In this update, we will be focussing on the latest National Office of Statistics (ONS) updates and then looking at both issues around stores re-opening and the continued use of online platforms.
The return of the High Street?
The key point for us this week from the ONS for the period ending 30 July was that despite the EY Future Consumer Index immediately prior to the reopening of “non-essential” shops finding that 70% of shoppers were wary of going to non-essential shops (and 57% of shoppers said they would be more aware of hygiene in stores), footfall across all UK shopping destinations has increased week on week during the first four weeks of trading. The ONS found that between 19 and 26 July 2020, footfall in high streets moderately increased to just under 60% of its level the same day a year ago, while retail parks and shopping centres held steady at just under 80% and 60% respectively.
The return to store opening
With the gradual return of the high street, many retailers are now starting to prepare to open stores as the Covid-19 lockdown eases.
However, there is a real change in the landscape around physical stores and how we shop at the moment. The big factors are:
- A real shift to multichannel retail and for some retailers, to lose physical stores as both landlords and tenants are going bust.
- The certainty of rent payments has fallen in some sectors (particularly retail) to the point where exposure to the sector is likely to discourage lending and pension investment. This could result in a reduction of both supply and demand for many physical stores.
- Suppliers of non-branded goods and well-known brands are seeing the possibility, security and cost efficiency of direct online selling.
- Going out shopping may be less of a national hobby because it is now:
- less pleasant;
- more frustrating (to queue only to find what you want is out of stock);
- inconvenient;
- more seasonal (more rain will mean fewer people will queue); and
- less necessary.
The threat (and media coverage) of a flare up or a second/third/annual wave could reinforce this behaviour
- More people will work at home, reducing incidental shopping. Many will already be looking at a monitor or smartphone.
- Many employers are considering staff returning on shifts so as to allow for social distancing and reducing infection rates. Many shops will not be able to open long enough to maintain the previous footfall that arose around usual working hours. Online businesses don’t generally need to ‘sleep’.
- Localised flare ups resulting in temporary localised lockdowns means that cashflow predictions may be unreliable, staffing requirements could be unaffordable and stock movements restricted at any time.
What should retail businesses do?
The primary focus needs to be to embrace new technologies – who would have thought that we would see buskers start using contactless payment technology?
Key issues to consider include:
- In-store measures – These involve looking at smart technologies, such as, smart security, virtual queuing systems and smart tills. Smart security allows for the taking of shopper temperatures when entering stores and could also be used to maintain a virtual count of the number of shoppers in-store. Virtual queuing allows shoppers to reserve a spot in the queue, carry on with other activities and return at an allocated time which lessens exposure to other shoppers but also comes with the added benefit of less queueing time. Some clients are also using smart tills which can automatically scan and recognise all products in a shopping basket, again minimising queuing and the need to touch surfaces in-store.
- Online capabilities – For any retailers for whom it may take time to construct and offer a comprehensive range of online services, an option to consider would be a partnership with an existing online market place. This would enable those retailers to leverage the partner’s logistical capabilities to continue to meet changing consumer demands.
- Data capture – Getting accurate data to feed into online sites allowing shoppers to make decisions on whether to visit a store for the last remaining unit of stock can help to build consumer confidence but also keep a tighter grip on inventory and drive footfall.
- Be ahead of any trends – In the backdrop to this, whilst all businesses are hoping for a surge in consumer interest, one of the big fears is that a large percentage of transactions will be returns of goods purchased pre-lockdown by so-called ‘reverse buyers’. With this in mind, businesses should:
- Ensure that staff are up to speed on any changes to the returns policy and the process accepting returns from a customer – this is particularly important for point of sale staff.
- Double check the returns policy – is it still fit for purpose in the current climate? Is any extended return period still needed or relevant?
- Consider any additional measure which could be implemented to mitigate against increased returns. An easy example of this could be providing more guidance around clothing sizes and variances in size between brands where changing rooms are closed.
Using online comparison platforms
Despite the increase in footfall, somewhat unsurprisingly, online platforms still dominate our buying habits. A big part of these are online platforms, that help us choose what to buy.
With a focus on these, it is worth noting the Online Platforms Regulation (EU 2019/1150) (“the Regulation”), that came into force on 12 July.
These are an attempt to promote transparency fairness and for business users of online intermediation services. These are the kind of services which are information services to then offer goods/services to consumers with a view to facilitating direct transactions between those business users and consumers. It applies to online service providers and search engines, including app stores, social media platforms, price comparison sites and booking sites that provide services to EU businesses or customers whether or not they are established in the EU. The Regulation does not apply to online platforms which do not act as an intermediary between businesses and their end consumers, e.g. online advertising services, payment services and retailers selling directly to customers.
The Regulation is now in force, despite UK’s withdrawal from EU on 31 January 2020, as the withdrawal arrangements mean that EU law continues to apply in the UK until the transition period comes to an end (currently 31 December 2020). We would expect the position in the UK after the end of the transition period to remain broadly similar on the basis that other EU platforms and search engines will still have to comply with the regulation, however the detail remains to be seen.
Conclusions
As sectors re-open, this will hopefully help contribute to a continued week on week increase in footfall across non-essential shopping destinations. The interesting behaviour to monitor will be if there is a related decline in the wariness of consumers visiting stores.
Without a doubt our approach as businesses will be subject to reflection and change throughout the next few months – watch this space….
Please drop me an e mail or call if you need any further details and stay safe and well.
Roger
