Opinion: Retailers must adopt new normals for post-coronavirus world

Yes, of course it will, but when normality resumes – even in the unlikely event that it looks like its pre-pandemic predecessor – the retailers that will be most successful will have adopted a new normal of their own making.

The health emergency has prompted some of the most successful businesses not to prepare simply for a return to all the past certainties and ways of doing business that enabled and sustained their ascent – but to accelerate strategies to bring success in new ways.

“Marks & Spencer’s initiative is entitled ‘Never the Same Again’, indicating that going back is not on the agenda”

Food-to-go specialist Pret A Manger, for instance, is not just banking on office workers’ pent up demand for a skinny latte and their signature sarnie when offices open up again.

Pret has sped up the introduction of a coffee range to be sold through supermarkets. Originally anticipated to be launched towards the end of the year, the range has already hit shelves. Chief executive Pano Christou told the Financial Times: “My sense is that Pret might be a very different operating model after this if [coronavirus] persists.”

You can imagine some of the factors at play. Consumers getting used to eating breakfast at home, rather than on their way to the office, might not necessarily resume their old daily coffee habits – but a range sold through grocers would give Pret a new revenue stream. A similar move from Starbucks, which partnered with Nestlé to launch a supermarket range, is understood to have generated additional sales of £250m.

Similarly, beds retailer Dreams has put its foot on the pedal to build digital operations. The retailer had been investing in its website, but the coronavirus outbreak prompted Dreams to act faster than it might otherwise have done. Chief executive Mike Logue told Retail Week that digital initiatives underway would change Dreams in all sorts of ways, from how it runs its stores and uses data, through to internal communications. “It’s about how we operate more effectively,” he said.

Weather forecast

Before Covid-19 struck, both Pret and Dreams had been consistently successful for a number of years. The changes being made, and similar projects being undertaken by other consumer businesses, could put such companies ahead of slower-footed competitors as the lockdown ends and the country gets back up and running. And they are happening now, not in six months’ time after restoring – or hoping to restore – the businesses as they were previously.

Marks & Spencer, too, revealed last week that it is to “accelerate” its transformation programme and “change ways of working permanently”. Details are expected alongside its financial results in a few weeks, but the initiative is entitled ‘Never the Same Again’, indicating that going back is not on the agenda.

It’s not only at an operational level that businesses need to prepare for new normalities. The political and economic backdrop against which they operate might never be the same again.

In a note published this week, Shore Capital senior political adviser Matthew Elliott identified six trends arising from the coronavirus crisis that he believes will affect the business environment in the medium- and long-term. As the former chief executive of the Vote Leave campaign, Elliott is well attuned to the political weather and worth listening to.

“If the relationship between China and the West cools further, retailers will have to consider the implications”

He highlights two trends in particular that retailers should consider. According to Elliott, “a new economic Cold War between China and the West has begun”, and “environmental action will not be a victim of the crisis”.

China has ballooned in importance for retailers, both as a sourcing location and as a growing consumer market. If the relationship between China and the West cools further, retailers will have to consider the implications. Elliott expects the Conservatives’ China Research Group, modelled upon the European Research Group, to “flex their muscles on Sino-British matters”.

On the environmental front, Elliott can “see there being an increased focus on sustainability” including “a push to reduce our dependence on imported food and a renewed interested in vertical farming” – both of obvious interest and relevance to the big grocers. 

With so much on their plates, it will be difficult for retailers to keep all of those spinning rather than crashing to the ground – but that’s exactly what the best will be able to do.

Perhaps the starting point, in such confusing circumstances, is to acknowledge that nobody can predict the future and there is no single blueprint to follow. That’s why accelerating strategies that have already been successful – or would make sense if coronavirus had never existed – are likely to bring benefits whatever twists and turns may yet come.