We have all seen the headlines and excess of statistics about the uptick in online shopping over the past year. The global boom in eCommerce is obvious, but what is less clear is the vast impacts the last year will have on traditional retailers in the longer-term as ‘new’ consumer behaviour now becomes the ‘norm’.
Along with the continuing popularity and convenience of eCommerce – health, hygiene, and social distancing will continue to be matters that consumers tackle with wariness, at least for the medium-term. However, in-between the various lockdowns witnessed in Southeast Asia, retailers were learning to adapt to the nuances of their new operating backdrops: virtual queueing, curb-side pickup, contactless payment options and even using physical stores as mini-fulfilment centres.
One of the biggest challenges at the start of the pandemic when stores closed their doors was the issue of in-store goods. Lockdown saw large volumes of stock trapped in closed store locations that couldn’t be sold, or even reintroduced to the supply chain for eCommerce purposes. Further down the line, this stock was then forced to be sold at huge discounts once stores could reopen, or in some cases inventory was arduously and eventually made available for eCommerce fulfilment – which was great for consumer’s pockets, but bad for retailer’s balance sheets.
Is there really any need to have stock in stores at all?
Looking ahead, having a smaller volume of inventory within stores will ensure retailers avoid this position again. However, if customers can’t, or are unwilling to try on the items they’re looking to buy, is there really any need to have stock in stores at all? Realistically, aside from the safety implications of having multiple customers handle the same item of clothing, the more stock held in a store, the less accessible and less profitable it is.
Back in the late 90s, leading UK retailer Argos’ model was regarded as unusual for its approach, using its stores as mini-distribution centres, only having the goods on display with a ticketing system for purchase. Now however, this approach could actually become the default for many retailers in the future, using things such as virtual queuing systems, increased use of mobile tills to ensure social distancing, and stock used for display purposes only.
The disruption of 2020 has made retailers realise that stock located in the ‘wrong’ place greatly impacts sales, profitability, and the customer experience. So, why not also use the learnings of the past 12 months as a catalyst to change the whole philosophical approach to the physical store?
Change makes for better innovation
Much of the brick-and-mortar retail industry has been changing for many years now, but the pandemic may well represent the short-term, significant shock needed to kick-start a retail renaissance, with brands rethinking the best use of their most valuable assets – the bricks and square footage of their flagship stores.
The next decade will likely see brands looking to reinvent their in-store presences in a move towards more experiential brand experiences, rather than effectively super-sized showrooms full of products across all sizes and colours, as in the not-so-distant future, the traditional shopping trip we once knew may well be completely transformed.
Instead of the multi-coloured array of bags associated with leading fashion brands, tomorrow’s Southeast Asian shopper may well be bag-less.
Racks of clothes could be replaced by mannequins displaying fashion combinations as shops reduce the levels of goods they hold, with smart mirrors allowing shoppers to use virtual or augmented reality to try on clothes in a completely contactless environment.
Likewise, shoppers will be able to avoid queueing, instead using app-based queuing and mobile point of sale technology through iPads and contactless payments – and while some stock may be available to take home there and then, more likely than not, it will be delivered on the same or next day to the customer’s home – in effect, a reverse click & collect.
Retailers must adapt with consumer behaviour change
Consumer behaviour has changed drastically over the past year, so in order for retailers to align with their consumers, approaches to retail and how the in-store experience actually operates must adapt too. In the past, out of stock would have meant out of business, however, that may not be the case today.
As speculative as it might sound, the environment that the retail industry is operating against today means that the less stock a store physically holds, the better off it might actually be. If retail is to recover and grow again over the coming years, the way in which physical stores are operated and used has to change.
What is clear is that the off the street shopping experience we once knew isn’t going to return, however, the important thing is to recognise that this is okay, and if anything, it is paving the way for a better, more innovative era of retail. With an increased awareness of shifting consumer behaviour, an understanding of the latest applications possible for supply chain and retail technology, and a willingness to think more creatively and innovatively about how best to use valuable floor space, retailers will be able to reinvent the brand experience on offer in their flagship stores, welcoming in a brick-and-mortar renaissance of epic potential.
For more information on how you retail business can best adapt with consumer behaviour change, please visit: https://www.manh.com/en-au
By, Richard Wright, Managing Director, SEA, Manhattan Associates