Digital investment is the key for companies to boost their fortunes as we head out of the pandemic, says Mike Smith, managing director at Virgin Media Business.
The past year has been like no other in the retail sector. Every retail enterprise, from local corner shops to global fashion giants, had to radically adjust the way they ran their businesses to cope with the challenges of lockdown.
As the sector opens its doors once more, all retailers have one thing in common: digital is now central to how they operate, from the supply chain through to the customer experience and how staff work together across organisations.
- Industry shift
Consumer expectations have evolved, thanks to digitally savvy customers having access to a huge range of products and services.
This has accelerated the industry-wide shift towards omnichannel retailing, blending the purchase journey across online and in store. Digital investment is now more important than ever.
We partnered with the Centre for Economics and Business Research (CEBR) to better understand the potential benefits of continued digital transformation for the retail industry and the wider UK economy across private and public sectors.
CEBR found that ongoing investment in digital change could transform the UK economy and increase the UK’s GDP by up to £232bn by 2040.
The retail sector alone could see an uplift of £21bn – a 6% boost to the sector – in that time, but only if retailers choose to seize this opportunity by investing in technology.
- Strong ecommerce growth
According to a recent study by Kantar, ecommerce continued its trend of being the fastest-growing channel in the world in 2020, gaining an additional 67 million shoppers.
Demand for online shopping is significantly growing year on year, and where there is rapid growth there is always room for improvement.
Retail analyst Richard Hyman, who has worked with the likes of Ocado, M&S and John Lewis, says that much of the legacy infrastructure in retail is problematic.
“The turnaround time for orders is too long. And the solution has to be to embrace digital innovation. It makes you light on your feet and more cost-effective.”
For many major retailers, digital change was already ongoing before the pandemic.
But according to Andrew Goodacre, chief executive of the British Independent Retailers Association, it was the pandemic that sparked the UK’s smaller retailers into a digital revolution.
“People want to shop locally, but they also want to shop online so there’s a huge opportunity for those willing to engage with people in their area online,” he says.
Digital investment is the key to helping many retailers navigate a route out of lockdown, a route that leads to a more prosperous future across the whole retail landscape. Some are already taking steps down this route.
- New digital offer
The difference between a struggling company and a flourishing one can be as simple as its online experience.
In 2020, the UK’s national lockdown shut Hillier Nurseries overnight – right at the beginning of its busiest time of year for plant sales. It turned its attention to its online shop, a dormant entity that hadn’t been updated in five years.
Quick to adapt, the company invested in digital to provide a new service offering for customers. It worked with a web development and design consultancy to rebuild its website from the ground up, partnered with a courier company and created a brand-new dispatch system – all in a matter of weeks.
Online sales went from zero to almost £250,000 a week in barely a month. In a little under a year, the company was nudging online sales of £1m a month. The decision to invest in digital opened the business up to new markets and audiences they previously weren’t reaching.
Now, the company is working on creating a new virtual garden centre and investing in a dispatch centre at its nursery to get plants to homes in optimal condition.
- More agile sector
It has been a hard year for the retail sector, but digital investment has transformed the experience businesses can offer their consumers.
Now there is a once-in-a-generation opportunity to continue this digital investment, seize the potential £21bn retail sector uplift and create better experiences for retailers and consumers – by speeding up supply and delivery chains and revolutionising websites and checkout processes.
Read the retail sector report for yourself and see how digital is transforming the way people do business every day.