The evolution of retail in a post-pandemic world

The rhetoric of ‘retail is dead’ is incorrect. In fact, retail is advancing at a rapid rate to meet the consumer demands for in-store innovation and service solutions for their shopping requirements in this post-Covid era.

This was the view of industry thought leaders who participated in the Fortress Retail Evolution webinar that took place recently. This online event was hosted by Mike Stopforth and included a panel discussion between Vuso Majija, Alex Morar, Tshiamo Mathibela and Richard Mukheibir, as well as commentary from other retail experts.

A key insight shared by Graeme Codrington is that the pandemic has accelerated a lot of the trends that were already underway. “E-commerce is one of the biggest trends at this time, but it’s not merely about putting your products online and then hoping somebody buys them. It is not competition to traditional retail; it extends and expands traditional retail. You need to develop relationships with your consumers and then personalise your connection with them through the right in-store experiences that gives them reasons to keep coming back– it’s not just sales.”

When discussing the innovations that are in play at this time, Vuso Majija explained how the tenant mixes are evolving and changing in response to changes in customer behaviour. “Pre-Covid-19, we saw space consolidation by tenants, including the closure of non-performing stores. For example, banks closed branches and Edgars closed certain stores. On the other hand, certain retail categories including grocers, pharmacies, and athleisure tenants were opening new stores. This is directly because shoppers were focusing on essential items, health and beauty products and changes in clothing preferences.”

“Our biggest challenge as landlords at this time isn’t omni-channel retail, it’s economic growth. There is appetite from small and large retailers to open stores, but the current economic situation is the main hindrance,” commented Majija.

SMEs are key drivers of economic growth in the country, which is the area where landlords are hoping to attract new tenants to shopping centres. “Both large and small partners are looking for space – it’s not all doom and gloom. Our priority this year is to try and accommodate as many of those opportunities as possible,” added Majija.

Richard Mukheibir supported these views, saying, “As a franchise business, we couldn’t sell franchises during hard lockdown in our usual face-to-face manner. Our sales model changed to weekly webinars and within a month, I had spoken to more than 100 people about franchising. Subsequently, we have sold 11 franchises as at the end of January. There are now more stores, but the size of the stores has reduced, with lower overheads and in turn, more profit. This proved how discomfort has resulted in interesting, innovative solutions that led to growth.”

Bathu Shoes have directly contributed to economic growth by opening twelve stores during 2020, despite the pandemic and its difficulties. Tshiamo Mathibela shared her views on how this emerging business overcame their challenges: “We don’t have a blueprint for the way we do things. Instead, we focus on innovation and customer experience. For the new stores, we paid a lot of attention to in-store design elements which have technological features that engage our customers as they approach the store – for example, the levitating sneaker machine makes the shoes look like they are floating. We consider the music we play, the images we use and fragrances we have in stores in detail. Most importantly, our engagement with customers through trained sales executives in a safe manner that makes customers feel secure in store. Furthermore, we built South Africa’s first sneaker customisation lab as an extension of customer engagement.”

The conversation around offline or online, this binary notion of one or the other, seems to be fading into obscurity. Retailers are looking to landlords to aid and advice in giving their customers a more seamless omni-channel experience. Alex Morar, CEO of NEPI Rockcastle, commented on how this has played out in the Central and Eastern European region: “We will never go back to the way things were, but that is always the case. Circumstances and operations continuously evolve and there is not a “one size fits all, all the time” strategy that we can apply. Landlords and retailers are part of one ecosystem. We need to work together to provide the best retail experience for our customers and partners. Landlords need to make sure shopping centres are attractive, well located and that the entire tenant mix is advertised. By integrating the various retailers’ concepts into digital advertising, we can ensure we are where the customers are searching. We need to have a joint strategy to approach this omni-channel experience.”

Retailers have realised that customer experience is only as strong as its weakest link. When the retail ecosystem works together to provide operational excellence, it benefits the customers. Most importantly, paying attention to what customers need and the level of human interaction that people are looking for was they come out of lockdown.

Majija made the point that customer experience does not start with the sales executive in store. “It starts with the car guard in the parking area and includes everyone in the shopping centre environment. The entire ecosystem must provide a great experience. Upskilling all staff to interact with customers will increase the interactions and will add to the overall shopping experience.”

It is a known fact that consumer behaviour is dictating most of the changes that have been implemented in recent months. The number one priority for customers is convenience. Majija related how Fortress partnered with a company that focused on Click and Collect. This company opened booths at many of the Fortress centres and there are plans to open more booths this year. In addition, Takealot opened a depot at Pineslopes. “We have seen a massive increase in delivery services like Uber Eats at a number of our centres, especially those with lots of restaurants and fast-food outlets”.

Mukheibir discussed the trend of people thinking about the trend of reuse, recycle and repurpose and wanting to live a more nomadic and agile existence. “This trend is playing really well into our hands. People are selling unwanted items in a professional retail environment and others are buying those items at half the price with a six-month guarantee. The idea of “value shopping” is increasingly mainstream, fast-forwarded as a consequence of Covid, a re-evaluation of priorities and financial spend, and the sad reality of change in employment status.”

Morar is looking forward to the continued progress of retail innovation in multi-channel retail strategy. “We are optimising our operations using revolutionary technology. The end goal is to offer a better service to our final customers. It does not sound like a big deal, but the detail behind it is substantial. The faster and the better that we do this, both us and the retailers, the more we will be able to provide the adequate experience and bring products to the end customers via multiple channels, not just physical or just online.”

Mathibela added that her team is excited about proving that traditional retail is still alive and kicking. “Because South Africa still struggles with high data costs and people not wanting to share their personal details online, they are frequenting shopping centres. We are going to continue to expand our footprint and conduct research into other engaging features to put into these stores. Our biggest goal for 2021 is become even more accessible by tapping into the smaller communities that other retailers don’t think about.”

Majija reiterated that the shopping centre industry in South Africa accounts for about 72% of all retail. “That’s approximately R780 billion per year. It is an important industry and employer. We must keep growing and expanding the retail industry. It is a massive contributor to service delivery and to the provision of services and products in South Africa. All we need now, is the economic recovery and growth to improve so that we can see the retailers opening more stores and consumers get what they want and need too.”

 

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