Retail has changed – perhaps forever

We pin down retail analyst Richard Hyman to discuss the long-term effects of the pandemic on the retail industry

Are there any positives that could come out of the pandemic for retailers?

Physical retail is a high fixed-cost business. The big variable is the number of people who come through the door. If that number diminishes and the costs remain the same, the retailer makes less money. That, as a business model, is not sustainable.

Where are the positives? Post-Covid, the bar will be raised in terms of customer excellence and staff welfare and safety. The strong will survive and provide jobs that are more secure and will allow retailers to develop their businesses to the benefit of everyone. Retail has paid lip service to understanding its customers, so far. Putting the customer first is not a slogan, it is philosophical and should be at the heart of everything they do. It has never been so important as it is now.

What is your hope for retail over the next five years?

Right now, retail faces an existential threat. Not so long ago, retail had the monopoly of putting the product and the customer together. It no longer has that monopoly. The brand owner no longer requires the retailer to find their customers. They can do it themselves online, or even open a shop themselves. Retail must get better at retailing. By that I mean getting properly engaged with customers. Most retailers are too big. They have too many stores, with too much floor space and too many products. They have diluted their engagement with core customers in the pursuit of peripheral ones.

My hope is that we will see a much leaner retail industry, an industry that is much more genuinely focused on their customers, that treats its staff properly and acknowledges that their store staff and managers are kings of the game. They are the people that you entrust your precious brand engagement with customers to. If you treat them well, and pay them well, then they won't leave so often and the whole thing becomes a virtuous circle, rather than a vicious one. If that happens, then the phoenix will have risen from the ashes.

Should independents step up their online game?

Many independent retailers have had 'a good crisis' in the sense that it has forced the public to shop more locally. In general they have stepped up to the plate and done a great job. And given that working from home is likely to be much more the norm, they have a huge opportunity to retain this additional business. Much of this involves simply continuing to do what they already do really well. But they should certainly be looking at digital opportunities to make things easier and processes smoother. This need not cost vast sums of money. But talking to some tech specialists who really understand retailing is worthwhile.

A full blown transactional website is probably not appropriate for all small retailers but there are a growing range of tools that can support operational management too, such as using social media platforms or customisable apps to arrange no-contact curbside click and collect style pick-ups or home deliveries for customers. Digital is rapidly becoming more accessible and affordable.

Richard Hyman has advised many of the UK's leading retailers and is non-executive director of Ergonomic Solutions (www.ergonomic.solutions). Connect with him on Linkedin.