Opinion

Wake-up call for retailers to re-strategise

Veenu Sharma | Updated on November 06, 2020

Retailers must reinvent themselves   -  The Hindu

Covid has changed customer expectations, and only retailers that develop new ecosystems and business models will survive

How to attract customers by transforming stores into shopping destinations has been the focus of every retailer prior to the pandemic. However, under the ‘new normal’, the priority of retail brands has changed — it is now about reaching out to customers through all possible means. Several retailers have come up with new, innovative ways.

Fashion brands like Metro, Levi’s have started approaching potential customers by visiting homes, besides experimenting with “store on wheels” concept. Covid-19 has helped in identifying potentialities of retailers to adapt to a changed market situation. Only those retailers who are capable of making use of the situation posed by the pandemic to their advantage will succeed. Visionary planning with quick response will change the dynamics of retail trade into turbo mode. Experimenting with new strategies, developing new ecosystems, and designing new business models are crucial for retailers to survive.

According to a recent survey by McKinsey, the spending power of Indian consumers has started improving after the decline in May 2020. Despite 90 per cent of customers reporting adverse impact of Covid on personal finances, 95 per cent of the respondents were confident about returning to normalcy within the next two months.

Thus the market situation in 2020 is extraordinary with major challenges for retailers. They have to showcase their unique and creative skills to grab the available market opportunity in the best possible manner. Transactional convenience with an innovative approach is what customers expect from the retailers under the pandemic environment.

Consumer behaviour

Retailers need to understand the depth of changes in customer behaviour as compared to the pre-pandemic days. Though Covid has changed customer expectations, customer experience has always been an important factor in retail sales. Under the prevailing market environment where maintenance of social distancing is a must, customers would definitely prefer shopping with minimum possible human contact. Thus, retailers need to keep in mindcustomers’ health concerns and put in place safety measures while they shop.

In this context, retailers can go beyond the traditional business arena and think out of the box. For instance, they can go for horizontal expansion by diversifying into retail clinics for treating common and minor health complaints of regular customers. Retailers such as Target, Tesco and Walmart have partnered with retail clinic services to strengthen the emotional bond with their customers.

Digitalisation is the new norm, and the retail industry must adopt it to win back customers and restore business in the post-pandemic period. Also, retailers must capitalise on every available opportunity to increase sales. Effective communication is a must to make their business stand out amongst the crowd. All initiatives made during the current crisis period should act as a building block for the new normal in the long run.

Crisis offers a chance to transform society and to implement the necessary changes to accomplish it. The retail industry cannot escape from the impact of Covid-19 on the economy. It’s time for them to create opportunity for small players by entering into deals and partnerships. In a recent survey by EY, approximately 40 per cent of the retailers responded in favour of bolt-on acquisitions.

An emerging trend today is “conscious consumption”, and hence it becomes important for retailers to provide unique solutions. According to the EY Global Capital Confidence Barometer, 66 per cent of the retailers intend to re-evaluate their digital transformation journey.

Retailers had started gearing up to transform their business even before the pandemic. However, the pace needs to be accelerated. Customers look for digitalisation beyond e-commerce, and it is crucial to facilitate virtual experience with a human touch.

Winning customers back at this crucial juncture could be made possible by rolling stores, distribution centres and logistics centres into one in order to ensure a transparent experience to customers. Business groups should introspect and identify the potential business prospects.

Mergers and acquisitions among different retailers may pick up in the current market scenario. To mention a few, BigBasket acquired Daily Ninja, a milk delivery platform, while Titan acquired ‘Hug Innovation’ for its wearable IoT segment. HUL merger with GSK has given Horlicks a new owner.

Irrespective of the emerging economic situation, retailers should explore the available opportunities in various regions and sectors by adapting themselves appropriately in a dynamic market environment.

The writer is Assistant Professor of Marketing, Birla Institute of Management Technology,

Greater Noida

Published on November 06, 2020

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