GoFarFast Show

The future of retail – tips for retail business owners, online and offline, in 2020 and onwards | S1 EP2

August 27, 2020 Chris Longman Season 1 Episode 2
The future of retail – tips for retail business owners, online and offline, in 2020 and onwards | S1 EP2
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GoFarFast Show
The future of retail – tips for retail business owners, online and offline, in 2020 and onwards | S1 EP2
Aug 27, 2020 Season 1 Episode 2
Chris Longman

In this episode, hear from Chris Brook-Carter, CEO of the retailTRUST, on how the future of retail is looking because of Covid-19's impact, whether offline retail businesses should open online shops too, what support the retailTRUST offers to help the retail sector, how to find out what customers want, whether it's the right time or not to start a new retail business, and much, much more! 

Massive thank you to National Enterprise Nation for sponsoring the Go Far Fast Show – we're super proud to be supported by such a vital part of the business community. 

And, of course, sending a virtual fist bump to our awesome accounting extraordinaire, Aaron at Boffix, for being such a fun co-host! 

See you in the next podcast! 

Show Notes Transcript

In this episode, hear from Chris Brook-Carter, CEO of the retailTRUST, on how the future of retail is looking because of Covid-19's impact, whether offline retail businesses should open online shops too, what support the retailTRUST offers to help the retail sector, how to find out what customers want, whether it's the right time or not to start a new retail business, and much, much more! 

Massive thank you to National Enterprise Nation for sponsoring the Go Far Fast Show – we're super proud to be supported by such a vital part of the business community. 

And, of course, sending a virtual fist bump to our awesome accounting extraordinaire, Aaron at Boffix, for being such a fun co-host! 

See you in the next podcast! 

Merlie: Hello and welcome to the #GoFarFast Show! This is our second episode of the series and we're really excited to have you joining us again today. We will be kicking off with a fantastic guest and a great set of questions. Don't forget to like, comment and subscribe if you want to join in the conversation, or take it further afterwards. Massive thanks again to our sponsor, The National Enterprise Network, who make all of this possible. I'm back with my favourite finance guy – the guy who knows all the questions and QuickBooks Labs' posterchild – Aaron! It's great to be co-hosting with you again today.

Aaron: Thanks Merlie... And she's the fabulous Merlie, the founder of Farillio, which is the essential small business legal aid. They are fighting the big fight, #LeaveNoSmallBusinessBehind which I'm sure you will all agree is a fight worth having.

Merlie: There are a lot of us fighting that fight right now Aaron, but thank you. It's something we feel deeply passionate about. Aaron is someone who knows all about the challenges of cash flow – he really is the finance guru that you guys want to hear from. He's Head of Accounting at Boffix too.

We're kicking off with a great theme for these times – the future of retail. How we rediscover confidence and ambition in the retail sector. How our consumer habits may have been significantly changed by what we've all experienced recently. What does that mean in retail?

Aaron: That's right. When we talk about retail, we're not just going to be talking about retail in the sense of bricks and mortar. We're also going to look at the online ecosystem and how that could be affected. So it's our pleasure to introduce our guest for today, the one and only Chris Brook-Carter who is the expert in retail. He is the CEO of retailTRUST, which is the leading charity and wellbeing organisation for the UK retail industry. We really look forward to asking him some questions today about how retail has been affected.

Merlie: Absolutely! One of the things I really love about what Chris is going to share with us this morning is that it all comes down to people. When we talk about retail, we think about platforms, bricks and mortar, statistics, fashion, food, and the things we read about in magazines. Ultimately, this sector comes down to people. It is the biggest private-sector employer of people across the UK. When you look at it like that, you can see just how much rests on this sector being successful, remaining ambitious, keeping up with change and innovating.

We'll use the same format we've been following so far. First, there'll be a few questions from us to Chris. Then we'll ask the questions that our producers have been collecting from you, our small business community, and we're going to put them to Chris too. So, let's see if he's up for it, right Aaron?

Aaron: Definitely Merlie! Let's not keep the audience waiting any longer and get our expert guest on the line ASAP. Chris, would you like to introduce yourself?

