<strong>2022</strong> PARADIGM SHIFT The Great Retail Reset THE YEAR OF THE GREAT Retail RESET While the harbingers of doom like to paint a dire picture of the future of retailing - aided by closed stores, empty shelves, lack of staff and economic instability – the wise note that, with great challenges come new opportunities. The pandemic may have simply catalysed a long-overdue ‘great retail reset’ which has helped savvy retailers rebirth.
<strong>2022</strong> PARADIGM SHIFT | The Great Retail Reset There is no doubt that The Great Retail Reset is happening, and will continue for at least another 12 months, or more. However, while it’s understandable that many small businesses, and specialist retailers will be wondering what the future holds, not everything caused by COVID should be viewed as adverse. During previous times of upheaval, such as recessions, world conflict and other pandemics, amongst all the turmoil, we usually discovered a few examples of The Law of Unintended Consequences. In addition, the old proverb every cloud has a silver lining rings true. From the outset, COVID-19 caused the flight to digital consumers all around the world – at least in the West – who were forced into online shopping as government restriction and lockdowns meant they could not visit stores. This had two impacts, the first: obvious, and the second could be described as an unintended consequence. Digital adoption across industries dramatically increased in the past two years because, for many, there was no other way to conduct business. In essence, it accelerated what was already in progress. However, for specialist retailers it fast-tracked investment in digital technology. Ironically, it accelerated the consumer’s use of online shopping, too - among people who had avoided it- or at least had not fully adopted the option. As consumers purchased household groceries and staples – because they had little choice – it helped instill confidence in ecommerce in non-essential categories. And with all this new activity the greatest unintended consequence came to the fore: people came to realise the importance of instore shopping. Perhaps it’s a human trait that we don’t appreciate things until they’re gone; something’s value is not realised until it is too late. The acceleration of ecommerce and online shopping caused by COVID-19, therefore, made people understand the importance of life’s little things. For retailers this was great news because for a decade or more the pundits have been saying physical stores would go the way of the dinosaur. The global pandemic showed that to be false, though it did cause businesspeople to reevaluate the importance of their digital offerings. Indeed, one feeds off the other and vice versa. <strong>Jeweller</strong>s also learned that it can be one thing to have a website, but it’s another thing entirely to be found by the consumer. Digital acceleration meant they needed to work harder on their technology and website. For many, without shoppers entering their physical store, they found their online presence wanting. It’s akin to having a jewellery store in a back laneway, rather than on the high street. Perhaps it’s a human trait that we don’t appreciate things until they’re gone; something’s value is not realised until it is too late. The acceleration of ecommerce and online shopping caused by COVID-19, therefore, made people understand the importance of life’s little things. The next example on The Law of Unintended Consequences – shock to loyalty - arrived holding the hand of digital acceleration. They are effectively two sides of the same coin. What might have been called ‘normal consumer behaviour’ changed as people discarded their loyalty to specific brands and stores. True, some of this was forced upon them when international supply-chains were affected. That is, when consumers couldn’t find their preferred product or shop at their favourite store, they looked elsewhere, thereby quickening the shock to loyalty. This is both a blessing in disguise and damnation; you can be more easily introduced to new customers while losing existing business. Therefore, The Great Retail Reset will mean that greater focus will be placed on maintaining longterm customers. The pandemic brought to the fore a new consumer: the homebody. Prior to COVID, the homebody represented a group of people - largely Millennials - who are said to spend all their time at home because they can’t afford to do much more. The homebody economy thrived during COVID because people worked and shopped from home. Their spending reflected a shift, with more people being forced to be homebodies spending money on at-home activities and small luxuries. Many workers not only enjoyed this new way of life, they wanted it to continue. This has had a huge impact on CBD retailers who rely on office workers, however, it has been a boon for suburban businesses as they found new customers working from home during the day. Every debit has a credit! Of course, not all retailers survived the pandemic. It’s difficult to accurately gauge how many businesses have closed because of COVID, but it’s fair to say it will be in the thousands. It is also fair to say that the pandemic caused landlords to genuinely consider The Great Retail Reset too, when stores could not pay rent because they were banned from opening. This created a more balanced approach to new discussions (read: ‘debate’) on more appropriate (read: ‘reasonable’) rents and tenancy costs. If governments were forced to step in with legislation to safeguard against landlords abusing the situation, then you knew it was serious. Therefore, another unintended consequence could be a huge benefit to retailers as landlords appreciate their customer, signifying another side of The Great Retail Reset. The points above are just a few of the lessons that we have learned since January 2020 - there are many others, see David Brown’s (below) – however; for retailers the two most important changes might seem diametrically opposed but they reinforce the importance of the other. The Great Retail Reset takes place with the knowledge that: 1) Buyers and sellers alike befriended technology and there’s no going back and 2) humans are social creatures. <strong>February</strong> <strong>2022</strong> | 39
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