07th May

The future of retail in Malta.

The crisis arising due to COVID-19 has escalated the case for change for retail stores, as it demands agility and adaptability in the face of industry-wide disruption. 

The retail model as we know it has been changed forever, along with customers’ purchasing preference and habits. 

Retailers need to adapt and they need to do so fast. Apparel and speciality retailers should be prepared to reopen their stores as soon as regulatory restrictions are lifted, whilst also taking behavioural changes into account. 

Retail outlets will no longer yield the same results they did in the past. There are changes that they must make to be able to continue thriving in the “new normal”.

Changes in Customer Behaviour 

A short-term effect of the pandemic on buying behaviour is the slowdown of discretionary spending, arising from a loss of income. 

A majority of customers expect to spend less on clothing in the near future. 

A longer-term effect of the pandemic is the rise in popularity of e-commerce. 

The rise of COVID-19 has led customers to venture into the world of online shopping, out of the lack of any other option. In fact, since the start of the pandemic, e-commerce has attracted new customer segments, such as baby boomers and Generation Z.

Customers have now developed the habit of staying at home indoors for weeks on end and making all their purchases online. This means that it will take more effort to convince customers to leave their house and go to the high street; resulting in a significant drop of in-store traffic. 

The shift in trends will have negative implications on companies’ P&L unless they act to embrace the changes. 

Preparing for the New Normal

In order to survive and thrive in the post-pandemic world, retailers must realise the importance of e-commerce and change how they operate in order to incorporate an omnichannel approach which delivers a compelling value proposition throughout. 

Retailers must gain an up-to-date understanding of customer preferences and improve in-store productivity in order to be able to maintain the profitability of brick-and-mortar stores.

Some key shifts in customer preferences are contactless fulfilment options and customer experience. Both preferences are expected to filter into the new normal, and retailers must start planning to accommodate them.

Contactless order fulfilment can be integrated into the structure of brick-and-mortar stores through curbside pickup or in-store pickup. The introduction of in-store pickup will also provide the opportunity for personalised in-store touchpoints which will further distance the brick-and-mortar store from being just a transactional venue. 

The key element in improving in-store productivity is a simplification of store operations and reallocation of costs to ensure that stores support the company’s omnichannel activities. 

To allow for those changes to take place, retailers must embrace a rapid digital transformation across all stores to facilitate the automation of in-store activities, which will allow staff to focus on value-adding tasks, such as customer experience and improving the omnichannel approach. 

The benefit of automation is two-fold; while it frees up the staff’s time, it also helps to ensure that customers keep receiving a contactless service, through self-checkout, self-service and mobile checkout, even after the pandemic is over. 

The click-and-mortar retail model will result in a shift in demand from in-store personnel to shipping staff, inventory managers and purchasing managers who will continuously work to reduce the end-to-end cost of order fulfilment. 

Preparing the Workforce for the New Normal

The pandemic has caused a great disruption to the frontline workforce within the retail industry. As brick-and-mortar outlets re-open, the workforce must be reshaped to support the changes that are being introduced and to improve workforce flexibility. 

When rebuilding in-store teams, workforce composition will have to be rethought. An omnichannel approach demands employees to be retrained to achieve digital fluency and customer experience skills. 

Employees must understand that they are no longer just in-store associates, but customer agents who are ready to optimise the client experience, both online and offline. They must also be well-versed in keeping the e-commerce site up to date. 

The greater the workforce flexibility, the better the chances that the company has to manage future disruptions, as the company will be able to move its staff between stores and roles with ease.

There’s never been a better time for retailers to rightsize and optimise their businesses. 

Now is the time to develop a future-state vision for a store network with the omnichannel in mind. 

The company may choose not to reopen stores with low productivity, to accelerate store-closure plans, to renegotiate rental agreements, and to introduce stores or distribution centres to centralise online order fulfilment. 

Regardless of the outcome, the trend shifts resulting from the pandemic, as well as the continuity of e-commerce stores must be factored into the plans of the organisation. 

A few weeks from now, the “new normal” everyone keeps talking about will just be our way of life. 

Author
Benji Borg
CEO/Co-Founder
Fact: Im an avid wind surfer

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