The Future of Retail
What a rollercoaster of a year it has been for retailers in Ireland! Starting out at the beginning of the year, we had an economy at perfect employment, a roaring hospitality trade, record tourism numbers and bustling high streets. By the end of March the retail sector went into hibernation and has created a completely different trading environment for all.
We recently spoke with four retail industry experts, with a view to understanding how the pandemic is changing retail and what we can expect in the near future. They have highlighted 10 key trends that will impact retail in the coming months.
Keelan Bourke Head of Commercial, Retail Excellence
Retail Excellence work on behalf of the Retail Industry and ensure that the needs are heard by the Government. They assist retailers who have queries or would like advice on any particular area.
To find out more visit: www.retailexcellence.ie
Retail Trend 1: Shop Local & Early For Christmas
This Christmas will see a larger majority of consumers shop locally as restrictions continue to be in place for many areas and employees continue to work from home. Consumers will focus on getting their purchases closer to home as they minimise their movements. Furthermore, many consumers will prepare their wishlist and begin shopping earlier than previous years in case stock shortages occur. The fear of missing out will compel Christmas shopping from the month of October and this will be further accelerated by online players offering deals and promotions earlier this year.
Retail Trend 2: Discount, Discount & Discount
Amazon have signalled that they will be launching a new campaign of deals from the middle of October, followed by Black Friday deals beginning from the 13th November – meaning that there will be almost 2 months of discounts in the lead up to Christmas. Over the last number of years, we have seen that the January sale period has lost its appeal, with consumers spending their left-over income before Christmas when the same level of discount becomes available as the January sale. Similarly, with many retailers carrying extra stock from the disastrous Spring / Summer season, retailers will be anxious to ensure they aren’t left with further stock piles. Cashflow has been become a crucial lifeline for many businesses and so retailers will be keen to ensure stock is being turned over. Many businesses are also using the Black Friday and Cyber Monday promotions to generate loyal customers. Repeated purchases from this cohort affords retailers the possibility of recouping any discounts offered to capture them.
Retail Trend 3: Pop Up Stores Everywhere
Retail Excellence counted over 80 high profile store closures in Ireland since the beginning of Covid-19. Many more have silently closed as retailers hand back the keys to their landlord. This will present many opportunities for pop up stores to be created for the Christmas period as landlords will be eager to fill empty units and generate some rental income. This will breathe new life into many high streets around the Country as well as giving opportunities to maximise sales in new areas for the key Christmas period. Keep an eye out for a pop shop coming a street near you!
Retail Trend 4: Customer Care > Customer Service
Crucially this upcoming Christmas period will be about customer care rather than customer service. Customers will want to ensure that proper santisation, signage, distancing measures and queue management will be in place to ensure their safety. Retailers will need to prepare for larger numbers of customers looking to enter their premises and to be aware that their customers will be watching and noting measures put in place for their care. Retailers that provide the best care will receive return custom and will be credited for their responsible attitude.
Retail Trend 5: Challenging Christmas Ahead
The likelihood that Britain will crash out of the European Union without a deal after Christmas remains strong. As so many family incomes are dependent on jobs that trade with the UK, many consumers will be watching closely what happens with the trade negotiations. A potential crash out could dramatically impact consumer sentiment and spending levels could quickly be reined in. This is on top of Covid-19 restrictions, the rise in online competition, rising cost base and potential stock shortages from suppliers. Any retailer that can weather this Christmas period will have faced their toughest trading environment in recent history.
Anne Reilly CEO – Paycheck Plus
Paycheck Plus are a multi-award winning payroll-outsourcing service. Operating from ISO accredited Payroll bureaus in Manchester and Dublin, Paycheck Plus manage many of the UK and Ireland’s largest and most complex payrolls, processing more than 195,000 payslips totalling more than £400,000,000 every year.
Retail workers were amongst the first and hardest hit when the pandemic struck. The initial lockdown which began in the final week in March rendered obsolete numerous customer-facing employees. The vast majority of our retail clients acted quickly with the number of lay-offs in April 2020 being more than four times higher than in April 2019.
