Retailers Urged to Adapt & Embrace Change to Beat Lockdown
The future is rosier than you may think!
Wow! Has the Australian Retail Industry been on a rollercoaster or what?
When KPMG produced its 2020 Australian Retail Outlook, COVID was just this strange disease that was happening overseas. At that time, the bushfires along the eastern coast were more of a concern.
Fast forward to now, and there’s no denying that things have changed. They will probably never return to the way they were. However, according to
KPMG’s report, we have come out of this better than expected.
PLANNING FOR A BETTER FUTURE
Resilience – and willingness to adapt – has seen the Australian Retail Industry not only come through the worst but start planning for a better future.
According to the survey, a third of respondents said they have actually accelerated their existing plans and 27.49% are now exploring new territory by entering new categories or launching new products.
The survey says, “In so many ways, the ‘new normal’ has forced the retail industry to raise the bar when it comes to customer engagement, digital, delivery and even physical retail. Customers are savvier than ever, and their demands and expectations have increased in the past 12 months.”
Interestingly, in the 2020 survey, KPMG predicted that we were in for some dramatic change over the next decade. How right they were
RETAIL COLLAPSES HIT RECORD LOWS
Initially, it was thought that Australian Retailing would be devastated. However, in the survey, this is what KPMG Partners Matthew Darby (National Sector Lead Retail) and James Stewart (National Leader, Restructuring Services) had to say
“Instead, retail collapses hit record lows as government initiatives (such as JobKeeper and the temporary suspension of insolvent trading laws) protected retailers. Consumers hoarded cash and retailers pivoted to online, driving some to produce financial results way beyond expectations.
“However, we believe 2021 may be the year that challenges retailers even more than 2020, as the government’s economic morphine starts to unwind, businesses return to business as usual and consumer cash piles slowly revert to more realistic levels. Indeed, COVID-19 has accelerated a wave of digital disruption for the retail sector, and with consumers now living differently, purchasing differently and thinking differently, retailers will need to place their bets around what will stick versus what is a glitch online caught many retailers unprepared, it has also seen businesses with strong digital DNA and e-commerce capabilities thrive, and their growth rapidly accelerate.
After experiencing five years of e-commerce growth in a matter of months due to the pandemic, retailers and brands need to leapfrog their investment programs to deliver their 2025 plan today. As the consumer’s preferred channel to purchase continues to shift, so too do the drivers influencing buying decisions as consumers demand greater personal safety and value for money.
“Other challenges of COVID-19 will also continue. Retail rents will undoubtedly remain in the spotlight this year, as landlords and retailers continue their delicate dance to work together to achieve a win-win outcome and succeed in transitioning their respective operating models for the new reality. The new Payment Times Reporting Act commenced on 1 January 2021 and requires reporting entities to publicly report on their payment terms and times with small suppliers, which means that customers, suppliers, investors and,more importantly, the media, will have the ability to call out companies stretching their cashflow.
REASON FOR OPTIMISM
“It’s not all doom and gloom. The development of a COVID- 19 vaccine provides a real reason for optimism, but it is important to understand that 2021 (and possibly beyond) will be all about the art of retailing against a lack of reasonable comp sales while vaccine distribution ramps up and supply chains are reconfigured. While uncertainty and many challenges lie ahead, good retailers won’t waste this opportunity to rethink their strategy, to embrace change and build competitive advantage. We believe those retailers will come out on top and will embrace 2021 as the year of retailing bravely.”