Representative image Photograph:( Reuters )
On the face of it, the answer is in the affirmative. Consider, for example, the Financial Times news story about independent stores doing better than big chains and assorted news of booming online retail business(es)
The COVID-19 pandemic has, if not actually brought, but certainly hastened putative trends and developments in almost all domains of life. In the world of business and commerce, the trend of working from home allied to home-based leisurely activities has created shifts in consumer behaviour that are likely to be the ‘new normal’. This, among other things, has undergirded a shift to e-commerce and online retailing.
All major retailers have posted stupendous gains both in revenue and operating profits. This begs the question: is retailing as we know it dead?
On the face of it, the answer is in the affirmative. Consider, for example, the Financial Times news story about independent stores doing better than big chains and assorted news of booming online retail business(es).
Online retailers with a local flavour have been not only more agile but nimble as well. They also have had the benefit of not paying rents that larger retail chains have had to grapple with. Along with the acceleration of what the FT calls, ‘acceleration of online retail spend’, these developments favour e-commerce and online retailing. Will this trend outlast the pandemic? And will retailing die a ‘natural death’?
Yes and no. To cut costs, by having an online presence which defrays rent and other fixed costs, and obviating the need of paying margins to major retailers for shelf space, B2C retailing will gain traction. This will be (and is) paralleled by profound changes in consumer behaviour, propelled by the pandemic along with technological changes and adoption.
Ocado, the UK retailer, has recently acquired robotics firms so that its warehouses are manned by robots. The aim apparently is to increase the efficiency of its fulfilment. Added up, this would mean that retailing will undergo a profound or even a paradigm shift.
However, retailing, or conventional retailing will not die. The reason(s) pertain to human nature and human needs. One major component of either is to socialize and the need for human contact. Humans, to make a cliched philosophical point, are social and sociable beings where either of these fulfils important psychological and emotional needs.
In this regard, the experience of shopping is not merely to buy goods or/and services but also a socially rewarding experience that people enjoy. Be it the bazaars of South Asia, the souks of the Middle East, or the modern shopping centres, people enjoy and savour the shopping experience. The word ‘experience’ is critical here as it denotes that shopping is more than buying and selling; it is an experience.
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So while the pandemic has induced certain habits and shifts, working from home and shopping online, and while some or even many aspects of these will remain after the pandemic frizzles out, the elemental need to socialize through shopping will re-emerge. But, it will not be the same as before. What is, in all likelihood, to emerge is a synthesis between the online and the real, brick-and-mortar themes that will reflect the nature of the world and the times we live in.
What will be implications of this on firms and consumers?
First, the shift to online platforms, hastened as it is by the pandemic, is a response or even a reaction to changing consumer behaviour and the nature of demand. In this sense than the consumer is king (or queen as the case may be). Because of this firms will attempt to develop business models that reinforce this trend and theme, developing business and operating models that reflect it.
If firms decide to go the whole hog into e-commerce and platforming and develop models that accord with this, it would be an erroneous strategic approach. The reason, at the risk of repetition, pertains to the elemental need of people to shop as a socializing and a social experience. It then behoves retailers and other business to develop models- business and operating- that factor-in both the online shopping variant and the real experience.
The world, to iterate another cliché, is at the cusp of profound changes and uncertainties. These two elements when they go together incubate changes and developments in all spheres of life. Or, in other words, the forces of creative destruction are at an all-time high under and during these conditions.
But prudence dictates that firms and business take a step back, understand the nature of changes and take a ‘Goldilocks approach' to the trends that are reshaping consumer behaviour, business, financial, economic and technological trends.
While these are the defining features of our age, but the fact remains that humans will be human, who will always have the need to socialize and be social no matter what the overarching trends and developments might be. This is a lesson that retailers must take to heart and develop models that reflect the golden mean between technological change, human nature and commerce.
(Disclaimer: The views of the writer do not represent the views of WION or ZMCL. Nor does WION or ZMCL endorse the views of the writer)