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‘Retailers must prepare for transformation post-COVID’


Till last year, retail was an industry that was steadily growing and progressing. However, the pandemic brought a major paradox in the consumer sentiments affecting the industry in an unprecedented way.

Retailers must prepare for transformation post-COVID

The retail industry in Q1 and Q2 2020 witnessed the impact of the outbreak with multiple challenges arising in the business operations due to lockdown and social distancing norms.

With the unlocking and reopening of markets across the country during the end of Q2 have brought a transformation to the continuously evolving retail eco-system in India, retailers are strategizing and adapting to new market trends.

With rapidly evolving consumer preferences and attitudes, businesses and retailers are embracing the change and preparing for transformation in order to provide a seamless shopping experience to consumers in the COVID and post-COVID eras.

In an interaction with IMAGES Retail, Bimal Sharma, Head – Retail, Advisory & Transactions Services, CBRE South Asia Pvt Ltd. shares challenges and way forward for the retail sector.

Excerpts from the interview:

How have different retail categories been performing? Give us a comparative evaluation, both from the shopping centre and high-street perspective?

In the past six months, as there were limited opportunities/ occasions for people to step out, they have been restricted mainly to basic and urgent necessities. With reopening taking places in phased manner, shopping centres have again started witnessing activities and consumers have started indulging by going a little beyond their urgent necessities. The categories we have noticed trending better than others are electronics, home, sports and athleisure.

Shopping centres have had an advantage over high streets as consumers prefer to visit a mall for an inclusive experience of shopping, food, cinema etc., apart from conveniences like parking and ambience. However, in the past six months, high-streets have emerged as a preferred destination for shoppers vis-à-vis malls due to the extended lockdowns, plus perceived lower risk, considering lower touchpoints/ interaction with people.

Meanwhile, due to the approaching festival season and economic activity picking up pace, we can hope that Q4 might bring back customers to malls under the prescribed safety norms. It is important to note here that in the pre-COVID era, multiplexes played a key role in the success of shopping centers and it has been seen that malls have often improved performance by over 25 percent, when a good multiplex opens in a shopping centre.

In the short to medium term, we expect retailers at both shopping centres and high-streets to adopt various marketing strategies to increase engagement with existing customers and visibility across their target audience, leading to improved performances.

How is retail evolving with work from home, lockdown and unlock phases? How are retailers modifying their way?

Retailer strategies are evolving at a faster pace than ever before, owing to the continuous change in assumptions and analysis in this continued COVID-19 era. Omnichannel strategies, innovative utilisation of spaces and a push for e-retailing are all becoming important in this work from home stage.

The integration between offline and online retail is likely to grow further as pure-click enterprises are opening offline stores while brick-and-mortar stores are enhancing their online presence. Last-mile stores are expected to gain further traction in the coming year, as newer business formats emerge that allow consumers to order groceries, dairy items, and necessities online and pick them up from stores.

Contactless shopping and home deliveries are becoming a norm and malls and stores may have to cater to these needs more effectively going forward.

What are retailers doing to bring the consumer confidence back?

Operators and retailers have re-opened malls and restaurants with stringent adoption of sanitization and social distancing guidelines to win back customer confidence and it will remain the key going forward. Factors like multiple safeguards to control customer traffic, enhanced sanitization measures, enforcing social distancing in common areas, adding signage to guide customer flow through the store, installing plexiglass dividers in certain areas, segregation of entry and exit points, and reducing the seating capacity in restaurants have been introduced in malls for customer safety.

Additionally, retailers are looking at permanent technological innovation in the form of apps, electronic rewards programs, QR code piloting, crowd control measures, contactless shopping and touchless technology on everything from entrances to order fulfilment. Retailers should keep customer engaged via personalised experiences to create brand visibility and loyalists both digitally and during store experience. Sustainability, health, hygiene and nutrition will be the biggest lookout for shoppers wherever they shop from.

How is the real estate requirement changing? Elaborate.

With the current pandemic situation continuing, most retailers are looking at their real estate spaces and strategies more closely and are looking at long-term sustainable solutions going forward. Though any specific market-wide trend may take longer to emerge, we have some short-term trends emerging for specific categories.

Within F&B, fast food players and coffee shops continue to expand while being cautious, though with rationalised spaces and planning for a higher percentage of take-aways and deliveries.

A few supermarkets are resizing upwards, while other hypermarket operators are increasing their penetration with smaller supermarkets, closer to their consumer, which would also help their online platforms with the last mile delivery.

Among all this, there are a handful of retailers, who are using this period of increased availability in prime markets as an opportunity to create prominent flagship stores for themselves.

Which are the potential new categories/ changes in mix for retailers?

