“Adapt or die” was already a well-worn mantra in the world of retail, but it has perhaps never been as relevant as it is during present times.
The fleet of foot, experimental businesses testing new products and routes to market have often emerged as the winners in their categories. Think Amazon and its focus on an online marketplace model; think Sainsbury’s purchase of Argos to build its general merchandise and fulfilment credentials; and think Greggs’ shift away from being a bakery business to a food-to-go operator brilliantly attuned to food trends such as flexitarianism.
At a time when coronavirus is wreaking havoc on retailers’ ability to go about their ‘business as usual’ – and leaders face the prospect of the worst recession in 300 years – establishing new ways of working and fresh revenue streams has arguably become more crucial than ever.
Even those companies that are better capitalised, have smaller debt piles and are looking at a rosier post-pandemic future than some of their competitors are not resting on their laurels.
Morrisons has been one of the so-called ‘winners’ during the coronavirus crisis to-date, although it stresses that a spike in food sales will be offset by reduced revenues from fuel, general merchandise and in-store cafes, as well as the additional costs it has taken on to expand its online proposition and hire more staff.
But the big four grocers’ response to the coronavirus crisis has been amongst the most impressive. “Our longer-term strategy builds a broader, stronger, more popular, more accessible new Morrisons. I believe our response to covid-19 is bringing that future closer,” Morrisons boss David Potts says.
Morrisons has expanded its partnership with Amazon to offer same-day delivery to more big cities including Edinburgh, Cardiff and Bristol, and it was the first to launch “simple-to-order” food boxes containing staple products such as rice and pasta – it has produced 100,000 of them a week during the health emergency.
After the success of that proposition, Morrisons sensed an opportunity. It has broadened the offer, leveraging its unique vertically integrated model that boasts its own food production facilities.
“We see the idea of ‘Morrisons: the box company’ having some legs,” Potts muses. “People like those boxes – it is like a celebration box. The Ramadan box we did, we sold 1,500 of. We are doing a British farmers box, we are going to do a British local cheese box.”
Unlike food box subscription services such as Hello Fresh and Gousto, Morrisons shoppers can buy such boxes for one-off occasions at keen price points as part of their wider online delivery order, offering an obvious point of difference.
Pret a Manger is thinking along similar lines as it looks to an uncertain economic future. After a period of temporary store closures as a result of the virus, some sense of normality is starting to come into view – it is reopening 100 locations across the country to operate take-out and online delivery services. But even as that process begins, Pret is hitting the accelerator on new sales opportunities.
The business was already mulling the launch of a retail range to be stocked on the shelves of third-party retailers, but it has put pedal to the metal to bring those plans forward. Three of its organic coffee ranges will be sold through Amazon from next week, and UK boss Clare Clough says the partnership merely marks “the beginning of a wider retailer offering”. Other similar products are already “under development for future release”.
Pret already has a solid market share in the crowded coffee and food-to-go markets, but as consumers shift back to “the big shop” during lockdown, it is adapting to build a proposition that offers it a foothold and revenue opportunities within more traditional grocery retailing channels.
Next has been even bolder with its thinking, revealing last week that it was to launch a new beauty hall format in five units that will be left vacant by embattled department store chain Debenhams.
It was a move that raised a few eyebrows, but Next boss Lord Wolfson insists the retailer has an “exciting opportunity” to bring its online beauty business to life in physical stores, with the overall aim to “create a new force in beauty retailing”.
The bold visions of Morrisons, Pret and Next offer just three timely examples of how the best and most experimental retailers are already positioning themselves for the post-coronavirus future, whatever that may bring.
Now, more than ever, business leaders have to be brave enough to take a punt, think outside the box and try something different to wow their customers.
They must have the courage in their convictions to adapt not just to the present, but the future. Those who don’t may suffer the ultimate consequence.
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