The post-pandemic retail environment will almost certainly support fewer retailers. Adapting to transformed buyer behavior seems to be the key to survival.
By ShopAbility director Peter Huskins.
Peter Huskins
The last few weeks of suspension have stretched relationships. I am not talking about personal relationships, although these may have been stretched in more than a few households.
The relationships I mean are those that retailers have to landlords, those that they have to suppliers, and those that they have to their buyers.
There is no doubt that this pandemic will have a profound and lasting impact on all of the above. History repeats itself, but direct comparisons to SARS or the Spanish flu are both premature and poorly advised given the social, economic, cultural, medical, and technological advances that followed in the following periods.
It is also becoming increasingly clear that the time between the blockage and a full trading environment will be long and that the final picture is not only cloudy, it is completely unclear – despite what some purists might preach. The puzzle contains too many moving parts for someone to be able to say exactly what the future will bring and then be completely correct.
The packaging mentality in shopping has come to an end. The personal nature and potential impact of COVID-19 have limited buyers and consumers focus on "me", which has given rise to some general trends that I believe are worth watching.
Most people eat about four or five times a day, which doesn't change too much. What has changed dramatically is where we eat, what is at home. Self-consumption mainly requires the purchase of ingredients that come mainly from supermarkets. Hence the spectacular sales increases of the majors and metcash.
The losers are the places where we have not been at home, such as pubs, clubs, cafes and restaurants, where physical distance cannot be easily and comfortably achieved. These will be among the last reopened venues, giving unfair advantage to supermarkets, fresh grocery retailers, and small local independent shops.
The risk is that these food service based retailers will never recover. The pandemic return to home cooking and the entertaining way that any aMasterChef style TV show could never do: to inspire a new generation of curious and creative chefs.
The wellness trend in food has been around for some time, but its expanded definition and acceleration are clear, with the trend continuing during the pandemic and even gaining strength. I don't just want to eat healthy. I also want to stay healthy and take whatever precautions I can take to be responsible for my health. Reliable and safe brands, preferably from local and / or Australian production, are some or the new norms – although they are not that new. It's just that the voice boost is much louder and more even.
The hygiene of households, people and retailers is at the forefront of the requirements of the new buyer, regardless of whether the transactions are online or in-store. Retailers with a shady past or bad business practice quickly and ruthlessly lose loyalty and sales without a second chance.
The same applies to supplier brands. No amount of discounts and discounts will restore that trust.
In terms of price, this role could change significantly in the short to medium term. Hoarding took place regardless of the price. It was the solution that the brand or product could offer that led to emotional buying decisions. With an unclear end to social distancing and the semi-permanent changes in behavior that could then arise, this is an ideal opportunity for retailers to recalibrate buyers' expectations regarding price.
We have already discussed advertising prices and the “waste of margins” caused by aggressive and unnecessary discounts. Based on the latest US data on customer expectations and the reality of the price, location, fresh groceries, and a hygienic shopping environment seem to be higher than the price.
The counter argument is that with a forecast unemployment rate of over 10 percent later this year, a completely new population will try to spread their dollars as much as possible. If you don't eat out, some economies will be reached, but other alternatives will be needed to balance the family budget.
Buyers and retailers must be prepared for the ongoing physical distancing and slow relaxation of current travel restrictions. While we were at home, we looked for options and alternatives to make life a little easier, hence the surge in online shopping. This is a risk to the future of shopping centers, as well as retailers and tenants based in the hospitality industry, who gather in food courts and other restaurants. Due to a behavior change that could be permanent when customers switch to e-commerce, online retail has been charged and brick-and-mortar retail may not be as attractive in a post-COVID-19 world.
Much has been said about rents and landlord relationships both before and during the crisis, and much more needs to be done in this area. Rents will decrease as retailers' business models are under acute strain. Many will not be reopened unless a quarter is identified in these discussions.
It is important to remember that at some point buyers will spend and consume money again and the Australian economy will come back to life. When and by how much are the key questions. If we are on the other side of this, or at least the worst, pandemic, it is obvious that there will be fewer retailers, especially small retailers and service providers, whether in local shopping streets or in the larger neighborhood or in regional shopping centers.
The future is still very bleak. Consumer confidence is likely to be volatile for a while, especially as the longer term effects of COVID-19 become clearer for "me".
About Peter Huskins
Peter Huskins is a career retailer that is well known and recognized in the Australian FMCG industry. As a pioneer in shopper marketing, a passionate retailer, speaker and trainer, he has worked with suppliers and retailers for more than 20 years to develop business, category, customer and channel strategies as well as competitive differences. Call Peter at 0412 574793 or send an email to: peter@shop-ability.com.au
Serving the new normal shopper first appeared in Retail World Magazine.
