COVID-19 represented an unprecedented obstacle for the retail sector in 2020. But what is the concrete impact of the crisis? What can we learn from it, and will we remain under the spell of the Covid story in 2021? Four retail experts reflect, and look ahead.
“Stores will not disappear, but will be given a different function”
According to Els Breugelmans, Professor of Marketing at KU Leuven, this crisis has magnified and reinforced the trends that were already present. “Personalisation, convenience, local buying and shopping experience are all trends that have gained ground over the past year. The latter is very difficult today, and will remain so at the beginning of 2021. Even if the security measures are relaxed, people might remain a little more inhibited out of a certain habit.”
“2021 will be a year of transition. The phasing out of strict measures will be gradual, and people will probably keep a distance for a while and have an increased focus on hygiene. The habit of doing things differently, including, for example, doing runshopping, at a safe distance and online, will continue for some time to come.”
Which trends will be at the heart of the new year? “Things that make shopping hygienic and safe will gain in importance in 2021. But the motivation to shop this way will lie more in ease of use than in health concerns. In order to make shopping hygienic and safe, we are paying more attention to non-contact transactions. Just think of self-scanning, contactless payments, the use of QR codes and ordering products online. These are all things that we have come to find easier through frequent use.”
According to Els Breugelmans, online initiatives will continue over time. This does not mean that there will no longer be room for physical stores, but that they may be given a different role. “I don’t expect that stores will disappear, but they will be given a new function. I’m thinking of a more compact shopping area, which is not only a place where you can buy or sell products, but which is also interspersed with online tools. They can make shopping easier, with suggestions and advice tailored to your needs.”
“In addition to selling, stores could also offer other services. The staff will therefore be given a different role. They will not just be salespeople, but people who help, inspire, customise and help build the brand identity.”
“Covid-19 will accelerate the demise of ‘mediocre’ retail”
British retail expert Natalie Berg saw that many of the trends she predicted a year ago held up and even increased over the past year. However, she also predicted that Amazon would reach its peak of success in 2020, but that is clearly not the case now. “Amazon is undoubtedly the big winner of the pandemic. It will probably be a long time before it loses its place among the world’s largest retailers’.
“Covid-19 was an unpleasant surprise, but it is certainly not the first time that the retail sector has been disrupted. Before this crisis, Amazon was the catalyst that forced retailers to adapt, and that threat indirectly helped them survive during this crisis. But the virus will be the last straw before the digital transformation that Amazon set in motion. As the saying goes, ‘necessity is the mother of invention’.”
What trends will we see in 2021? “The amalgamation of physical and digital actions will accelerate. We see more and more technology that makes shopping safer. In anticipation of the launch of Amazon Go, many shops are now working on their version of scan & go. M&S recently introduced it in all its stores in the UK.”
“We’re also going to see more of click & collect. It’s been in use for a while, but since the pandemic, shops that used to want nothing to do with it are embracing the technology as well. In the future, more stores will work together around this principle. For example, we already saw a collaboration between Sweaty Betty and Waitrose, where the customer could order products from the first one, and then pick them up at the supermarket.”
According to Natalie Berg, more attention will be paid to the optimal digital shopping experience. “Over the past decade, the focus has been on smooth, fast and simple transactions. Now that we’ve mastered that, we’re also going to make the online shopping experience more colourful and fun. Some fashion retailers, for example, already present their assortment in a virtual showroom”.
One thing she knows for sure: in 2021 there will be no room for the laggards: “Covid-19 will accelerate the demise of ‘mediocre’ retail. Many retailers have failed to adapt and evolve with the online age. Last week we already saw what that meant for Arcadia and Debenhams, who (almost) have to close the books. That’s what I call retail darwinism on steroids.”
“The gap between rich and poor will widen even further”
Jorg Snoeck, founder of RetailDetail, as always saw winners and losers in 2020. “The ravage always comes later. Companies within the ‘bubble’ have done extremely well. For those who fell outside, 2020 was an annus horribilis.”
“Globalisation and digitisation put pressure on sales and lower margins, increasing inventory levels. This had already started before the pandemic. More working capital is needed, which puts cash flow under pressure. Healthy companies get into trouble, knowing that the business banks are not willing to help. Much will depend on whether this banking trend will continue in 2021.”
“A 12-month corona credit will not get us there! That period is too short. It needs to be extended to three years, and that is where the problem lies. Echoes from the market tell us that banks are not inclined to finance.”
“If this does not change soon, I predict an unprecedented ‘last dance’. The shopping streets will become even more deadly after the corona crisis than they already are. Especially the intermediate cities and the B-locations will go into the negative spiral: no shops, no restaurants, no passage… The action will move to the few cities where there is still life. The online winners are global players who do not guarantee employment and do not pay taxes here.”
Concrete effects of the corona crisis? “The number of people working will fall due to bankruptcies and companies cutting costs. As a result, the risk of inflation is very real, with well-known consequences such as an increase in interest rates and life becoming more expensive. The gap between rich and poor will widen even further, and I believe that wages will fall in 2021.”
“In order to make the economic engine work, we need to get moving again. Mass vaccination of the active population would quickly give new oxygen to the economy, but I do not see that happening. This is politically unfeasible because it would mean that older and vulnerable groups would not be protected as quickly. Giving priority to those who contribute economically will not be on the agenda.”
“The lack of a mature e-commerce market is our greatest weakness”
2020 was the year of e-commerce, says Sofie Geeroms of BeCommerce. “There were an enormous number of online purchases this year. More consumers found the internet, and consumers found more products. Things they used to buy almost always in physical stores, such as swimming pools, bbq’s and garden furniture, they bought online. Especially the elderly, who used to never think about buying anything online, have really discovered e-commerce during this crisis.”
But this e-commerce explosion is not big enough to make up for the loss of revenue in other sectors. “The online services sector has completely disappeared. Revenues in the travel and entertainment sectors, for example, are at 0. In the Netherlands they compensate for this with the increased revenues on products. This is not the case in Belgium.”
“This crisis revealed our biggest weakness, the lack of a mature e-commerce market. The only reason that people did not buy locally during the crisis is simply the lack of e-commerce players in our country. The fact that you have to call on customers to shop locally simply shows the weakness in the system.”
“The perception that e-commerce is detrimental to physical stores, and vice versa, is wrong. They are complementary and perform a different activity. Physical shopping is done with a friend or partner, and is therefore an important social activity. Online shopping is done on your own, on your couch or on the go. That’s why omnichannel retailers also see more physical shoppers during weekends, and more online shoppers in the evening on weekdays.”
To be better able to resist a similar crisis in the future, we need to get our heads out of the sand, she says. “We can no longer afford a negative attitude towards platforms. We would do better to be inspired. Why don’t we start our own Bol.com or Zalando, instead of grumbling about it? We need talent and a long-term perspective in addition to investment. We have to want it too, of course. All the big players started e-commerce 20 years ago. Belgium did not do so until 2014 at the earliest. In order to be successful today, you need track record, and we need to finally understand that.”
