Retail after COVID-19: From contactless omnichannel fulfilment to changing customer perceptions

By Zach Thomann, Executive Vice President & General Manager at PFS.

Whilst the re-opening of our much-loved UK high street has come as music to the ears of both brick-and-mortar retailers and consumers alike, traditional retail as we know it is now very different from what it was before.

Whilst there is the issue of adhering to social distancing measures to protect consumers and workers, retailers are also faced with the challenge of finding new ways to cater for the permanently altered needs of consumers since the lockdown first began. According to our latest research, 60% of UK consumers revealed they have purchased more goods during the lockdown than they would normally, with 53% having made more of these purchases online.

The long-term implications of the lockdown

Whilst the short-term ramifications of COVID-19 have been detrimental for retail, it is apparent that consumers shopping behaviours are set to be permanently changed even after as social distancing measures are eased. In fact, when questioned, as many as 77% of UK consumers stated they expect they will continue to purchase online more, once the lockdown is over.

Prior to COVID-19, the brick-and-mortar retail landscape was shifting. However, it is safe to say, the pandemic has accelerated this change. Over the last couple of months, other than groceries and essential items, people in the UK have had no alternative but to shop online, with many turning to online shopping to alleviate boredom. In this time, consumers have become more comfortable with online shopping, with many actually preferring the experience due to the convenience and efficiency. This trend will continue even after the lockdown, especially as some may not feel comfortable with venturing out to shops just yet.

These sustained online peak-like volumes will continue to cause ongoing repercussions for retail operations, many of which are already working tirelessly to keep up. With the outcome of Brexit negotiations still looming on the horizon and the lead up to actual peak season trading rapidly approaching, this could become even more challenging still. To overcome this, retailers must make sure they prepare their supply chains, taking the time to invest in systems that will streamline online operations now to overcome further turbulence.

The need for a true omnichannel experience

With this increased movement to online, it is crucial that retailers have a strong omnichannel offering in order to keep up with consumer demand and expectations. Before the lockdown, whilst a number of retailers were offering click and collect services, consumers were still taking a gamble on whether the item would be in stock or not. This is ultimately down to the point of sale (POS) and inventory systems not being in sync with each other which can lead to customers being left dissatisfied when the item are not in stock at their local store. When the lockdown has lifted there will be an even greater need for retailers to offer a true omnichannel experience and this can only be achieved by implementing a one system mentality where data from the POS and inventory systems is centralised under one order management system. Only then will retailers be able to truly offer a streamlined and effective ‘buy online, pick up in-store’ model (BOPIS).

By utilising a single data source that captures information through technology across the entire supply chain, retailers can use this to push orders to the best location to ensure orders are fulfilled. By using the same technology in stores, retailers can be confident in the consistency of the data, ensuring the process is streamlined and customers receive a good experience when opting for click and collect. With 25% of shoppers having tried a new online retailer during the lockdown, a good consumer experience can be make or break for retaining loyalty.

Don’t forget reverse logistics

For many retailers considering an omnichannel fulfilment strategy, reverse logistics can remain an afterthought. However, as we enter the ‘new normal’ the concept of ‘buy in-store, return online’ will become increasingly important.

Whilst high street fashion stores are set to reopen, government rulings reveal that changing rooms will remain closed to protect consumer health. This could mean a surge in over-purchasing and increased returns as consumers purchase multiple sizes and return those that don’t fit. Potential 72-hour quarantining of returned goods are also set to add new challenges to the returns process, as it will require additional storage space within the store and delays to getting the products back on the shelf. Being able to return items online rather than in-store will therefore be essential to alleviate this pressure.

Retailers must also be aware of the rise of online returns, which is likely to see a steep increase as more and more consumers migrate online. This can be for a number of reasons, often consumers ordering online will act more frivolously in comparison to when they are in-store, purchasing items that they then decide not to keep later.

To overcome this, online retailers and high street brands must look to invest in new technology that enables them to navigate the new customer journey alongside consumers. Developments in augmented reality, virtual reality and 3D visualisation are already beginning to make big waves in the fashion industry – allowing customers to virtually try on garments and outfits both online and offline.

Changing delivery expectations

Whilst delivery expectations have eased during the lockdown, with just 71% of UK shoppers expecting their items to reach them within a week compared to 90% normally, this could change at any moment as we transition to a ‘new normal’. To overcome this, retailers must find a way to utilise store inventory to fulfil online orders by adapting their store models to work better for them and their customers. A hybrid store model is a good example where retailers make their existing store space work twice as hard – doubling up as a store open to the public, whilst incorporating the technology that enables it to fulfil online orders for in-store pick-up or ship from store. Additionally, inventory management and order picking systems are becoming more important as online retailers and brands seek to implement multichannel fulfilment operations, a necessity for many as they seek to release and utilise store inventory to keep up with increased ecommerce volume and decrease inventory stockpiles.

As well as the speed in which goods are delivered, the method in which they are delivered is also set to change. Trends such as kerbside pick-up, which is already frequently used in the US, could also be adopted in the UK so that consumers do not need to go in a store to pick up an order. Instead, retail workers will bring the item directly to the customer, meaning minimal store interaction is required. The use of drone delivery is also something we anticipate will increase over the coming months, as well enabling the safe delivery of packages to consumers, drone technology is set to increases across the whole ecommerce fulfilment operation to decrease the number of touchpoints required to complete an order.

Welcome to the new world of retail

It is clear we are entering a new world order when it comes to retail. As we transition to a ‘new normal’, both online and brick-and-mortar retailers and brands will have no choice but to adapt to ensure business continuity and remain set for future growth as we come out the other side of the pandemic. One key learning that can be taken from recent events is that consumers are becoming more discerning when it comes to choosing where to shop. People are more conscious of the environment; they also want to see the brands they use acting ethically and responsibly. According to our research over half (52%) of consumers agreed that they had felt greater loyalty to the brands that had effectively communicated with them and were demonstrating social responsibility and behaving in an ethical manner during the lockdown.

Ultimately the future success of retail, as it always has done, relies heavily on the loyalty of customers. To be able to retain customers, brands need to start by understanding how their attitudes have changed and respond effectively in order to retain them. Retailers simply cannot afford to ignore this shift in behaviour, and risk losing out in what is already proving to be a turbulent and increasingly competitive marketplace.

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