So after an initial shock in April, employee numbers stabilised in May. The critical factor during this time was the lockdown. The lockdown saw retailers close doors and so staff numbers plummeted.
It wasn’t until the 29th June when the government initiated Phase 3 of the recovery plan and non-essential retail outlets – with street level entrance and exits – were opened that employment began to return to their to pre-covid equivalents.
And so, while the recent figures indicate that a return to near-normal employment levels might be possible in the near future, it is clear that sustaining these staff levels is contingent on avoiding further quarantines or lockdowns.
Retail Trend 7: Pay Levels Returning to Normal
Wages also declined sharply in April, ending the myth that many retail workers were better off on wage subsidies. Wages fell by 32% when compared with April of the previous year and the trend continued during the summer where wages fell by a further 24% from March’s figure.
A further concern is that half of our retail clients have subsidised employees’ wages through wage subsidy schemes. The continuance of these schemes will be critical to maintaining current employment levels.
When we consider that retail employs 280,000 people in Ireland and accounts for 14% of national employment, sustaining these supports will be critical to maintaining employment levels within the retail sector. Furthermore, the premature end of any wage subsidy scheme could have a sizable knock-on effect to the Irish economy.
Retail Trend 8: Uneven Impact on Employees
Our research showed that at least 2% of our retail clients have already closed their doors for good and those that will survive the downturn will likely face permanent changes in the way they operate.
The pandemic certainly affected some retailer’s employees more than other’s with employment levels dropping fastest in discretionary retail chains. Clothes shops seemed particularly impacted, while many of those classified as “Essential Retail Outlets” (such as pharmacies, supermarkets and newsagents) were less affected.
We expect this trend to continue, albeit in a less pronounced way as customers continue to concentrate their spending on the essentials.
Our research showed that employees from Bricks and Clicks retailers fared much better than their Bricks and Mortar counterparts. That is to say, businesses that already had an online presence were far more capable of keeping staff on the payroll. For these businesses a complete cessation of trading was not required and several were even able to increase their employee numbers as they profited from a new wave of online customers.
Our expectation is that the shift toward online (or at least off-premise) retail and physical-distancing behaviours may well outlast the pandemic. And so, one likely outcome from this is the need for many retailers to expand or enhance their workforce to accommodate online-retail activities.
Conor Shaw CEO – Bizimply
Bizimply is an All–In-One People Solution that changes forever the way shift oriented businesses are managed. Bizimply allows our customers to manage their employee scheduling, time and attendance, in-store communication, frontline HR and shift reporting across multiple locations. Each application is powerful alone, but stronger together, in 3 suites of products on one easy to use cloud based platform. It is easily integrated to payroll partners like PayCheck Plus and is currently used daily in over 2,500 locations, across 11 countries and by 35,000 employees.
To find out more visit: www.bizimply.com
Retail Trend 9: Employee Satisfaction is Critical
Matt Coulthard (Solution Advisor, Bizimply) wrote a piece that came from a study published in 2015 focusing on the relationship between happiness and productivity;the findings were not what you might expect.
The study was conducted over six years across 95 different dealerships in USA and found that businesses with the happiest employees saw the most amount of sales. The academics who produced the study believe that workplace happiness is directly linked to productivity and not the other way around. One substantial factor missing from this study that is prevalent today lies with the novel coronavirus, COVID-19.
The Irish Examiner reported nearly 40% of Irish workers are “struggling” with everyday life as a result of the pandemic with a further 91% experiencing a rise in anxiety. Over 50% of the workers cited the possibility of a second wave as a reason for their elevated anxiety levels. The report was sourced from research conducted by Laya Healthcare. It stated that only one in ten Irish workers were receiving help for their mental health and almost eight out of ten in Ireland have not taken any sick leave since March. Ireland’s workforce is worried for their health, their mental wellbeing and their livelihood.
