How the pandemic is forcing retailers to rethink the future and shift to digital
With the sector locked down and losing an estimated £2bn a week, consultant Elliott Goldstein looks at shifts caused by Covid and the challenges of the next 12 months
Retail is experiencing one of the most turbulent periods in living memory. And it is clear that the pandemic will be a watershed moment for the sector.
“The biggest change has undoubtedly been the shift to digital,” says Elliott Goldstein, managing partner at The MBS Group, an executive search and leadership advisory firm working across consumer-facing industries. Clients include M&S, Pets at Home, Superdry and Costa Coffee in the UK through to Coles in Australia and Tata in India.
“Digital credentials are no longer simply a ‘nice to have’: they are crucial for survival and will be a vital part of emerging stronger from this period. We’ve seen retailers expand their online offering, their delivery networks and strengthen their supply chain at extraordinary pace. Covid-19 has encouraged an entirely new demographic to turn online, and encouraged countless partnerships between retail and digital businesses. Even my parents now do their weekly grocery shopping online.”
Goldstein, who started his career with Boston Consulting Group, says the pandemic has led to a resurgence in suburban high streets as people have deserted larger, city-centre venues in favour of local options. “Many independent entrepreneurial localised businesses have benefited from increased footfall and daytime traffic. Where and how we shop will be very different in years to come – and, if we continue to home-work, we could well see a shift towards more localised, community based, retail.”
There have been big digital winners over the past year: Amazon in general merchandise, ASOS in online fashion – and meal subscription businesses like Gousto to name a few. And certain segments have boomed. “We are all spending much more time at home, therefore we are investing much more in home furnishings, kitchens and home decor. Likewise, many of us have bought pets – which has led to a boom for businesses like Pets at Home.”
Other sectors haven’t been so fortunate. “As shops open and shut in response to the different lockdowns, fashion retailers had to deal with a back-catalogue of the wrong season’s stock. And we’re all going out less, so have much less need for new wardrobes. For every week we are lockdown, the sector loses a reported £2bn per week in sales so many businesses will be in serious difficulty and many thousands of jobs could be at risk.”
Consumer behaviour has also changed: people are increasingly looking for companies to ‘do the right thing’ by their employees, community, wider society and the environment. “This has been particularly acute over the course of the pandemic and is a trend we see accelerating.”
Goldstein admires the way the UK’s big supermarkets – Tesco, Sainsbury’s, Asda, Coop and Morrisons – responded to the crisis. “They experienced surges in demand like they had never seen before: staff shortages, booming demand for online deliver – and unprecedented disruption to manufacturing and supply chains… yet still continued to keep us all fed.
He says one of the most positive outcomes of the pandemic is the never-before-seen levels of corporate collaboration in retail, “facilitated brilliantly by organisations like the BRC [British Retail Consortium] and IGD [Institute of Grocery Distribution].”
Goldstein joined The MBS Group in 2012, becoming managing partner in 2019. Prior to that he was CEO of a luxury cosmetics brand and then CEO of a fashion label. He holds a first-class geography degree from Oxford and an MBA from the University of Chicago. He is a trustee of a number of communal charities including Reshet, the umbrella body for Jewish Informal Education, LSJS and Limmud.
As we navigate our way through 2021, how can the sector survive? “The first phase of the crisis was survival – ensuring liquidity, moving operations online, keeping customer and colleagues safe. The second phase, which we are now living through, is commercial trading: in a safe way, maximising revenue opportunities whilst continuing to minimise costs. Now, alongside survival and trading modes, leaders need to transition into two new phases: transformation and visioning the future – which will require very different skills, priorities and focus.”
On transformation, businesses will require a ruthless and ongoing focus on strengthening the balance sheet, including looking at people, property and processes.
“On top of that, leaders will need to find the head space to focus on visioning the future. Businesses need to think holistically, strategically and calmly about their future, and determine where their business fits within the ‘new normal’ for consumers – whatever that may look like. Many companies, for example, will be forced to reposition themselves in a new market or for a new demographic.” He advises retail leaders to continue with the entrepreneurial and agile approaches they have displayed so far. “One of the great things coming out of Covid-19 has been the volume of new ideas, channels and products: we have proved, once and for all, that innovation doesn’t need to take years – it can take days.
“2021 will see an ongoing shift of sales from traditional retail to digital channels. However, as people continue to base themselves at home for work, local high streets will continue to boom, benefiting from increased weekday footfall.”
Elliott Goldstein’s retail expectations for 2021
- Ongoing shift to digital channels
- Resurgence of local high streets
- Demand for right moral compass
- Continued innovation
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