FEATURE
Reimagining the New Normal for Retail
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he way we all are currently living and working Joelle Elias Manager, Retail Consulting differs vastly from MENA at JLL this time last year. Joseph Kerbaj At least a third of the Associate, Retail Consulting world’s population has MENA at JLL been impacted through lockdowns and quarantine. The full impact of the changes that have come about as part of the new normal remains to be seen. As the retail sector continues to be one of the hardest hit from the outbreak, retailers have been forced to revamp their business models to maintain cash flow and seek out opportunities to keep up with the rising market disruptions. For retailers, the primary focus in the short term remains on preserving cash. A rising number of retailers and leisure operators are assessing options to offset the loss of revenue from their physical store portfolios. For example, proactive gym operators are offering subscription services to stream online workout sessions while high-end restaurants are offering meals for delivery or collection, and others have turned eateries into mini supermarkets. Social responsibility too is being closely monitored by all, especially as more time is spent online. In addition to generous donations and the manufacturing of masks and hand-sanitisers, various cosmetics and luxury brands have embraced live streaming for sharing make-up and fashion tips. The changes adapted during the year have altered retailers’ long-term objectives to safely target a wider market by embracing technology. In the current environment as the structural change in the retail market accelerates, greater emphasis will be placed on the shift toward a flexible omni-channel retail model and sustainable fulfillment. ‘Retail beyond Covid-19’ can be captured through five key pillars that we expect are here to stay:
Digitally Adapting The online shopping surge, sparked by the outbreak, is continuing to change consumer habits. Along with all other pressures on profits, such as price competition, traffic declines, inventory overages, and increased cost of running a business due to increased safety measures, the quick pivot to digital is adding its own pressures. What we are witnessing is increased e-commerce integration as part of which virtual online platforms are being set up to support the wider community. As part of this integration, customers are now able to visit the stores and shop virtually and have items delivered straight to their homes. The “New Normal” Some of the implications of COVID-19 have created a need within retailers, both start-ups and franchise, to promptly embrace technological implementations which are here to stay, such as contactless payments, convenience, and self-service, to name a few. These changes reflect embedded costs to retailers remodeling their structure to account for a lower margin for error. The new normal also reflect the consequences of a recessionary economy driving shoppers to off-price stores and essential items. The Battle by Category The performance of retail has been dependent on the specific category. For example, the grocery industry has peaked in 2020, with growth expected to decline in 2021, as part of a correction and stabilization post-pandemic. Meanwhile, other retail categories are expected to witness a correction of growth as consumers adapt to the new normal, and operators customize their offering accordingly. Space Redefinition The recovery from the closure period has been uneven and is based on the location of a retailer. Brands are increasingly aware of the impact of their
RETAIL PEOPLE . OCT-DEC 2020 .26
