The retail space was already undergoing major shifts even prior to the Covid-19 pandemic, including the pivot to e-commerce and the decline of the high streets. With these same trends accelerating as a result of the pandemic, it is now truly essential that retailers adapt by aligning their commercial strategies and operating models with the emerging digital marketplace.
To investigate this crucial topic, Oliver Nevel, Operating Director at Michael Page, and Ben Hands, Manager at Michael Page Retail, hosted Julian Grindey, the Director of Digital at Sigma Efficiency in our recent webinar.
During the session, Julian drew upon key industry statistics to illustrate the remarkable accelerative effects of the pandemic on the digitisation of retail.
Predictions captured from Statista in September 2020 indicated that the online sector would grow to 28 percent by 2023. Since then, re-estimates suggest a staggering growth of 34.5 perfect by 2023.
– Julian Grindey, Director of Digital, Sigma Efficency
The changing face of retail
From these figures alone, it is clear that retailers will need to develop their strategies and capabilities if they are to thrive - or even survive. But most UK retailers have a long way to go, Julian notes, with only a minority optimising voice and visual search or maintaining ‘good or excellent’ upload speeds. But in the coming retail sector, user-centricity and in-built e-commerce facilitation will separate winners from losers. To understand the extent of the shift that is taking place, it is only necessary to look at the high streets: permanent shop closures have increased by 25% since last year, while 38% of retail property owners have already begun to switch their properties to other uses. Julian also points to The Centre for Retail Research’s report into the sector, which found that up until the 6th November 2020, there had been 51 retail company failures, impacting 4,200 stores, putting nearly 83,000 jobs at risk.
However, the proliferation of smartphones and devices has also created an opening for retailers to establish themselves as e-commerce leaders. With 75% of all e-commerce trade now carried on mobile phones and a greater proportion of shoppers having embraced online shopping in the UK than its peers in the western world, there is a clear potential upside for UK retailers. Moreover, certain areas of retail are growing dramatically, most notably the discount market, which is set to expand by 36% between 2017 and 2022. So, while the immediate outlook for the traditional retailers is challenging, the growth of e-commerce and market segments like discounts constitute a major opportunity. To grasp this opportunity, however, retailers will need to become more digitally savvy than ever before and embrace an agenda of technological transformation.
How are technologies and strategies changing?
Effective transformation in the post-pandemic world will hinge upon both consumer behaviour and adoption of technologies which deliver actionable insights to retailers. Mobile commerce is an obvious example to draw upon; but as mentioned, voice and visual search are also emerging as a key focus, with 22% of UK citizens owning a smart speaker in their home – a dramatic 9% increase from 2017. Meanwhile, the introduction of machine learning to the retail sector promises to drive efficiencies by providing greater insights into data, creating superior targeted strategies and more accurate customer profiles, and improving product visibility.
Personalisation is already transforming the sector, with retailers enhancing their customers’ digital experience through suggested content, tailored offers, related item recommendations, and more. By developing superior understandings of, and relationships with, consumers, businesses will gain an invaluable competitive edge. The value of this connection with customers is exemplified in the rise of Direct-to-Consumer (or D2C) models, whereby vendors or suppliers bypass the retailer, going straight to the consumer, thus owning the relationship.
It is clear that retailers face a rapidly changing commercial environment defined by user-friendly digital platforms, personalisation, customer-centric approaches and new operational models. The retailers that thrive in this landscape will be those that embrace change and act quickly to evolve their strategies. To learn more about the key trends affecting the retail sector and how to survive in today’s digital marketplace, be sure to watch our webinar with Julian Grindey, Director of Digital at Sigma Efficiency, in which we discuss all the above and more.