The impact of COVID-19 continues to be felt in all areas of life, and besides the terrible impact on people’s lives and our health services, one of the frequently recurring headlines is the implications for retail.
The world has been confronted with stories about the end of brick and mortar stores, for years. A fundamental shift to online adoption was inevitable, and being shuttered indoors with stores closed during the pandemic has only helped speed the journey along.
According to a digital transformation survey Twilio conducted in June 2020, 43% of retail decision makers stated that the global pandemic accelerated their digital programmes by 1-4 years.
When it comes to mobile shopping alone, McKinsey predicts that ecommerce could account for 73 percent of all retail ecommerce sales by the end of 2021. Globally in 2020, online sales as a share of total retail (excluding fuel) exceeded 33%.
The last few weeks have seen a turbulent time for well known brands, but what does this mean for the high street brands that remain, and how can they best adapt to attract the customers and colleagues they need to remain a compelling destination?
In the UK, we watched staples of high street fashion, Debenhams and Arcadia Group, fall to ruin as they announced administration in 2020. Their potential fates became a frequent topic of the news. The public now has its ironic answer, as The Guardian states about Debenhams, “a venerable 243-year-old department store chain [was] acquired by a 15-year-old online upstart”. boohoo, a Manchester-based online store has acquired Debenhams for £55 million ($73 million), and ASOS has acquired Topshop, Miss Selfridge, and HIIT from the Arcadia Group for £265 million ($364 million).
Both Topshop and Debenhams are known for their physical shops and in-store shopping experiences, however both ASOS and boohoo made deals to take the two brands solely online, giving them the power to expand their customer bases and reach more generations of shoppers.
The fashion industry in the UK undoubtedly shifting. 10 years ago, no one would have been able to anticipate that huge establishments such as Topshop and Debenhams would be brought out by online fast fashion retailers – let alone vanish from the high street entirely.
It is plausible that ASOS and boohoo do not want the costs associated with the larger store estate – especially in a pandemic-influenced market where retailers are shuttering bricks-and-mortar shops permanently amid consecutive sales or profit declines. But the permanent closure of Debenhams’ and Topshop stores will leave immense gaps on high streets around the country and the loss of thousands of jobs (5,500 at Topshop and 12,000 at Debenhams), the majority of which, according to worker’s Unions,were held by women under 35.
boohoo has previously acquired other high street labels including Coast, Karen Millen and Oasis, but not the connected stores. Its executive chairman, Mahmud Kamani, said: “This is a transformational deal for the group, which allows us to capture the fantastic opportunity as ecommerce continues to grow. Our ambition is to create the UK’s largest marketplace. Our acquisition of the Debenhams brand is strategically significant as it represents a huge step which accelerates our ambition to be a leader, not just in fashion ecommerce, but in new categories including beauty, sport and homeware.” boohoo has stated that Debenhams is projected to relaunch on boohoo’s website later in 2021.
How do these acquisitions change everything?
The big investments both ASOS and boohoo have made send two clear messages to the retail industry. The first is, there is still value in brand and customer loyalty. The second is, online shopping, particularly in fashion, is a future that consumers continue to welcome.
Both online retailers had to have confidence in the longevity of the brands they snapped up as well as the future of online shopping to make the acquisitions they did.
As for the high street retailers that remain, they have a unique opportunity to learn from these developments and ensure their customer omnichannel journeys, inventory availability and personalisation approaches meet their customer’s needs.
They must focus on what differentiates them, and provide an environment where customers can receive the instant gratification of an online experience, but with a better informed, experiential journey.
Store colleagues want to engage with customers and represent their brand using the latest technology, allowing customers to transact when, where and how they like. Retailers must invest in training systems and solicit customer insight to create a feedback loop that continually enhances the interaction and drives repeat sales.
In 2021 and beyond, a digital first storefront approach will be key to retail success. Retail businesses looking to be on the forefront of this fundamental shift will need a flexible, scalable and responsive that allows rapid change to meet ever evolving customer and colleague expectations.
Retailers with legacy, monolithic systems have come to realise that making changes to their digital offering is exorbitantly expensive and counterproductive to consumer trends. Those that adapt, evaluating their vertical, proposition, product and current digital & technology channels to fit an uncertain landscape and changing consumer trends, will thrive.