Chris: Hi Aaron, hi Merlie! It's great to be here and thanks for having me today. I'm Chris Brook-Carter, Chief Executive of retailTRUST, which is the largest charity within the retail space. We look after the wellbeing of the four million or so people who work in this sector in one form or another. I've been in retail or covering retail as a journalist for around 20 years before joining the Trust, so I'm very much part and parcel of the industry.

Merlie: Awesome and I think it's those journalistic skills that we want to patch into today as well, Chris, so thanks again from me. The first question we have for you today is: Covid's been a massive challenge for retail, especially high street retail and things might not return to normal for quite some time, if ever. What sort of future do you think we should expect for retail? It's a big question.

Chris: It's a huge, huge question. If I knew the answer I'm sure everyone would be clamouring at my door. I think the one thing to say is that we're not going to be returning to anything comparable to what we've seen as normal in the past. I think that the industry has changed forever over the last six months. The changes that we've been seeing in the sector for the last 10 or 20 years – since Amazon launched back in the early 2000s – have been accelerated massively over in the last six months. People are talking about five or six years worth of change in the space of 12 weeks or so, which is extraordinary really.

I think that the shape of the industry is going to depend very much on what part of the industry you're in. Some areas of retail have done much better than others, while some have suffered in a greater way. I think the fashion industry, in particular, has been hugely hit and we'll have to wait and see whether it regains any semblance of the shape it had beforehand. We're buying fewer clothes because there are fewer occasions for going out at the moment. People are really re-evaluating what they need from their fashion retailers, so that's the sector that's been hit very hard and impacted.

Grocery has obviously fared much better, and hats off to the grocers for the incredible way that they've navigated through this crisis. I think they've ensured that the country has remained fed and that people could still get their food. They've responded particularly well for those who are most at risk. I think there'll be an enormous change in the way that the sector is shaped with regards to geography. You can see in the some of the recovery happening over the last couple of months that it's not uniform. It's happening at different paces depending on different locations. City centres, in particular, have been very hard hit because people simply aren't returning to the offices. If you go into London for example, footfall is down considerably and sales just simply are not recovering at all – I think they're at about 30 per cent of where they were this time last year.

If you go further out to the suburbs and outside of the city centres, sales have recovered better. I think we're going to see a big shift as some of those trends stick; people not returning to work, people staying and working at home. We're going to see retailers reassessing where they've got their stores and then, of course, there's online.

I don't think we can ignore the fact that online penetration has shot up over the last three months. Speaking to some retail chief executives, they're talking about the penetration of their own sales going from something like 30% to 60% of their overall sales in the space of three months. That's caused problems of its own because not every retailer is set up or has the infrastructure to deal with that sort of demand. A lot of the work that's being done over the last few months has been simply trying to cope with the level of online demand that they're experiencing, but I think that that trend is here to stay. I think we've all converted to shopping online – parcels arriving at the front door has been one of the highlights for many people during lockdown! It'll be different depending on the different sectors. There'll be some sectors for whom it'll work better. For grocery, whilst online shopping has spiked, I think that the store will remain very key.

Aaron: These are such hard-hitting facts aren't they? There are so many aspects that we've got to consider. I think at times like this, when we are so focused on Covid and looking at the impact Covid has had, it's really interesting that you reminded us that retail was already in a difficult place before this happened. Covid has basically accelerated the issues and accelerated the problem. I think that's something we really would like to go on to, but you did mention location as well. You mentioned that different areas of the UK are handling things differently, so should we tell retailers that are very location-oriented to adapt online propositions to survive?

Chris: Well not necessarily. I think it depends on your customer base and what you're selling. For retail, particularly over the last 20 years with the advent of major marketplaces such as Amazon, relevance and understanding your customers has become more and more important. When you look back pre-Covid at the businesses that have struggled or have gone under, there have been some very high-profile brands – from Woolworths to BHS – that are sadly no longer on our high streets. Relevance has been the of the key drivers in their demise, or a lack of relevance in the modern world.

That very much remains the case. You need to understand your customer and ensure you've got a relevant proposition; in terms of the product that you are providing, the way that you communicate with them, and the channels that you are using to let them shop with you. These are the sort of critical factors determining whether people will survive now, just as they were pre-Covid. It's just that the stakes are higher now, so if your customers are online, if that's where they're shopping for your products, then absolutely you should be looking at a digital solution. If your customers are local and if they are shopping for that kind of product near their house, then local stores remain very relevant and the local high streets remain a very relevant channel to be using.

