What is the Retail Renaissance?

Post Covid19, as most of the sectors are gearing up for recovery mode, my article highlights the new era of a retail renaissance.

Retail is one of the sectors most affected by COVID-19 in both positive and negative ways.

There are sectors that are thriving in the current scenarios such as grocery shops, hypermarkets, pharmacies, food delivery aggregators, and e-commerce marketplaces.

It is a very busy time for these sectors.

As every coin has two sides, the flip side of covid19 on retail sectors such as fashion, beauty, and non- food sectors which are facing challenging times. And most of them are closing as well or filing for bankruptcies.

These turbulent times are giving birth to a new era in Retail.

I call it Retail evolution or Retail renaissance.

My article highlights the changes that one can expect in the future of retail as we all gear for economic recovery.

 

Retail renaissance – Covid19, no longer a health pandemic, its economic disruptor.

It has impacted the changes in the consumer’s behavior. Today consumers have got themselves accustomed to the convenience of shopping from their couches.

The emergence of the shift to online and digital shopping

Pre covid19 era, most of the retailers used to think that digital /eCommerce initiatives will take time to pick up since eCommerce trade was only 8% of the overall brick & mortar pie.

Fast forward to today, post covid19 era… digitization is no longer an option. It’s is a fact of life now.

 

Read 10 eCommerce growth hacks, click here.

 

Rise of the value for money brands.

The aftermath of any economic downturn is an increasing trend towards value for money brands across retail sectors.

This is already happening in essential categories, for example, when the pandemic occurred this March month, I recall spending dhs 140/- on a jar of 5litres of sanitizing gel.

As time progresses, more and more players in the market introduced their range of sanitizers, the price corrected itself and today, the same jar is now available for less than dhs 40/-.

That’s the perfect example of Product life cycle & market dynamics.

How will the Retail Renaissance look?

Ideas are the new currency for new era economies.

Amidst shop closures and bankruptcies, a new kind of retail is evolving.

The entry of Digital Native brands into physical retail formats.

While digital-native brands like Bonobos, Glossier, Casper, and Warby Parker started online, many are launching and expanding their physical presence.

According to a study by a Real estate Company, digitally native brands are predicted to open 850 brick-and-mortar stores in the next 5 years, with New York being the most popular destination. (Study conducted in the US)

 

An example from our Indian ecosystem, Urban ladder, which started as a purely eCommerce site, today is creating experience centers in a couple of malls in India wherein they want their customers to engage, feel their furniture prior to purchasing.

Brick & mortar (B&C) brands are creating online channels to complement there physical ordering.

Example – Click & collect by Carrefour in Dubai.

Customers can purchase their groceries online and come to a mall’s parking facility having dedicated space counters for picking up your online orders.

Amazon GO concept is in line with this philosophy.

Watch the video here.

 

Experiential retail – the core of phygital (physical and digital) world.

Retailers are leveraging AR technology to bridge the gap between the digital and the physical.

Experiences have become the social currency of a new generation of consumers who have commemorated every meaningful life experience online.

Mega-brands like Target, Lowes, and Amazon have launched AR features that allow shoppers to picture furniture in their homes.

AR app of Ikea Place.

 

Read more on experiential retail in the beauty sector, click here.

 

Data-driven shopping enhancements

Amazon scout is an example wherein it uses machine learning to recommend specific products to shoppers based on their likes and dislikes & their shopping patterns on the digital space.

Currently still being tested, Scout provides recommendations in the categories of home furnishings, decor, and women’s shoes, with more categories coming soon.

Mergers & Acquisitions – forms the new normal in the Retail Renaissance.

The retail renaissance shall see more mergers and acquisitions, either like-for-like acquisitions, that is, the purchase of a direct competitor, who plays in the same categories.

The recent acquisition of Future group by Reliance Retail falls into this type of acquisition.

Or category or channel expansion, that is, buying into a new category or channel with the goal of improving growth exposure and/or broadening the product offering to the consumer.

 

Retail Renaissance offers a dual-edged sword to new era consumers.

They have to face new financial realities.

While their targeted millennials’ incomes have increased when compared to previous generations but their net wealth continues to trail.

So today retailers will have to serve consumers, who are well informed, more discerning but pressed with low incomes & higher debts.

It is going to be more challenging to entice such consumers and keep them engaged with brand stories and emotional & experiential connects.

If a retail concept that can address these concerns with their value for money proposition shall thrive in the coming years.

Retail Renaissance- New era retailers will empower their front-liners more.

Have you ever wondered why a neighborhood grocer is able to run his small shop more profitably than the major hypermarkets?

Many of you will say since the small shop owner operates on lower overheads that’s why he or she is far more profitable.

The above may hold true partially.

The main reason for the success is that he knows his customers face to face.

He understands his customers, their shopping behavior, and accordingly, he plans for his merchandise mix.

                       The Reason for success: Knowing your customers.

Big retailers miss this aspect as they get entangled into the processes & SOPs and hire research firms to find what their customer need.

There is a loss of key insight in the process.

New era retailers, will empower their front-liners more, push more power, autonomy, and decision-making back to the front lines.

They will create more information capture channels from the front lines to make an agile strategy for their brands.

 

Make your brand –purpose-driven & technology your BFF. (best friend forever).

I am not a huge fan of technology as I strongly believe in simplifying retail.

However, technology can be your BFF if retailers are clear on their brand’s promise.

For example – Walmart is investing in robotics in order to reduce its operating expenses.

It is in line with its brand’s promise,

                               “Everyday low Prices”

By lowering operational costs, they can offer better prices to their customers.

 

Conclusions:

Never seen or heard brands will make a foray into the retail sector and that’s the crux of

                                                            RETAIL RENAISSANCE

Feel free to reach out to me in case you are a business owner willing to reinvent your concept.

 

References: header pic Photo by Ksenia Chernaya from Pexels, Mckinsey report on next normal, Arabian Business, and other business publications.

About the author:

Ritesh Mohan is a passionate retail professional with over 20 years in the Retail sector, handling some of the biggest brands in the beauty, fashion, and fragrances retail & FMCG sector. He has been instrumental in the growth of some of the regional brands as well in the Middle East region. Ritesh specializes in Retail management, Product development, and Brand Management, Retail Operations, Sales Management, and Franchising & Business Management. He strongly believes in empowering business owners with his wisdom & experience of around two decades in the industry.

Ritesh can also be followed on Instagram as @mohanritesh & on Youtube as @riteshmohan