COVID has seen some retail businesses boom and devastated others. It has accelerated the trend online, changed tenancy mixes and highlighted the importance of brand narratives and regional strategies.
Home-service retailers have done well out of COVID-19. From homewares to renovations, people have been spending big, while fashion, tourism and service-based industries are hurting.
The reasons are obvious, according to Brian Walker, retail consulting expert and managing director of the Retail Doctor Group.
“We can’t travel, we can’t socialise and we are spending more time at home,” Brian said.
These same reasons have led to a boom in online retail, from an average of around 9 per cent of sales pre-Covid to an average of 14 per cent in October 2020.
Online research has also gone through the roof. We are researching 90 per cent of larger retail purchases online – from fashion items and fridges to computers and cars – up from around 70 per cent pre-Covid, according to Brian.
And 80 per cent of that research is being done on a phone.
“We spend an average of four hours a day on smartphones. That’s a large percentage cent of our waking hours.”
“We are more educated than ever and if we are not buying online, we are walking into stores more knowledgeable.”
How to attract customers in the new normal
“The days of products sitting on racks in boring retail stores are numbered,” Brian said.
“Unless people have a compelling reason to go to your shop they will buy online or from a competitor.”
“People go to physical retail that is interesting, educational or fun. Retail that is novel.”
“Retailers require a good online offer, matched with interesting stories in store,” he said, giving the example of Patagonia.
“Consumers want relationships with brands. They want trust, loyalty and security, and to belong to a tribe.”
COVID has also seen a rise of “community” that retailers must align with.
“The really clever retailers are the ones thinking about this strategy and investing in online, physical experience, training people and adapting their business model.”
Advising impacted retailers on how they can ride out the current challenging conditions, Brian encourages them to go back to basics.
“Treat every customer like gold. Make sure there is an offer for them to come back to and focus on the basics of relationship: training staff in sales and service, great looking shops, eye contact and a smile.”
The return of the high street
Brian forecasts that the rise of local, community retail brought on by Covid will see the return of the high street, however stresses the critical importance of managing this effectively.
“The dramatic decline in tourism numbers that retailers rely on in places like Manly is leading to more empty shops and a requirement for landlords to adjust their rental expectations.”
“Who can afford Manly’s current asking rents? National chains. Not local, individual, characteristic retailers,” Brian said,
“As a result, we are seeing asset managers rethinking their portfolios and working more actively with retailers and adjusting rents in many cases.”
However, there is the risk that without a cohesive regional tenancy mix strategy, high streets will fail to fulfil their potential, which ends up eroding the value of that strip for everyone.
A regional strategy and narrative are required
There is an ongoing opportunity to develop collegiate trategically with owner bodies, councils and Chambers of Commerce to create the thematic of an area expressed in community events, tenancy mixes, and so on according to Brian.
“What is the three-to-five-year retail strategy? Regions need to do more to inspire localism in their communities,” Brian said.
Speaking of Manly he asked: “What is the character and flavour of Manly’s retail? What outcomes do we want? What character do we want it to have? What makes it unique?”
“The challenge for Manly – and many communities – is that property ownership is fragmented, with different parties all wanting to achieve slightly different, and in some cases conflicting outcomes.”
“Ultimately the market decides but sometimes it needs guidance, and it may need boundaries.”