Covid-19 accelerates digital transformation in retail

  • October 6, 2020
  • Steve Rogerson

Covid-19 is accelerating digital innovation and experiential transformation in retail, according to market watcher Futuresource Consulting.

As the retail landscape continues to emerge from the business devastation and disruption caused by the Covid-19 pandemic, retailers have been battling to innovate their approach to the market to deliver their goods and services.

Covid-19 will continue to be a threat in the short term, says the report, and its effects are likely to be felt long after the pandemic recedes. Retailers and brands need to continue to innovate in this new evolving omnichannel world of retail, so they can weather the so-called new normal, while simultaneously future-proofing their businesses.

Through the storm there is a real opportunity to upgrade supply chain processes, transform the consumer experience and build customer loyalty across the omnichannel landscape, says the report. This involves encompassing brick-and-mortar stores, click and collect, bricks and clicks, ecommerce web sites, digital marketplaces, comparison shopping engines, and social media platforms.

“The massive shift, driven initially by Covid-19 is expected to stabilise in 2021,” said Stephen Mears, research analyst at Futuresource Consulting. “However, the retail landscape will never be the same as it once was; only the fittest and most innovative will survive. This is because of the on-going effects of the pandemic such as the reduced store visits, changing consumer buying behaviour and the huge shift of the overall customer shopping journey. There is also expected to be a further decline of physical retail presence worldwide, following permanent store closures during the pandemic, and a continued downsizing of physical retail presence moving forward.”

The analyst’s latest retail distribution report, which also tracks macro retail trends and product shipments across the TV, headphones and wireless speaker categories, says that in 2020 online retail will take a record share of retailer sales across all channels. Mass merchants, consumer electronics specialists and other traditional retailers are also witnessing a rise in online purchases.

Physical retailers that have been able to implement a multi-channel offering quickly have benefitted significantly, retaining loyal customers, and often offering more timely delivery or collection methods than pure online retailers, due to an existing physical local presence. Pure online retail has, however, benefitted most during 2020, with its share of consumer electronics retail value growing from 21% in 2019 to 25% in 2020.

The direct channel is also continuing to gain in importance within the wider retail landscape, as this allows vendors to manage the shopper journey more closely as well as maintaining product margin. This channel is particularly important to vendors that have a broad portfolio of products, such as Samsung, Huawei, Xiaomi and Apple.

These vendors all offer an ecosystem of connected home and personal electronics, and the direct retail methodology, particularly through experience stores, allows these vendors to demonstrate the value of its entire product portfolio as an ecosystem, rather than treating each device as an independent, discrete product. With a further reduction in store space expected over the next five years, vendors are expected to fill this void partially through branded stores or experience centres.