“We’ve been through the Great Depression, we’ve been through the Great Recession. Now we face the Great Acceleration.” Wise words from retail strategist, Carl Boutet, on how we’re seeing an increased rate of change in the retail industry due to the coronavirus pandemic. In this episode, Carl Boutet joins host, Oliver Banks, to explore why you must realise how retail is changing or risk being left behind.
Listen to this episode to hear:
- How retail is changing as a result of Covid-19.
- Why Amazon could be about to take another huge step forward.
- The big global phenomenon that could come out of the coronavirus pandemic.
- And much more.
Introducing Carl Boutet
Carl Boutet is a retail strategist, board advisor and founder of Studio Rx. He has over 25 years of retail experience, initially at Costco, where he ran 65 sites. Now, he advises both retailers and tech companies – blending his practical experience with his commercial acumen and strategic outlook. Also, he advises the Retail School of Management at McGill University as well as several retail innovation labs.
Find Carl Boutet on LinkedIn.
Or on Twitter (@carlboutet).
We’re seeing how connected our world is
At the start of 2020, Carl was in Shanghai and saw, first hand, how coronavirus began to play out. But as the virus spread across the world, we’ve of course seen how impactful it has been. This is the first indication of how global business and travel has become. We’ve seen how the global supply chains have been paused whilst stock is held in quarantine – either on shore or on the water.
But, it’s not just people and logistics though. Initially, the largest problem to the Chinese economy was forecast as a supply problem. With factories closed due to isolation, there would be a financial impact whilst production wasn’t going. But wasn’t forecast was that the demand from the rest of the world would crash and this would then present a different financial challenge for China. Another indication of how connected our world is.
Now, we’re seeing consumer mindset and psychology start to evolve across the connected world.
And of course, the electronically connected world has helped minimise the global impact – especially if you think about how this could have played out without the ability for so many people to work from home and for ecommerce businesses to continue to trade.
Coronavirus has shown us just how interconnected our world is now – and there is a much wider appreciation of this now from consumers. This in turn is leading to a change
But the coronavirus isn’t leading to a pivot – but it is an acceleration
Whilst some are proclaiming huge changes, even after “normal life” continues, the likelihood is that there will not be a huge “U” turn. So, whilst there is unlikely to be a complete pivot, but instead an acceleration of the trends and changes that we were already seeing.
Take ecommerce as an example. It won’t surprise you that ecommerce has been growing as a percentage of the total retail market – and this trend has been continual since the birth of online shopping. And, as you would expect, many customers have turned to online shopping during the pandemic lockdown. So, the data is showing a huge leap up in line with the coronavirus. Again, exactly what you would expect when many physical shops are shut.
But, as stores reopen, footfall will slowly return and the total share of ecommerce will reduce back down. Not to the “normal” pre-Covid-19 levels that we’ve seen though. Carl predicts a step up, but not to the levels that we’re currently seeing.
And it’s not just ecommerce. We’re seeing many retailers putting trials and tests of concepts that were already on the roadmap. This is the evidence that we’re seeing an acceleration rather than a pivot.
What is the outcome of this acceleration
Already, we’re seeing significant impacts to retail. The category which has suffered most is probably the department stores. It is with sadness, but perhaps not surprise, that we’re seeing major retailers such as J. C. Penney, Neiman Marcus and Debenhams announcing bankruptcy or administration proceedings as a fallout of the coronavirus. Afterall, the department store model has been in challenging times for a number of years – and with physical stores shut, it was always going to be a ticking timebomb.
But it’s not just department stores. For every week that the pandemic continues and shops remain shut, there will be increased pressure on physical stores. In turn, we should expect that the longer it continues, the more retailers will have to close permanently. However, it doesn’t stop there. As we have all seen, the world is connected and we know of the complexity, scale and reach of retail supply chains. So, as more retailers struggle or close, we should also expect more impacts up the supply chain too.
Finally, there is an opportunity for those that do stay in business to build and earn trust from their customer base. Particularly with the global trend of “buy local” – which is as popular in China as it is in the western world too. So, will local businesses be the longer term winners from the coronavirus as long as they can stay connected to their customers? Time will tell.