In the UK, the restrictions imposed have driven stress, anxiety and depression “far above the normal levels”. Nearly 60% of the individuals who took part in the study reported symptoms of anxiety, with 64% recording symptoms of depression.
While businesses in retail may not be able to make employees feel fulfilled right now, it is imperative businesses and their leaders understand how the workforce feels. Knowing how employees feel will give leaders a benchmark to increase their level of satisfaction at work, which in turn can improve sales. This is where technology can be a great asset.
Businesses need to hear what their employees have to say and can achieve this by initiating employee surveys. Once businesses understand their employees’ morale levels, they can act accordingly. Matt Coulthard cited in our blog that creating a strong company culture starts with its leaders, and that means you.
If you are still lost on where to start, using Bizimply technology can help you track and measure your employees’ morale without the need to create your own survey. Employees can simply report their sentiment using the Bizimply clock-in station. We also released a pre-shift questionnaire which helps businesses get a more in-depth look at how their employees are feeling. The feature doubles up as a COVID-19 pre-shift questionnaire to manage the pandemic’s risks on your business and it is being used by businesses across Ireland and the UK for COVID compliance.
Retail Trend 10: Surging Online Demand
The last half-year has been a whirlwind, and it feels like old news at this point to say that ecommerce has moved on 10 years in the past 6 months.
After the initial lockdown panic settled, it was clear that online sales had ramped up. When those sales began to decline again in June and July our clients were concerned that they were the only ones seeing this decrease in orders. We decided to analyse the lockdown impact and generate some benchmark sales figures to form a view of what our customers were seeing across the board and what the near-future of ecommerce for retail was looking like.
We aggregated the sales figures for all of our clients who are targeting the Irish market for ecommerce and averaged them to create a ‘benchmark’ monthly figure for 2019 and 2020.
On the left is the graph we generated for Revenue. The blue line is the benchmark for 2019. As a rule, at StudioForty9 we target 30% YOY growth for our clients. This is a key target that focuses the work we do with clients over the course of a year. So for 2019, you can see a nice gentle upward trend with the standard uptick for November and December.
The green line is 2020, and here you can see the extremely obvious and aggressive peaking of revenues in March (already surpassing Black Friday 2019), April and May. The peak in May is nearly four times the November results for 2019. This marks an incredible shift towards, and a reliance on, Ecommerce sales both for customers and for retailers.
While the results began to taper off as the lockdown eased, you will remark that each month from June to August 2020 is still significantly higher for Revenue than November 2019.
What this shows is a phenomenon we’ve seen a couple of times over our own career here at StudioForty9: it’s a step change in behaviour and attitude amongst the shopping public.
The last major one was when Black Friday properly took off. Many readers will remember the year that Black Friday really “landed” in Ireland and all of a sudden everyone was talking about it. Any retailer participating in online sales for Black Friday was seeing multiples of their previous best months, sometimes even a year’s worth of sales, within the period of just a long weekend.
What happens after a step change like this is that everyone impacted lands higher up the shoreline. After that Black Friday, revenues did of course taper back down, but where they levelled out again was much higher than where they were only months previously – and they stayed there.
We’re seeing a similar pattern here, and that pattern is visible and holding across most ecommerce KPIs.
We can see the pattern in the Conversion Rate KPI, which was already improving really well at the end of 2019 and coming into 2020, owing to a lot of work completed in mobile UX and site speed. But again, it really took off after March – a sign of the far greater intent to purchase on behalf of visitors to sites.
Again, we see that sessions increased dramatically and interestingly have not tapered off at the same rate as Revenue, indicating that people are researching more, and probably checking sites for opening hours and information about how to engage with a retailer in the post lockdown world.
But interestingly, Average Order Value remained static – so that’s still a major opportunity for retailers this peak season!
Overall, there is compelling evidence to suggest that the future of retail is moving online at a greater pace owing to the impact of Covid-19. From what we see behind the scenes, retailers are embracing this fact and working hard to improve both online and instore offerings in line with the new normal and in anticipation of what the future holds for growth across all retail channels.
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