What retail leaders must do to succeed in the next phases of Covid-19.
Since the start of the Covid-19 crisis, under the most extreme pressures, we have seen retail leaders balancing a myriad of competing priorities each and every day. The first phase of the crisis was survival – ensuring liquidity, moving operations online, keeping customers and colleagues safe. The second phase, which we are all now living through, is commercial ‘trading’: in a safe way, maximising revenue opportunities, whilst continuing to minimise costs. Now, alongside survival and trading modes, we need to transition into two new phases of leadership: transformation and visioning the future – which will require very different skills, priorities and focus.
At The MBS Group, we have seen most leaders in UK retail respond admirably to the first phase of the crisis – survival. Most CEOs exhibited real leadership, huge resilience, quick thinking, excellent communication skills and astute commerciality as they responded to the initial demands of Covid-19. As we move into these new phases, however, retail executives must now apply entirely new leadership lenses if they wish to achieve the large-scale transformation demanded by the ‘new normal’ and beyond. So, what are these leadership priorities?
Firstly, most businesses need to rapidly accelerate their digital transformation in response to likely changed consumer demand: in the US, for example, first-time use of digital grocery methods surged 28% in March as shoppers sought to avoid stores, and in the UK, ecommerce accounted for 30% of all retail sales in April. This trend isn’t going away: we can look to China for what’s to come, where ecommerce sales are predicted to overtake bricks and mortar by 2023. Retailers have done well to rise to the digital challenge, but without the right talent in your business that can consolidate short-term progress into long-term success, traditional retail businesses run the risk of being outpaced by digitally-native brands. Alongside hiring expert digital talent, businesses may consider bringing in a chief transformation officer, to facilitate enterprise adoption of digital tools, and to rebuild and re-orientate technology, supply chain, logistics and property.
Secondly, retail leaders remain agile. The most effective leaders demonstrated high levels of flexibility during Covid-19, making quick decisions to pivot business models and adapt propositions. With consumer habits changing at pace, winning organisations will stay nimble, adapting to shifting buying patterns and new ways of trading. For instance, through our conversations with Chairs across the consumer-facing sector, we found that founder CEOs fared particularly well during Covid-19. With a deep personal understanding of their market and their customer, as well as a firm grasp on costs, founder CEOs were consistently agile and successful in crisis management.
Additionally, alongside agility, retail leaders must remain robust in the face of unprecedented challenges still to come. The future will not be easy: negotiating with landlords, lenders and unions; navigating business rates; lobbying for government support; maintaining confidence of investors – and, keeping driving the pace of change – all alongside driving the day-to-day performance of each business. The best leaders, able to steer this course for the long term, will stay on top of their own mental health in order to stay resilient, energised and effective.
History tells us that crises have a lasting impact on society. Covid-19 will be no different, and retail executives must think holistically, strategically, and unemotionally about the future, to determine where their organisation fits in the new normal. Some, for example, will be forced to reconsider their entire proposition and reposition themselves in a new market for a new demographic. Here, a chief strategy officer, or a chief new horizons officer, can help businesses reconceptualise – as can forward-thinking NEDs. Indeed, there is very little relevant data available which can be used to predict future consumer behaviour – so retailers will need to conduct rapid research and establish an insights-driven strategy for the future, and have a real ‘feel’ for business and the consumer.
With these skills and roles in mind, leaders must think carefully about whether their organisation is equipped for the future. We have seen many companies turning to interim leaders: temporary executives who can balance a deep understanding of the sector with a fresh, outsider perspective are particularly effective and can present an invaluable opportunity for businesses as they move through uncharted waters.
Lastly, retailers should ensure that diversity remains high on the corporate agenda. Businesses that fail to prioritise diversity and inclusion – especially now – will suffer as they find themselves outrun by their more forward-thinking competitors who can bring real diversity of thought to a problem. Amid the disruption of forthcoming restructuring, there is opportunity to really move the dial on diversity. Indeed, Covid-19 has served to bring flexible and home working into the mainstream, as well as humanise our colleagues and peers from right across the industry, creating exactly the right environment to ramp up focus on diversity. Business who fail to prioritise D&I in this period risk falling out of favour with consumers and losing their ‘social license’.
Over the last few months, we have all come together as a retail community to address common issues and challenges. In times such as these, we can be proud that UK retail has shone as a beacon of hope, resilience, customer-centricity and collaboration. As we move into new phases of transformation and future-visioning, I for one hope we will maintain the values, pace and resilience that we have all shown during the initial phases of Covid-19.
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This article was also published in The Retailer, our quarterly online magazine providing thought-leading insights from BRC experts and Associate Members.