changed
2020, as the year Covid hit, became the catalyst behind transformational change in retail. This was the year where shopping became focused on authenticity and convenience. The year where anything that made it just that little bit easier for customers was more than welcome.
Although change is nothing new for retail, Covid instigated real momentum into that evolution. Lockdown really reminded us of the entrepreneurial spirit and core principles that always make retail great. Established business models needed to pivot to accommodate unprecedented demand and constantly evolving customer behaviours. Changes that might have taken years to accomplish in other circumstances came to happen in only weeks. If the era of Covid gave us one gift, it was the ability to reconnect with customers and react to their demands in a more agile and innovative fashion than ever before.
A foundational shake-up in customers & operations
We all know by now that there’s been a boom in online shopping, but the change has been more complex than a simple spike in demand for second screens and coffee machines. Overnight, habits and behaviours changed as customers who have spent their lives shopping on the high street, were forced to shop online. The traditional customer journey was turned on its head and for a time, as online retail reached a record proportion of total retail sales, (35.2% in January 2021 according to ONS figures), shopping became all about functionality.
For Freesat, it helped accelerate our transition to a blended retail format supported by a new direct-to-consumer proposition (launched in late 2020). For others, the development was slightly harder to define as retail morphed into a myriad of click & collects vs home deliveries. The winners became those digital first and omni-channel retailers who could pivot more easily between the digital and the physical and also crucially, those who realised that strength lay in the ability to engage with customers and offer them enjoyment in their purchases. Truly data driven retailers have seen their relationships with customers improve as a result of making them feel more emotionally connected than ever before.
The winning retailers were also those who adapted quickly to operating from central hubs, which in turn meant a change in inventory management. Amazon, for example, focused on essential items early in lockdown, fully anticipating a whole new raft of demand.
Winning in 2021 and beyond
The million-dollar question is how will retailers continue to tempt back customers once the high streets and retail parks open for business again in April and we see yet another shift in the retail parameters? From browsing and discovery, to the ability to see, touch, feel and try out items; those sensory elements that we have all been missing from the experience of shopping online take on a new importance as we approach the midway point of 2021.
There will certainly be pent up demand and savings to spend, but how much spending will come back to physical stores once they reopen remains to be seen. Retailers will be hoping for a share of the estimated £10,000 that households have saved on average during lockdown but they’re going to need a shift in approach to make the most of the new rules.
Tailored service and personalisation will win customer spend
2020 has shown us there’s no ‘one size fits all’. The role of retail encompasses far more than just function. Service will become a determining factor in retail success and local and neighbourhood shopping is likely to become far more prevalent as the year progresses. With movement limited and travel restricted, it’s those buying relationships formed with the local bakeries and coffee shops during our daily walks for example that will bear fruit. That’s meant that where, once, they might have been the first casualties of a drop in demand, artisan independents are now actually leading the charge in this re-invigoration of the high street.
Partnerships mean power
Whether it’s Asda’s partnership with The Entertainer or Tesco joining forces with Next or AO.com, there’s strength in numbers in 2021. The new retail environment will see the creation of ‘hubs’ designed to meet many shopper needs simultaneously and all in one place. Retailers were in a competitive environment in the past but now alignment and partnerships means greater impact, greater footfall and greater profits.
In line with changing shopper behaviours, brands/retailers will be able to offer customers the best possible choice and convenience when they shop. They’ll utilise excess floor space, as well as broadening their geographical reach, to provide greater accessibility and increased touchpoints for customers.
Experiential shopping wins
As we head into the summer, it’s no longer just about selling ‘stuff’. Covid presented retailers with the opportunity to get creative in doing what the internet can’t. Shoppers by their sheer nature will always gravitate back to the high street, but the traditional rules have changed. When you can literally buy anything online, today’s retailers now more than ever need to give customers a reason to leave their home and offer experiences in store that can’t be replicated digitally.
Despite the seismic shifts towards online, for most it still remains a very functional, and a solitary experience. Physical shops are here to stay but they need to repurpose. Retailers with their fingers on the collective pulse are reimagining stores for the digital age, with the understanding that what was once the basis of a transaction has now become about the telling of a story. Shops have the potential to be a place where customers see, feel and experience products and where a brand story is told. The straightforward example of speaking to a shop assistant can give you information in five minutes about the history of a brand, new products and options that a chatbot might struggle to understand and express at all.
It’s the successful retailers such as Selfridges, Ikea, Burberry and Samsung who are now using their stores and technology to educate their customers on product offerings and to reframe their retail spaces as more than just places to buy but also places to socialise, eat, play, work, discover and learn – subject to Covid modifications of course.
As brands become retailers, retailers need to start thinking as a brand
In whatever form the reopening of shop doors plays out in the coming months, one thing is for sure – it’s a unique opportunity to move forward retail and one that Amazon, uber, AirBnB and WeWork have already foreseen by reinventing the customer journey, building relationships and in turn, long-term loyalty, with their customers by offering ‘something new and different’. With the right omni-channel plan, retailers can navigate the disruption to arrive at a stronger future. For Freesat as a brand, this change in the relationship with our customers and their new expectations has offered a golden opportunity to build new partnerships, establish revenue models and enhance our customer relationships. In the midst of the pandemic, customers were more reliant on television than ever before to keep them informed and entertained. TV provided not only a very necessary distraction but also a way of keeping us connected to the wider world. We reframed our retail position to take account of this need for enjoyment and when staying home became the new going out, we needed to be agile enough to identify a new approach.
Just as we offer a hybrid entertainment experience as a TV platform, our retail approach has also become somewhat hybrid. While we recognise that, for some, online will now be better, for other customers it will always be ‘bricks’ over clicks’. Our challenge, and opportunity, is to make sure that, however they choose to buy, we create a meaningful experience that provides customers with an understanding of what the Freesat service is, the reassurance that they are making a smart decision and the confidence that they are entering into a relationship with a business that is fun, vibrant and will do right by them.