Merlie: I guess it comes down to the data again Chris? It's really taking a hard look at what's happening in your retail business. What's selling? What's not selling? Where it's selling and maybe where other people are scoring successes that you might not be. It's not just about money. The money is always going to tell you whether something's successful, but that might not track out fast enough. It's really about watching the data and spotting the changes and the preferences that are happening because all of this is playing out so quickly, isn't it?

Chris: It's playing out incredibly quickly and that's what I mean by the stakes have increased now. You can't afford to not understand your customer. There are successes and there are people getting it right. You've seen this week that Gymshark, the gym clothing brand that no one had heard of a few years ago, has just been valued at over $1b. That's a business that has absolutely spotted a niche. It's understood its customer base, it's delivered the product in a way that its customers want, and it's marketed to those people brilliantly. There are opportunities in retail still and there are opportunities for small businesses to become big ones.

Merlie: Let's talk about something else that has affected the industry quite significantly and that's the Covid-secure guidelines. I think for the bricks and mortar retailers this is probably one of the biggest areas of challenge, isn't it? If you want the footfall back, if you want to get people in-store browsing, being inspired by what you're laying out, the regulations make it quite difficult to do that. They make it quite a challenging environment for the staff within them as well. We've talked about there being something like 4.5 million people employed in retail – many of those are involved in bricks and mortar. They are going to have to use the screens, the mask, the hand sanitiser, the distancing. Maybe they can make appointments for customers, or manage how many people come in so they can still give them a great experience? How can you see all of this playing out – because it is a massive challenge isn't it?

Chris: Ultimately we want people to be safe and the measures that are in place are really important to do that. It's also really important that the people who are staffing those stores feel they're working in a safe environment – retail is a business about people. In distribution centres and in warehouses up and down the country, people need to have the confidence that they're going into work and feeling safe, so I think these measures are necessary.

I would encourage the public to be very empathetic of the fact that retailers are doing their very best at the moment. These are really trying times. Six months ago, people who were working in stores would never have dreamed that they would have to become experts in health and safety in this kind of way. They've had to learn new skills and new ways to adapt, whether it's cleaning trolleys, constantly cleaning the stores, policing whether people wear facemasks, or managing queues.

It's added a level of complexity into running a store that would have been unimaginable only 12 months ago. Individual retailers and individual stores are going to make mistakes. Individual people are going to make mistakes. This is a very fluid environment and one of the things that have shocked and saddened me during the Covid period is the rise in abuse within stores towards shop staff. I would encourage everybody who's going into stores to be very patient and very empathetic with how difficult it is to run a store right now.

Absolutely, it is affecting footfall. There are still those, very understandably, who are not yet confident about going back into stores. We've already said store staff are having to manage the volume of customers within stores at any point in time, so it is dampening footfall and it is dampening demand. I can't see that changing anytime soon, unfortunately.

Aaron: I think you've mentioned confidence twice now and I think that's going to be such a crucial element to the retail industry going forward. We've got to find a way to make sure people do feel confident, they do feel safe, that they do feel like it's a place that that can be in.

That really is going to be the element that we've got to find together. As consumers, as the retail industry itself, we've got to find that line where we can all feel confident and where we can all carry on utilising retail as we should be. With that in mind, what support is available from the retailTRUST to help the sector survive in times like this?

Chris: We fundamentally believe that the health of a workforce is inextricably linked to the wealth that is created by the retailer. It's proven time and time again that a happy, healthy, fit workforce within your business is one of the key pillars of a successful business and being more productive. When people love what they do and love the brands, you get a better response from your customers. It's all inextricably linked together, so we are trying to create a coalition of businesses and leaders who recognise that the health, the happiness, the diversity, and the inclusion of their workforce is right at the centre of their retail strategies.

We support the industry firstly by telling that story and secondly by providing services that look after the wellbeing and the health of colleagues, whether it's their mental, financial, vocational or physical health. I'd encourage everyone in the sector to come and look at the work that we're doing supporting the industry and our colleagues like that.

