What's Retail Business Going to Look Like Post-Lockdown?

What will the world of retail going to look like in the second half of 2020? Everyone is talking about the new normal, that lockdown has brought profound change to the economy. I think this is true, but until we get there the new normal is conjecture. So what do we already know, and what can we extrapolate from that?

Pre-lockdown, retail of all sorts was struggling. Footfall was decreasing in lots of places and was generally blamed on the ever-increasing amount of online retail. Throughout the last decade shops of all sorts have closed down, and by 2019 it was so common to go past an empty or a boarded up shop that it wasn’t worth commenting on unless it was a major department store. In fact it was the opposite that was newsworthy! Retail success was starting to be celebrated.

Lockdown has meant that retail needs e-commerce. But this just confirms what everybody knew. The latest high street trend is to argue for rent concessions, and if you don’t get them from your landlord, to close the doors. So should we just close down all our high streets, board up all the shops and go online?

During most of the last decade, one area of retail that actually increased was the coffee shop. Looking at Costa Coffee as an example, they grew from 881 UK stores to 2,422 UK stores between 2008 and 2018 – over the same period, Mothercare went from 400 stores to 79. What lessons can we learn from the story of these two very different retailers?

Perhaps the rise of the coffee shop is something that will continue post lockdown? You might be able to buy the ground coffee you like and make it at home ... but the allure of the coffee shop is a combination of factors. Most coffee shops have armchairs as well as more upright chairs; and they have wifi so you can work there. They are used for business meetings or for friends to catch up, for a daily takeaway cuppa on the way to work and for a relaxing drink whilst out shopping. Market research shows people are choosing a coffee shop based on the ambiance and usefulness as much as the quality of the products or the convenience of the location. My key takeaway from this is that what they sell is not just complemented by how they sell it - how they sell it is more important than what they sell!

On the other hand, compare this to Mothercare. Despite some 1,900 babies being born everyday in the UK, this mother and baby shop couldn’t make its shops work – probably because it is easier and more convenient to buy stuff online (and some 45% of its worldwide sales are now online). Whether as a bricks and mortar store or as a e-retailer, its share of the mother and baby market has declined.

How can you recognise that Darwin moment? You know the bit where your business isn’t the fittest, and your survival is in doubt? This is a far more complicated downward spiral to unwrap – but the key is that Mothercare didn’t evolve until it was too late. Mothercare stayed as a physical retailer when it could have taken its position as a market leader to recreate itself as an online market leader.

I think that store-based or physical retailing needs to have an edge. You need your shop to be a destination, not just a place to go shopping. You need to think about how you can get your customers to want to spend time in your store. Which means doing more than just shoving a coffee shop outlet into your local supermarket!

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