Retailers begin their fightback

Regional trends are expected to shape the retail landscape in the future

Circumstances may be unprecedented, but the industry has endured the pandemic-related restrictions.

Months into the COVID-19 Products & Retail Leader, Olivier amidst the economic downturn, pandemic, the retail Gergele in an interview with retailers have been reducing their landscape of Singapore Singapore Business Review. overhead costs and back-office has seen huge changes. “There will be an increasing shift costs, implementing in-store cost

According to Singapore’s Ministry to online platforms as consumers reduction and store portfolio of Trade and Industry, the wholesale are spending more time at home rationalisation, according to an EY and retail trade sector shrank by even after restrictions have lifted— poll of Singapore and SEA retailers 8.2% YoY in Q2, worsening from online penetration rates in the Olivier Gergele conducted in May. the 5.6% decline in the first quarter. region are expected to be around “Many shared that they have also Retail sales were also down by 8.5% 15-20% in some countries by 2025.” been looking for short-term cash YoY in July, which was the first full Another change will be the shift relief by turning to working capital month of physical operations after in product mix, as consumers optimisation, rental negotiations the circuit breaker. are purchasing more essentials and profit-sharing readjustments,”

Due to strong e-commerce and online, delaying splurge-spending said Gergele. e-commerce sales, experiential and favoring value for money and To survive, retailers do not retail shopping, as well as the easing trusted brands, and the emergence just need to optimise their cost of circuit breaker restrictions, the of new business models— management strategies, they will industry has slowly recovered along called “dark kitchens” or “cloud also have to boost revenues by with the economy. In a latest report, kitchens”—where retailers capitalise riding on the wave of online retail Euromonitor forecasts a $28.82m on the demand for food delivery growth. However, businesses need overall retail sales for Singapore in services, whilst saving costs that are to expand their focus beyond year 2020. otherwise incurred from having driving online sales numbers,

However, as Singaporean retailers dine-in restaurants. and to look at developing an navigate the industry’s headwinds, omnichannel strategy. they will also need to look out for Challenges to retailers “Even as retailers are looking regional trends that are expected to Since retail revenues have dipped to manage their working capital shape the landscape in the future, due to the lack of tourists and and revenue, they have had to according to EY Asean Consumer reduced consumer spending demonstrate agility in facing

In the longer- able to fill in the supply and demand term, retailers gaps in the past few months, they will need to need to shift from a reactive to successfully proactive approach in optimising build out digital their supply chain. customer Retailers should plan a mix of journeys local and overseas suppliers to these changing sentiments, new consumer segments are emerging.

To deliver against these heightened expectations, retailers will need to continue creating transparency to secure consumer trust, as well as reshape their products, services, and experiences to build a portfolio relevant to the future consumer.

“In the medium-term, retailers should prioritise value-based products, where private labels, bulk pack sizes and higher promotional offers, would be attractive to the cost-conscious consumer,” Gergele said. “In the longer-term, retailers will need to successfully build out

diversify their supplier base and build supply chain resilience. Those who can institute strong demand planning will be able to better manage demand fluctuations. Another important thing is to promote innovative thinking among Contactless methods for both payment and delivery employees, Gergele said, noting that since changes take place quickly, disruptions in their supply chain Retailers will need to assess and less hierarchical culture will enable and demand surges. To meet the invest in new technologies such quick decision-making, thereby spike in demand, some players as AI to enable personalisation, improving business operations. managed to operationalise idle assortment management, pricing, For companies with adequate equipment in just two weeks when and promotion management, as well resources, now is the right time the overall process would typically as in back-end digital investments to consider acquiring companies take months,” he added. that will enable them to deliver on available at distressed valuations.

Additionally, the implementation their front-end investments,whilst Furthermore, the consolidation of temperature controls at managing costs, such as demand of retail real estate space is expected store entrances; provision of prediction algorithms, digital order to continue as consumers get hydroalcoholic gel in outlets; usage management, automated inventory comfortable with shopping online of contactless methods for both management, and operations. and retailers reevaluate their store payment and delivery approaches; performance and adopt a more development of remote assistance Thriving amidst a modest outlook prudent approach to leasing methods in customer service and Driving sustainable growth in an physical shopfronts. maintenance; and adoption of drive- environment where consumers are According to Gergele, consumers through facilities outside mass retail evolving and new business models still like to visualise, try on, and feel helped generate overall customer are emerging will require retailers products before purchasing them, value and good will. to continue addressing challenges, so as offline brands move into the

However, 50% of consumers including continuously expanding digital space, and e-commerce expect their lives to change their offerings, as well as driving an brands buy physical stores, novel significantly in the long-term, omnichannel strategy to deliver an takes on retail where stores are according to the EY Future improved customer experience. laced with digital touchpoints Consumer Index. As a result of Whilst some retailers have been should be seen.

having an agile organisation with a digital customer journeys.” Retailers should prioritise value-based products which would be attractive to consumers