Before COVID happened, many brands were still playing catch up with Amazon and had not been investing as heavily into eCommerce viewing it as a less profitable venture given the picking and delivery involved as opposed to people coming into stores. However, they all now recognise the direction of travel is irreversible. eCommerce sales are absolutely booming, particularly within grocery. Online grocery sales have risen from 7 per cent of the total market to more than 13 per cent following lockdown, according to market researcher Kantar.
In the face of fierce disruption and competition, many of the largest operators including M&S and Asda recently made significant pledges to overhaul their operations, double down on eCommerce and have set far-reaching targets to increase online orders. With Amazon pushing into the online grocery sector by offering free grocery deliveries for Prime customers, M&S replacing Waitrose on Ocado’s site and Tesco saying it will create 16,000 new permanent jobs to bolster its online grocery business, the stakes couldn’t be higher.
Innovation will be key in this battle for online supremacy and fiercely competitive environment. The grocers have realised the value of their larger store estates to fulfil online orders. Larger stores lend themselves well to online distribution – they have extra room for online order picking and hold the larger range of products. They are also typically situated in prime locations in large population centres. This thinking has only recently evolved – just a few years ago grocers were trying to reduce their exposure to large stores as the discounters were chipping away at their profitability and many thought the online model would be run out of central distribution hubs.
Non-food retailers should be looking to replicate this by leveraging their store networks to use as online fulfilment centres to accept click and collect orders and returns. With footfall largely down in city centres, the biggest challenge for retailers is to keep those stores useful if they are not operating with the same level of turnover as they were this time last year. Retailers like Boots and M&S who both have a large presence on the high street should look to group together with like-minded retailers to offer click and collect and returns out of their store networks. A great example of such a tie-up was Co-op who recently partnered with John Lewis to offer their stores in suburban areas as click and collect centres for John Lewis.
Despite the delivery and eCommerce boom some customers don’t want to pay extra for this service or for returns. Some customers also don’t trust couriers with expensive items, especially phones and laptops. Click and collect and return to store provides an opportunity to cater to these customers and also offer brands a significant way to reduce cost, which is critical in this uncertain environment where all businesses are highly focused on cash preservation.
Retailers will have to reimagine their stores in other ways. Prior to COVID, many retailers were trying to curate an experience to give customers a reason to go into a store. The USP of stores was that you can touch, feel and try on a product. In a post COVID world it has given people less of a reason to venture out to stores. Retailers will have to see if they can move the experience online – sales teams should look to host webinars and online events to showcase new product lines or offer virtual personal shopping trips.
Traditional high street retailers also need to review their technology platforms to make sure they are match fit in this digital age. For many, their platforms were built to support a brick and mortar store network, not eCommerce operations. As the rise of eCommerce has become unassailable due to COVID these retailers need to strip out any legacy, outdated systems and invest in leading technology platforms.
With COVID continuing to cause such rapid and seismic change, to stay ahead of the curve retailers need to keep thinking ahead to future proof their businesses. Customers more than ever want speed, immediacy and choice. Customers are highly fickle and if they can’t find what they want they go elsewhere. Retailers, therefore, need to be as flexible and agile as possible to keep innovating in order to give customers what they want.
By Ed Bradley, Director and Founder of Virtualstock