Merlie: One more question before we get to our wider audience questions. This one really relates again to support and it's about the effectiveness of the government's relief schemes. If you look at them through a retail sector lens on, how effective do you think these schemes have been? Have they gone far enough? Could more be done? If so, what more could be done?

Chris: I think you could always argue very passionately about retail. You could always argue that you'd want to have seen more, but largely I think the measures taken by the Chancellor have been pretty good. I think that they've undoubtedly propped up the economy. I think the furlough scheme has been great and the rates holiday has been great, although undoubtedly more could be done. What we'd like to see, and what the British Retail Consortium and the rest of industry would like to see, is some sort of re-look at the rates system going forward in the long term. I don't think it's right and I think it does penalise people quite heavily. I don't think an online tax is the right thing to do because you'd be taxing the one area that is growing across the sector at the moment. It wouldn't be an Amazon tax, which I know some people believe it would be. It would penalise almost every retailer that has growing online channels. Something needs to be done around business rates and reducing the burden on retailers to actually operate their stores

Merlie: I hear you and I think that's incredibly well said. Right folks, it's time for your questions and we're going to put them to Chris now.

Aaron, if it's alright with you, I'll take first dibs and then hand you the baton. The first question is: Chris, selling online hasn't been something I've invested in much and I'm not sure how to get a website that I can sell from. What's your advice? Am I better just selling directly from Facebook or Instagram? Do I need a website to do that?

Chris: Well I think we're going to come back to this time and time again with these questions, but you've got to know your customer. There's no point in heading over to Facebook or Instagram if your customer base is not there. Likewise, there's no point in building a store if people don't want to buy that sort of product in that location. I think it's really important that you understand your customer. If you've not sold online before, then perhaps looking to one of the marketplaces such as Amazon, eBay or Wish would be a good first start. Many successful businesses have started on those channels and they do offer small businesses quite a lot of technical support, expertise and marketing support to get themselves going. So that might be the first step, but without really understanding your customer I think it's very difficult to make those decisions correctly.

Aaron: That's really interesting isn't it, because we're talking about using these marketplaces that people often forget are designed for small businesses, as well as for your average consumer. They have so much marketing potential like you said, and they have so much infrastructure and so much already built-in. They really are the best place to start with. You don't have to invest thousands and thousands into a website, you can utilise these solutions that are already there.

Our next big question that's come through, and thank you again to everyone who sent these questions in, is: I was furloughed for a few months and now I've been laid off from my job as a shop manager. I think I've got a good business idea that I'd like to get started, but I'm nervous about whether I stand a chance and about launching and selling anything right now. How can I get help? Are any investors even interested in the fashion retail sector? Where can I go to find out some more?

Chris: I think fashion is a very difficult area at the moment, but it's not to say that there aren't brands being successful. There've been big spikes in those clothes that are more for home wear. Gym kit has been well received and has gone through the roof at the moment. Again, research is essential in understanding whether you're going to get this right. Do you know your customer base? Who are you trying to sell to? Is there a need for that product? How do they want to be communicated with? What channels are they going down? There are resources out there that you can use to find out that sort of stuff.

I would encourage you to to look at Amazon and eBay. These are good places to test products on. They have good support for small businesses to sell through them as well, but it's all about understanding the customer. There are investors out there. I think they're quite wary of fashion at the moment because it's such a difficult space but, if you have got the right proposition and you can demonstrate that you do understand your customer, and you are meeting a need that is genuinely there, then there are still opportunities.

Merlie: I think that's very well said. The Business Planning 101 guide on Farillio really will help you answer a lot of the questions that Chris is pulling out right now. I think it does all come down to knowing your customer and having that rigorous plan that you've properly validated. If you've put the right foundations down then you should have this prospect. Pick a sector where your idea is going to fly because it's truly unique in that sector at a time when that sector is struggling. I think that is really good advice.

Let's dig a bit deeper into that with the next audience question. This is: Where can I go to find out what customers really want? I'm trying to predict where the best demand is going to be, but it's super hard. None of the brands I would normally benchmark our business against seems to be getting it right either. Is it just that customers aren't buying? Or are they only buying certain products right now?

Chris: Consumer demand is below where anyone would want it right now. Consumer confidence understandably has taken an enormous hit, but customers are buying. There are certain products, certain retailers in categories like DIY, gym wear or loungewear, and those categories are doing extremely well.

