2020 was one of the toughest years ever for most retailers with the exception, perhaps, of grocery, DIY, home furnishing and ‘essential’ shops. Lockdown sent shockwaves in a sector which, according to the British Retail Consortium (BRC), accounts for c. £180bn revenues in the UK. There were unprecedented numbers of bankruptcies and CVAs, as well as store closures and trading losses, leading to significant redundancies. One third of CEOs changed. The trouble is, the traditional retail sector is no longer where the C-suite necessarily wants to go; the sector is looking for ‘new blood’ or established CEOs ‘who are prepared to forget everything they know and be bold’.
Elsewhere, the pandemic has accelerated changes which were badly needed - online and convenience sales combined, which represented 16% of sales in 2019, now account for over 30% and the trend is here to stay. However, the big challenge is still one of profitability - Supply Chain Executives are still grappling with high logistic costs making direct delivery a big challenge; panic buying during the pandemic also led to challenging product availability issues, not to mention Brexit which is slowing down imports. Retail operators are having to sell, re-purpose stores and look for different uses of space, placing renewed focus on both the Store Operations and Property functions. Aside from digital transformation, many retailers expect a resurgence of local shops and community centres which will be good news for the high street, though more affordable rents will be needed to allow for this to happen.
General merchandise and fashion have faced huge pressure from online competitors like Amazon and ASOS. Expect more investment in mobile shopping and digital transformation with greater collaboration and trials with third parties and up-and-coming disrupters. Meanwhile, the shares of a well-known online fashion retailer fell off a cliff following reports of ‘unethical sourcing’, highlighting the need for Trading Executives to ramp up controls with greater focus on ESG compliance and governance in product buying.
All the while, the spotlight has been on CFOs to reduce retailers’ overheads and cost to serve, while making full use of government support schemes and strengthening cash management. Theirs is a difficult balancing act when there is so much pressure to invest in technology and supply chain efficiencies just to keep up. Refinancing and managing banking relationships together with an increase in IPO and PE transactions will continue to keep our CFOs busy.
Searches for Chief Customer Directors have kept us busy too. They are in poll position when it comes to ‘rewiring’ a business so as to put the customer at the heart of everything it does, from payment systems to click and collect. The emergence of these roles call for a unique blend of brand marketing, insight, data, brand, loyalty and NPD skills and expertise. Marketing has gone through an extraordinary journey - we have gone from big advertising campaigns to huge investment in data and personalisation and now social media, machine learning and algorithms requiring both left and right brain skills. Finding the right balance between understanding and stalking consumers is a key new challenge…