Retail is a consumer-centric industry and is highly dependent on consumer needs and sentiment. Due to the growing awareness among consumers, fluctuating disposable incomes, changing consumer behaviour and growing integration of online and offline retail formats, the retail industry has always been adaptable to changes and witnessed rapid transformation in recent times.

Apart from the physical improvisation, an increased emphasis on health and wellness is expected, providing opportunities for retailers to introduce new healthy product lines. Health and fitness brands are likely to further drive up demand for retail space as they seek to expand their footprint.

Will the festive season bring back the lost sheen?

People have been indoors for a while now and are looking forward to breaking free and looking forward to reasons to celebrate. Festive season being known for making new purchases and investments, everybody is hoping to see consumers come out and spend. Additionally, with cinemas and multiplexes opening from October 15 and restrictions reduced for the operation of restaurants and serving liquor, we expect customers to come back. Though, we have to wait for big budget and other new movies to hit the theatres, we expect it would improve the performance of the shopping centers.

Apart from cinema, with continuous subdued discounts and offers ongoing this year, we expect both shopping centers and retailers to come out with interesting and luring offers to entice customers back to the shopping centers during this festive season. Improved spend per head that shopping centres are witnessing today, it gives us the confidence that even with lower footfalls, the revenues would improve and move closer to the pre-COVID levels during this festive period.

How can the Indian retail sector be redefined by the use of technology in the post-COVID-19 times?

Technology will drive revolution in the upcoming months and years and thus retailers should invest in technology and technologically-advanced infrastructure and facilities. From check-out free to touch-free shopping, merchandising to transactions, technology will accelerate the industry eliminating physical interaction.

Retailers should look at permanent technological innovations in form of apps, rewards programs, QR code piloting, crowd control measures, contactless shopping and touchless technology on everything from entrances to order fulfilment.

‘Phygital’ spaces, a merger of physical and digital retail with the help of virtual reality, artificial intelligence and augmented reality are slowly invading the retail space in India and the trend is expected to grow further. Both online and physical stores are likely to embrace immersive technologies and intelligence to understand consumer psychology and requirement. Virtual trials backed by AR-VR facility to facilitate a seamless shopping experience for consumers, as physical trials could be restricted.

Are Indian retailers looking to invest in new technologies in the current situation?

Digital transformation will pave the way for touch-free shopping experiences, merchandising, transactions and eliminate physical interactions, therefore investment in retail technology will be seen.

With emerging technologies and the rise of omnichannel retailing, retailers need to revamp and recalibrate their business strategies across all channels, including brick-and-mortar stores, e-commerce platforms and mobile applications.

Focused over customer wellness, retailers need to create engaging experiences for their customers at stores to strive in the challenging and competitive market. The emergence of artificial intelligence and virtual reality will help retailers create new experiences and gain consumer trust. A number of retailers have already increased their spends or even preponed their investments on tech this year.

Can retailers thrive in the ‘Six Feet Economy’?

It’s not a question of ‘can’ but rather ‘how do’ they thrive in this environment. Retailers who are doing better are the ones who have had a diversified approach to reaching clients and have already spent time and money on having a robust supply chain for themselves and having a seamless omnichannel approach for retailing.

Today, we expect retailers to tide over these troubled times by improving their reach to consumers and being on top of the mind for them. These can be done by luring consumers by ease of access, better product offering, safe and hygienic operations, road-side pickup, assisted shopping, online shopping, timely/ faster deliveries, etc.

While businesses need to survive and thrive the aftermath of COVID-19, retailers are looking at newer avenues to reach out customers and adapt to the ‘Six Feet Economy’.

COVID-19 has changed consumer sentiments and their lifestyle, it has parallelly fastened the adaptation of technology and trends in the industry. Retailers have moved towards technology and digitalization and have understood that the only way out and ahead is adapting to the current market scenario and to make a speedy transition infrastructurally.

A point of relief for retailers is that consumers are still spending. With rapidly evolving consumer preferences and attitudes, retailers and businesses must embrace the change and prepare for transformation in order to provide a seamless shopping experience to consumers.

How critical is it for retailers to build a resilient supply chain?

The retail industry is driven by a strong supply chains and now more than ever, this has become critical. CBRE believes that expanding network of bases, keeping inventories close to consumption points and adopting technology is instrumental to building a resilient supply chain.

Supply chain fragility during COVID-19 has encouraged logistics players to explore digital tech solutions, flexible automation solutions and lean reconfigurable technology, ensuring seamless supply chain operations.

While linear supply chains concentrated on cost, speed, reliability and connectivity, the new supply chain ecosystem that has emerged from the pandemic is expected to lay equal emphasis on resilience, near-shoring capability, sustainability and agility. As a result, most retailers are now putting in place a ‘modern’ supply chain ecosystem that enables timely and transparent data flow among stakeholders, with a greater focus on establishing fulfilment centres, and ensuring deliveries from retail and dark stores as well.






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