The retail sector is of great importance and accounts for almost 5% of GDP and employs about 1 in 12 workers. However, the COVID-19 pandemic has sent shockwaves through the sector and accelerated a major shift, highlighting the differences between brick-and-mortar versus online shops, essential versus non-essential stores, and small versus large retailers.
The Impact of COVID-19 on Retailers
When the government announced the UK lockdown in March many businesses were heavily impacted, with the retail sector being one of the most affected, as all non-essential retail stores were forced to close with no answers as to when they would be able to reopen their doors. Retail sales volumes experienced a record decline in April of 18.1%, the biggest monthly fall on record since December 2005.
Whilst non-essential stores were closed, essential retail businesses such as supermarkets, hardware shops and pharmacies had to operate in difficult conditions with labour shortages, social distancing requirements and complexities with supply and demand as consumers began to bulk buy.
Lockdown measures had a huge impact on physical stores, forcing consumers to shop online for their non-essential goods which is ultimately accelerating the ongoing shift from brick-and-mortar to online retailing. In the UK, reports from the National Office of Statistics show that the proportion of retail expenses online increased from 19.1% in April 2019 to 30.7% in April 2020, reaching a record high.
Many non-essential retailers have now reopened but it is clear that the COVID-19 crisis hugely impacted consumer behaviour and shopping habits that will continue long into the future. Attracting shoppers back into their physical stores is a challenge now faced by retailers as shoppers’ number one priority is now safety, ahead of convenience, price and choice. Social distancing measures have been implemented in physical stores however this, in turn, disrupts the enjoyable and traditional shopping experience. It is estimated that nearly half of UK consumers now plan to avoid congested areas such as large shopping centres, causing retailers to reimagine their customer journey and increase emphasis on online channels.
For retailers, finding their feet in this COVID and post COVID world will be challenging. They need to rethink products, promotions, pricing, how they operate and focus on new revenue management ideas. They need to transform and adapt to the new reality and pivot into digital-led and data-driven businesses. Data and technology will enable them to recover customers with personalised and relevant marketing to online consumers and uncover new shopping needs and trends with AI.
How can data help retailers re-capture their audiences and thrive during and post COVID-19?
It is apparent that retailers need to find a viable strategy to recover from the global disruption and plan for their uncertain futures. Data presents a huge opportunity in the retail sector due to its ability to help retailers better understand consumer needs, capitalise on digital commerce and track consumer shopping patterns, allowing them to make better-informed decisions.
Moving to the cloud:
If retailers have not yet started their journey to the cloud, there is no better time for them to make the leap. Moving to the cloud will simplify tasks and maintenance and allow retailers to scale up and down on demand. Having a cloud platform will enable retailers to track real-time and historical customer trends, in-store and online engagements and the impact of their marketing efforts.
Migrating to the cloud and utilising big data will help retailers deliver granular insights and enable them to enhance store customer engagement, create better customer experiences and most importantly, ensure customer health and safety demands. This is of high importance as in-store experiences must be optimised and delivered safely to ensure customers will return.
On top of this, deploying a flexible and scalable cloud infrastructure will enable retailers to prepare for the rush of online shoppers ahead of Christmas and the New Year.
Supply Chain Optimisation:
There have been enormous shifts in supply and demand reflected in retail markets across the globe, especially in essential retail due to dislocated supply chains and the uncertainty of bulk buying habits. It is vital that retailers and FMCG outlets leverage their data intelligently in order to maintain an adequate supply for their customers.
One of the most important aspects of supply chain management is demand forecasting. Intelligent logistics and supply chain management processes can be used to get the right product, at the right price, to the right customer, at the right time. AI and Machine Learning can be used to help stores select the ideal suppliers based on big data analysis by measuring the performance of suppliers based on their delivery performance.
Personalised Shopping Experiences:
Retail businesses hold significant volumes of customer data. This data tells meaningful stories about the consumers’ journeys, their needs and shopping habits. If leveraged in the right way; this data can be one of the most valuable assets to create personalised offerings. Predictive analytics can be utilised to generate evidence-based insights into customer purchasing patterns and habits, which, in turn, help create exciting personalised experiences for retail customers in order to stand out amongst competitors and win customers back. From this data, retailers can learn more about their customers, their behaviours, preferences and how they engage with the brand, both during and post COVID-19. Research shows 91% of consumers are more likely to shop with brands that provide offers and recommendations and that are relevant to them, demonstrating that customers value a personalised shopping experience.
Leveraging data with new technologies is a huge opportunity for retailers, especially in a during and post COVID-19. Now is the time for retailers to make use of their data to not only improve internal systems but also to drive customer loyalty, trust, engagement and safety beyond the pandemic.