As a consequence of the COVID-19 outbreak the retail sector has faced an unprecedented disruption of commerce. A multitude of short-term challenges have arisen – such as health and safety, supply chain, labour force, cash flow, consumer demand and marketing. There is still much uncertainty surrounding the ‘return back to the new normal’, as consumers need to feel safe with shopping indoors. Short term, COVID-19 could prove to be the ultimate trigger for already struggling retailers to close their businesses. Dragana Marina, part of CBRE’s Nordics Research Teamreveals more in this article.Major changes for the retail market
The retail market in the Nordics is undergoing fundamental changes. Structural changes in consumers’ spending preferences and the growth of e-commerce have influenced retailer performance. In the retail sub-sectors which we examine we do observe a relationship between periods of strong online sales growth and subsequent retailer failure, though it is difficult to isolate the effects of e-commerce growth from cyclical drivers.
The most frequently asked question
A question that has often been raised recently is whether there is an oversupply of retail space across the Nordics. Our analysis shows that the Nordic retailers make relatively efficient use of space compared with many other EU countries, and that the retail market has a healthy amount of retail space overall. At the very least, it would be very difficult to argue that Nordic countries are an inefficient outlier in their use of retail space.
To make or break
The COVID-19 pandemic seemsto have accelerated the key underlying fundamental trends influencing the market. Market stakeholders are therefore closely following the sector transformationas it can result in the make or break for some market players. The impact of the outbreak will vary depending on the retail format, and the main platform on which the retailer relies. Improved connectivity between sales channels, logistics and customer interaction will therefore result in revised business models. Digitalisation of operations and a customer-centric approach to transformation will be the backbone of further growth and value creation.
The Store of the future
Across the region, retailers are in pursuit of definingthe ‘store of the future’ , and how to increase customer traffic by offering consumers the shopping experience that they cannot experience online. The customer journey is changing, and retailers are getting used to the fact that customers sometimes window shop or visit a showroom before returning home to purchase online.
The future can be won but will require a strategic mindset and advanced analytical capabilities to support the vision. Embarking on this journey will be just one of many steps in developing the new approach that entails constant reimagining of retail. Being quick in building capabilities and creating flexibility will allow retailers to stay ahead of the game.
The future of retail is here. In a competitive market how are you going to stand out?
Read more in our Retail report, you find it here.