We asked Richard Hyman, Independent Retail Analyst and non-executive Director of Ergonomic Solutions, for his thoughts on the effects that the COVID 19 pandemic will have on the retail industry, as it comes to terms with a range of fundamental challenges that no-one could have possibly foreseen just 6 months ago. Here are his thoughts and insights:
1. What impact will we see in terms of the ways that customers and staff will interact, in-store?
The new normal will only allow a small number of people in to a store at any one time.
An unavoidable consequence of this will be a severe reduction in the number of transactions that can physically take place in a day.
Clearly, one of the changes that COVID has brought about is that an industry that has mostly paid lip-service to customer and staff welfare, has now placed that very close to the top of their agenda, so much so that when those doors do re-open, that new normal will only allow a small number of people in to a store at any one time. An unavoidable consequence of this will be a severe reduction in the number of transactions that can physically take place in a day, and it is hard to overstate the economic significance of that to a retail business.
Social distancing will make a huge impact. There are two customer journeys to the store at play here, buying of course, but shopping too, and they are different animals. For the “needs” driven buyer, the purchasing point is at a predetermined location and that will need fitting with safeguarding equipment such as screens, hand sanitisers and enhanced cleaning regimes. However, the “wants” shopping experience, which might end up with a transaction, and taking place upstream of the point of sale, is probably responsible for around 50% of all retail sales and worth £100bn a year. It is here that many important staff-customer engagements take place – for information on pricing, sizing and so on, and here we are in uncharted waters.
2. The next 12-18 months look very challenging for the retail industry. What are the positives?
Post COVID, the bar will be raised in terms of customer excellence and staff welfare.
The strong will survive.
There are positives, but they will come at the cost of taking some very unpleasant medicine. The biggest plus for the retail industry is that it will finally have to face facts. If you consider that 15 years ago, online retail did not exist, yet Pre-COVID, it accounted for 30% of all non-food sales, despite the amount of physical floorspace on the high street remaining the same. You do not need to be an economics genius to work out the effect that has had on trading economics. Online hasn’t brought more demand to the industry – it has cannibalised the physical store. Physical retail is a high fixed-cost business. The big variable is the number of people who come through the door. If that number diminishes, and the costs remain the same, the retailer makes less money. That, as a business model, is not sustainable.
Why is any of that positive? Well, it has kept many in their jobs, that’s true, and sometimes the banks, not willing to take the financial hit, have really thrown good money after bad to keep many retailers going beyond their sell by date. The current situation has therefore left the weak in place and not given that extra space for the strong to develop. Post COVID, the bar will be raised in terms of customer excellence and staff welfare. The strong will survive and provide jobs that are more secure and will allow retailers to develop their businesses to the benefit of everyone. Retail has paid lip service to understanding its customers, so far. Putting the customer first is not a slogan, it is philosophical and should be at the heart of everything they do. It has never been so important as it is now.
3. What might the bounce back, look like?
Fewer footfall will not mean that no one in retail is going to make any money,
in fact there are numerous outstanding role models demonstrating best practice.
When the doors open, there will be a lot of coverage of queues, and people buying and shopping, and there will be pent up demand to be satisfied. However, many retailers are better off now with stores shut on this kind of cost holiday. Their staff are being paid by the state and Landlords cannot realistically expect payment, and so their costs are very small. Once those doors are open and the Government lifeboat is withdrawn, as it will be, then reality will bite. Footfall will be less, and the numbers just won’t add up. Meanwhile, the reality of recession will bite.
However, and it is important to say this – it does not mean that no one in retail is going to make any money. There are numerous outstanding role models demonstrating best practice. Retailers like Zara, B&M, Selfridges, Home Bargains and Aldi are very different, but all have the focus and customer understanding to come out the other side of this in very good shape. They show the way forward, and what the pre-requisites for survival are.
4. How can in-store technology provide a differentiator?
Mobile technology and mPOS solutions enables upstream interactions,
which can now be queue busting, frictionless, quicker, and without physical contact.
The hard bit of retail is to persuade someone to buy something. The execution of the transaction needs to be as slick, quick, and as uncomplicated as possible. Whilst it is reasonable to assume that a vaccine for COVID-19 will be found, and that social distancing will not be required in the same way, as it is now, I think one of the learnings from this pandemic will be a greater emphasis on the protection of both staff and customers, in the store.
Mobile technology and mPOS solutions , in particular, have a part to play. mPOS enables those upstream interactions to include the final payment transaction, taking them away from the confines of the traditional point of sale. With the contactless limit now raised, those transactions can also now be frictionless and therefore quicker, without physical contact and without queuing!
