Analysis: 6 principles for post-Covid retail

Retailers are in a strange limbo regarding the Covid-19 pandemic. On one hand, most restrictions have been removed, meaning /business is back to ‘normal’ operations. Yet, case numbers remain persistently high, resulting in continued challenges for staffing and distribution. At the same time, short-term spikes in online sales are starting to return to more expected levels, even though some consumers have permanently altered their channel preferences. 

The big challenge for retailers is to balance continuing challenges while also looking ahead to a post-Covid future. Retailers need to consider what changes to make as a result of the pandemic and its impacts, while not overreacting to short-term trends. The Customer Experience and Insight (CXI) research group faced this challenge recently when planning for our upcoming Strategic Planning and Management in Retailing (SPMR) executive education program.¹ How much should we update the content to focus on the impacts of Covid and the ‘new normal’? Conversely, should we keep the content consistent, as the fundamentals of successful retail remain relatively unchanged?

Members of the CXI team were able to answer these questions through new research recently published with international colleagues.² The research identified six guiding principles that retailers can apply in strategically planning for and managing the potential long-term effects of Covid. Below, we’ll summarise these guiding principles and how they were identified, to help retailers answer these challenges in their own context. 

Long-term Covid effects

The research involved in-depth interviews with a range of retail executives, suppliers, and thought leaders across the APAC region, the UK, Europe, and the US. The interviews focused on the short- and medium-term impacts interviewees had experienced within their organisations, and then sought to predict possible long-term effects. While the specific answers and predictions differed across organisations and sectors, these common themes emerged that help retailers consider their ‘post-Covid’ strategies. 

1. Embed new ways of working

One of the most common predictions among interviewees was a more permanent shift towards remote and hybrid working. Companies that embraced these new ways of working found their staff had been just as efficient – if not more. They also found that technology, when used effectively, could facilitate bringing staff together while heightening the consideration for mental health. This shift has implications both for how retailers embed these trends within their own corporate operations, as well as how businesses (particularly in CBDs) adjust to new work habits of consumers. 

2. Rethink the purpose of physical space

Even pre-Covid, the role of physical spaces had evolved from transactional towards experiential. While many tactics implemented at the onset of the pandemic – such as social distancing and sanitising  – will probably go away post-pandemic, some others are expected to have permanent impacts on the role of stores. Interviewees predicted two longer-term changes to physical environments: store design and payment methods. In terms of design, there was a sense that stores would continue to transition towards becoming retail showrooms while using technology to enhance consumer interactions along the customer journey. The shift towards light-touch environments and payment options driven by the pandemic was also expected to stay, as consumers became increasingly used to options like contactless payments, scan-and-go, and click-and-collect. 

3. Prioritise digital elements

Innovation is critical in turbulent times, and the pandemic certainly accelerated the need for digitalisation of retail and service environments. Retailers had to quickly adapt to an increase in both online and digital channels in general, and even new ways of operating. It was clear which brands had already invested in those innovations, and those that were lagging behind. The interviewees agreed that continued investment in digital innovations would underpin the future of retail and services, particularly in how digital overlaps with other trends. For instance, digital is central to new ways of working and how brands can adapt to those environments. Likewise, digital innovations help connect physical stores to online environments as they continue to evolve. In these ways, digital elements were often described as the ‘glue’ that would hold the future of retail together. 

4. Build a sense of community with employees

Beyond digital innovation, one of the critical elements the pandemic has highlighted is the critical role of employees at all levels of retail and consumer services. Frontline staff, in particular, were asked to take on new duties and accept a range of changing restrictions. For most, if not all businesses, staffing operations required significant change and reorganisation to manage the pandemic’s immediate impact. The pandemic has clearly exacerbated the need for employee engagement and a sense of community. Two key aspects underpin how interviewees viewed the long-term change pathway for employees: health and safety of employees, and staff resilience and retention. In both cases, businesses identified that building a sense of togetherness among staff at all levels of business is critical to recovering from the pandemic. 

5. Build agile supply

In addition to the disruptions to in-store operations, the pandemic also created severe challenges across supply chains. Disruption of global supply chains has been unlike anything we’ve ever seen. Businesses have learned the need for long-term agility in supply-chain relationships. Interviewees in the research also highlighted that these challenges put increased focus on building relationships between suppliers and distribution partners. Similar to the need for togetherness with employees, the research highlighted that supply-chain partners working together strategically and agilely is now crucial to long-term success in retail and consumer services. Retailers also noted that it was now easy to distinguish between supply-chain partners who were willing to work together productively, and those who were not, and were increasingly prioritising the former over the latter.  

6. Plan for future turbulence

There may not be a repeat of the Covid-19 pandemic, but we have already seen other examples of the turbulence that natural disasters, wars and other forces can cause. After the damage already done, one of the main lessons from the pandemic is that businesses should be planning for future turbulence now – with flexibility and agility front of mind when developing business-wide contingencies. While it may seem easier to say ‘plan for all contingencies’ than doing so, there are frameworks that can help businesses work through future scenarios. In fact, our colleagues teach scenario planning as a key framework in Swinburne’s Marketing Insights unit, and the ideas permeate our upcoming SPMR program, because planning for possible future scenarios is critical for business agility and innovation. As the famous saying goes, failing to plan is failing to plan. 

We’re all in this together

As retailers and consumers look to move on from the disruption of the pandemic, there are many parts we may prefer not to remember. Yet, there are things that the retail industry can learn from and apply moving forward. The six guiding principles above aim to provide a starting point for retailers and suppliers in considering what to bring forward into a post-Covid world. Underpinning them all is the sense that while brands may compete with one another for shares of consumer spending, the industry is at its best when we all work together. Community and togetherness have been key to working through the pandemic, and provide the blueprint for industry prosperity long term. 

¹ SPMR is a six-day executive education program that CXI will host in October 2022. Early-bird applications close 31 August.

 ² The paper is titled, “In this together: the long-term effect of a collective crisis on the retail and service sector” and published in the Journal of Strategic Marketing.

The post Analysis: 6 principles for post-Covid retail appeared first on Inside Retail.