How shutting up shop opened the door for ecommerce

How shutting up shop opened the door for next-generation retail

I think we will all remember the day we heard we were going into a national lockdown. Overnight, my stack of fifteen or so digital roles – all stamped urgent – were withdrawn by clients. As an industry that can’t work from home, retail was one of the hardest sectors hit by the measures. Thousands of people were furloughed, and purse strings were tightened, as businesses struggled to stay afloat. 

In this chaos, retail companies of all sectors, and of all sizes, began to recognise that to succeed in this new climate they needed to become digital-first. eCommerce boomed, with research from Edge Retail Insight reporting a £5.3bn boost to the UK eCommerce sector in 2020

After taking voluntary furlough, I was eventually called back to manage the needs of a rapidly growing sector. My once empty desk is now overflowing with new need, and we’re growing our eCommerce recruiting team at pace to keep up with our clients. The pandemic has propelled retail to a new, very exciting, place. And the questions now are: how strong is your digital offering? Can you compete with businesses that were built on eCommerce? What industries are performing? And what does this mean for bricks-and-mortar shopping? I’d like to answer some of these questions.

Who were the winners in retail in 2020?

Health, fitness and nutrition all received a boost under lockdown, with people investing more time in themselves and their wellbeing. 

I’ve experienced first-hand the boom in athleisure, being privileged enough to work with clients like Lululemon. According to retail analytics business Edited, sales of activewear in the UK were up 97% in the first week of April. This correlates with a rise in home workouts, which athleisure brands have been quick to seize on, with brands including Lululemon, Nike and GymShark all offering their own live classes. This has led to some significant results.

Nike, for example, transformed its popular online training app (Nike Training Club) into a customer engagement tool, with special promotions on its lines for regular users. As a result, despite store closures, Nike’s revenue for the first quarter was up 5%, with online sales rising by 36% compared to the previous year. Meanwhile Lululemon, which also runs its own online workouts, hit over $1 billion this year, with 22% growth in net revenue

I’ve also seen a significant rise in nutrition and specifically food subscription services. With more people cooking at home, more anxiety and less head space, and a greater interest in health, ready-to-go, healthy meal plans are on the rise. Hello Fresh saw its customer base double in 2020, with revenue shooting up by 120%. At the same time, there was intense competition for a stake in Mindful Chef and Gousto hit unicorn status with a £25m investment

Pharmacies and health retailers are also winners in the Covid-19 climate, with growth for 2020 projected at 4% for the industry in the UK. Herbalife Nutrition, for example, reported a 22% growth in its net sales for the last quarter compared to the same period in 2019. And while the general beauty industry is due to contract by 27-30%, clean beauty has grown by more than 20% since March 2020

Is eCommerce the death of the high street?

There’s been a lot of debate about what eCommerce means for in-store shopping. Certainly, the high street – already on rocky foundations – has really struggled this year, with store closures and powerful eCommerce competitors causing many businesses to collapse under the pressure. Department stores, a high street staple with a large physical presence, are a good illustration of this distress. Growth for 2020 in the UK has plummeted from -1.1% at the outset of the pandemic, to -17.8%, and we’ve seen the result of this in the untimely demise of Debenhams. Worryingly, 17.2 million people in the UK now plan to make online a permanent change to their shopping habits, which on the face of it, would suggest bad things for the high street. 

But I want to make it clear that I don’t believe that the growth in eCommerce sounds the death knell for in-store shopping. In my opinion, the long queues for stores once the ban on non-essential shopping was lifted should be proof enough that people still want a high street. But I also don’t agree that people are ‘naïve’ to sense a permanent shift in behaviour, as CEO of Primark, Paul Marchant, suggested.

Instead, I think we’re seeing a shift in consumer habits towards intuitive, digital experiences that are simple, convenient and personalised. But the key will be integrating that across both digital and physical customer experiences. 

‘Total experience’ is key to compete with digital-first businesses 


Gartner predicts that in the next 18-24 months in-person and digital experiences will become more seamless and intertwined. ‘Total experience’ (as coined by Gartner) will bring together once siloed disciplines like multi-experience (MX), customer experience (CX), employee experience (EX) and user experience (UX) to create single, streamlined brand journeys. 

I think this is certainly the future of retail, where customer centricity will be key to outsmarting competitors. Competing in an online environment today is about so much more than simply owning a website. Competing with digital-first businesses is about understanding your audience first and personalising your brand and your experience to them. 

This means using digital to its full potential, from drilling into data to understand individual customers’ behaviours and preferences, to developing an integrated IoT strategy that simplifies the customer experience; or deploying augmented reality to help customers merge the physical and digital worlds. Companies like Burberry and Farfetch are pioneers in this, and by harnessing digital while tapping into their unique selling points, they are bringing established, luxury fashion into the fifth industrial revolution. ‘Total experience’ is not online-only, but rather is about the entire end-to-end experience. The businesses that are best prepared for the future are therefore those companies that can create a seamless experience between the digital and physical world.

Conclusion 

There’s no denying that the coronavirus pandemic has altered the way that we browse and buy. Businesses must now invest in their digital offering or be undercut by faster, more aligned, more technologically savvy, competitors. But that doesn’t mean that it’s the end of the high street. Businesses that adapted best to this climate – such as athleisure and healthcare – listened to need and developed their digital strategy accordingly. Customer centricity, enabled by digital, is the future of the industry – for retailers of all sizes, in all sectors, physical or eCommerce based. And it’s one I’m personally very excited for. 

How are you integrating your digital strategy into your business? Reach out to me at terry.cannon@lorienglobal.com to discuss how we can help you reach top eCommerce and digital talent, and prime your businesses for retail 2.0. 

 
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