How do retail business adapt to the new norm?

Covid has become the catalyst for significant change with the pandemic applying more pressure to the already struggling high street. Physical stores continue to battle with uncertainty and the growing shift to online; the reshaping of the high street (as we know it) is, no doubt, inevitable. 

During lockdown we have seen a seismic shift in retail business models as businesses struggle to grow bottom-line profits and differentiate. Adaptation in retail is key to survival. What does that look like? It is exactly what it has always been – focus on the customer! Except now, the customers is far more sophisticated and savvy.

With customer habits ever evolving and demands growing, businesses must effectively serve consumers through multiple channels and with a digital first mindset: Retail is about the customer experience as well as the product. Retailers that can quickly reimagine their omnichannel approach will create better customer experiences and, in turn, differentiate against competitors.  

The Mckinsey article “Adapting to the next normal in retail: The customer experience imperative” provides useful insight into how businesses can thrive in the post-Covid environment. The article focuses on five actions to build more resilience in their customer experience.

  • Digital, Digital and Digital – be that driving online traffic through omnichannel marketing campaigns or increasing digital presence and customer engagement
  • Omnichannel innovation – increase the number of interactions at multiple contact points with your consumer
  • Transforming store operations to comply with Covid measures
  • Reimagine the physical network – businesses optimising footfall and deciding the role of each store
  • Embrace an agile operating model – be that operationally or logistically

In our experience, businesses that have a robust online platform typically command greater multiples due to the business’ ability to immediate scale at relatively low levels of CAPEX. During the pandemic, these companies have performed well with online shopping becoming the main channel for consumers post lockdown. In the last couple of months we have seen an increase in activity with shareholders evaluating options in advance of possible CGT increases within the next 12 months. We are always happy to provide insight into current valuation drivers and if you are exploring your options, please do get in touch.

How retailers can meet new customer expectations

By Bhavik Borkhatria on 26/11/2020