For transactions at the static point of sale, then technology will need to be mounted and enabled to accommodate the use of screens and sanitiser holders are a necessity, for example. These simple measures, driven by technology will and must provide greater peace of mind for all involved both as we re-start trading again, but also, to provide a blueprint for how these interactions may take place in the future.
The SpacePole Duo shorten the transaction time between customer and operator, and provides a more hygienic environment.
It can ensure revenue from the customer at point of sale, turning a potentially poor customer experience into a queue-busting safe one.
Pairing with a wide variety of mobile payment with devices, the Zebra TC5X, or the Honeywell CT40 with the SpacePole Duo sled.
5. Ergonomics in retail also have a huge importance and part to play in the welfare of staff and customers
The technology used will take on an even great importance, with the demand from customers for a vastly improved physical experience of ‘going shopping’ in a post COVID-19 environment.
It is vital. The look and feel of the store environment and the technology used has of course improved over time. It will take on an even greater importance, once the dust settles over the coming 18 months. The physical experience of “going shopping” must be vastly improved. You do not want stores to be too overcrowded. You want an ergonomic layout that is accessible to all and engages more with the customer, in the broadest sense, and that includes those customer interaction points, such as visual displays, and those applications using technology to guide and inform.
The ergonomics of the store will be driven by economics. Online market share will have likely risen to 40% in the non-food sector. Given the oversupply of physical space that was already in existence, this increase will demand a re-imagining of the store layout.
Retail in the UK is the most polarised in Western retail. We have the value end of the market, the middle and the premium. At the value end, customers expect a “no frills” experience whilst at the premium end, they expect an exciting, comfortable experience with great service, and the ergonomics of the store layout should reflect that. It is the “squeezed middle” that will have to work hardest to create an environment that gives it some differentiation.
6. What do you think the biggest advance has been in retail in-store ergonomics during the last decade?
The ergonomic advantage of portable devices enhances staff productivity,
and brings a new level of customer engagement.
Technology and how that technology is mounted and operated, has played an enormous part in advancing the cause of ergonomics, in-store. Making sure that payment terminals at checkout areas are mounted such that they are easy to reach and operate securely for those in wheelchairs, is an example.
But it is also true for the staff. The ergonomic advantages of devices that are truly portable, such as tablets, assist staff, provide better customer service for all, at a time and place of their choosing – mPOS applications are a great example. These enhances staff productivity for the business and bring a new personal level of customer engagement.
Non-food retail must re-define itself and how it serves its customers and focussing on ergonomics from a store layout and technology perspective is a good place to start.
7. In your experience, what are the main ways in which retailers most often miss the mark in relation to ergonomics?
Retailers must create a more personal and ergonomic shopping experience that entices the shoppers to make that transaction and enables the buyers to move quickly through the store with their purchases.
It is all about understanding the customers journey. Are they shopping or are they buying? It is pretty fundamental. The new normal means that retail will have to create an environment that reflects a journey that may involve queuing, and may involve shopping by appointment, in some cases. It seems certain that it will involve lower footfall, in-store. Therefore, retailers must create a more personal and ergonomic shopping experience that entices the shoppers to make that transaction and enables the buyers to move quickly through the store with their purchases. That is where retailers previously have often missed the mark.
8. What is your hope for retail, in the next 5 years?
My hope is to see a much leaner retail industry, more genuinely focussed on their customers, that treats its staff properly, and acknowledges that their store staff and managers are kings of the game.
Right now, retail faces an existential threat. Not so long ago, retail had the monopoly of putting the product and the customer together. It no longer has that monopoly. The brand owner no longer requires the retailer to find their customers. They can do it themselves online or even open a shop, themselves. Retail must get better at retailing. By that I mean getting properly engaged with their customers. Most retailers are too big. They have too many stores, with too much floor space and too many products. They have diluted their engagement with core customers in the pursuit of peripheral ones.
My hope is that I will see a much leaner retail industry, an industry that is much more genuinely focussed on their customers, that treats its staff properly and acknowledges that their store staff and managers are kings of the game. They are the people that you entrust your precious brand engagement with customers to. If you treat them well, and pay them well, then they won’t leave so often and the whole thing becomes a virtuous circle, rather than a vicious one. If that happens, then the phoenix will have risen from the ashes.
Get in touch to discover how Ergonomic Solutions can help you prepare for the new ways in which customers and staff will interact in-store.
Richard Hyman is a world-leading expert in the retail industry, having provided top-level analytics, insight and thought leadership on retail intelligence for more than 35 years. Richard has advised many of the country’s leading retailers, analysing, forecasting and evaluating all the key sectors and companies across the retail market. In addition he is a non-executive Director of Ergonomic Solutions. He can be contacted at www.richardtalksretail.co.uk