The year the retail world didn’t stand still

SYKES EMEA Team

It’s easy to think of 2020 as the year in which the world stood still.

Many of us were – and are – working from home, travel is still restricted, and, in many key respects, our everyday lives are still on hold.

But the world didn’t stand still.  All of us, across countries and business sectors, found new ways to connect, share information and continue trading.

According to a McKinsey Global Survey of executives, companies have accelerated the digitisation of their customer and supply-chain interactions, and their internal operations, by three to four years. The last few months have therefore brought about fundamental and long-term change that may have happened anyway – but taken years to achieve, if at all.

Underlining that, the survey found that it would have taken more than a year to implement the level of remote working that took place during the crisis. In the event, it took an average of 11 days to implement changes, and nearly every company created workable solutions within a few months.

The speed at which companies have ingeniously adopted new ways of working has therefore been remarkable.  Changes that would have taken years were achieved in a matter of weeks.

The McKinsey survey also suggests that companies are making these crisis-related changes with the long term in mind. Like it or not, those changes are not going to be undone, and the world is not going to return to an old normal.

That’s particularly true in retail which has faced enormous upheaval, with many brand names unable to make a viable transition from bricks-and-mortar to the digital marketplace and so have closed down.

For example, Boohoo has just bought collapsed department store group Debenhams, a high street brand for 242 years, but will close all 118 shops with up to 12,000 job losses. The grim statistics are that nearly 180,000 retail jobs were lost in the UK in 2020, up by almost a quarter on the previous year, according to the Centre for Retail Research (CRR).

It warned there will be more pain for the sector in 2021 as retailers face a cash flow crisis and rent payments, with some 200,000 more retail jobs at risk this year.

It is, in part, as a result of lockdown restrictions which have meant that if we can’t get to the shops, then those shops must come to us.  Indeed, most consumers across the globe have tried online shopping, many for the first time, and most – 65% or more – are not going to change back.

Another report from McKinsey sets out the main consumer trends Covid-19 has brought about. In most countries, consumers intend to continue shifting their spending to essentials, while cutting back on most discretionary categories.

This reflects falling incomes for many people, and a growth in digital shopping.  Also, bad news for the High Street, many consumers say that they’ll continue to shop online. Worldwide, in 2019, an estimated 1.92 billion people purchased goods or services online. During the same year, e-retail sales surpassed $3.5 trillion worldwide.

E-retail revenues are projected to grow to 6.54 trillion US dollars in 2022.

The fact is that lockdown has changed the consumer habit of physically visiting stores.  That’s been most marked in older demographics, who may have been wary of online shopping, or lacked the technical ability to shop online.  That’s changed, and so have their buying habits.

Something else has changed.  Now that we’re working from home, a lot of people won’t want to go back to the office on a full-time basis.  That will have an impact not only on offices, but on service industries – like cafes and restaurants – on which they rely.

It will profoundly change our towns and cities, and a key priority for national and local government will be to ensure that we maintain vibrancy across communities.

One example being put forward is to convert empty hotels and offices into housing, which in turn would bring footfall back to the High Street supporting local shops and restaurants.

We tend to think only of Covid-19 as a disease that will in time be beaten.  But its social impact will be felt for many years, particularly now that homeworking has become so popular with employees and employers alike.   We will therefore have to be smart and ensure that lifeblood doesn’t drain from our urban areas.

A vaccine may now be on the horizon.  But we will continue living in a very different world.

Skills

Posted on

February 15, 2021

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