It's difficult for me to say without actually understanding what the category is that I've been asked to advise on. I think if you understand your customer and you know what the need is then you can be successful. You will then be able to research and find other people in your space that are doing well. I would suggest that, if no one is doing well in this space at the moment, it's probably not a great time to launch into that segment because undoubtedly demand is down.

A lot of these questions seem to be coming from potential fashion retailers and that is a sector that has been hit enormously. People just aren't buying clothes. We're just not going out so the opportunities to buy clothes has changed. Then add in a change in mindset about fast fashion – whether it's good for the planet and good for the environment. You see news headlines about what's going on in Leicester at the moment. There's potential slave labour, even in the UK, and I think it's making people reassess their fashion choices entirely and whether they've simply got enough clothes in their wardrobe already.

Merlie: I think it's fascinating watching this play out. We talked about whether certain habits may be permanently changed. I think how we buy fashion may well be one of those areas that do change. It feels like the world has got smaller in terms of what sells, what doesn't, and where the opportunities lie.

Chris: I think at the moment people are only buying the things that are relevant to them right now. People's lives have got smaller and the vast majority of us haven't left our home offices for six months. Our worlds have got smaller and therefore our needs have shrunk. What that will look like in a year is very difficult to say.

Aaron: It's really interesting isn't it? Especially when we're talking about the world – I think sometimes we forget we're so confined in our own spaces at the moment and we don't leave our houses. We almost forget about what's happening in the world itself – what is going on and everything that comes with that.

You've just mentioned the fact that it's not just our retail industry that's going to be affected, it's going to be all the manufacturing and everything else that goes with it. We're not consuming as much and there's going to be a knock-on effect that we're going to have to prepare ourselves for. We need to be prepared to fight that as well when it comes down to it.

Back in January the big question on everyone lips and the big talking point was Brexit. It seems like a world away! We've had this great question coming from one of the community. It says: I'm worried about Brexit on top of Covid-19. We import some of the products we sell and we also have distribution in the USA. At the start of the year, we are planning on expanding, but I'm not sure if we can cope with increased costs, more paperwork and delays – especially after having to lay off 20% of our staff last month. It doesn't feel like the government is focused at all on Brexit and what this means for the retailers. I'm really worried about the kind of future we're looking at and whether I should just try to sell up and get out. I'm not sure anyone would buy my business right now though.

Chris: That's a very sad story and Brexit is undoubtedly being pushed to the back of the agenda. You're hardly hearing about it in the newspapers, but it is going to be a huge logistical challenge for retailers when the borders close. I think the industry is rightly very concerned about what will happen, what supply chains will look like next year, and how they'll get goods into the country. I'm afraid I don't have anything more positive than that to say about it. It will be an enormous challenge on top of an already very difficult situation.

Merlie: It is very tough. I've got another question from our audience, one of the last questions from you guys today. It's on a similar theme: I get a lot of our stock from abroad. We sell specialist foods and fragrances and this is increasingly unsustainable with the virus situation and with Brexit not far off either. Should I adopt a more locally-sourced strategy? The equivalent products in the UK seem to be a lot more expensive and I'm also finding that competing for local supplies is getting really hard. What do you think about local sourcing as a strategy?

Chris: I think local sourcing is fantastic. I think it supports local communities and local economies. Again, whether it's the right thing for you to do comes down to your customer base. A lot of people have done extremely well by marketing the fact that their brands and their products are sourced within the UK. Obviously it's easier to control your supply chain and you've probably got a smaller carbon footprint as a result of sourcing locally. Potentially yes, it could be more expensive with regards to sourcing the goods, but there should obviously be savings around transportation. It could also allow you to lift prices because you can market differently. You can leverage the fact that there's a UK heritage aspect to your product. It would be difficult for me to say without actually understanding what the product is, but there are opportunities for lifting pricing considerably as a result of the product being locally sourced and UK made. That that might be an option.

Aaron: Chris, that's really insightful and I think you're right. I think as consumers we've changed our habits, haven't we? We've experienced restraints and we've had things taken away from us. We've not been able to buy stuff at the supermarket. I think that has led people to look at more locally sourced options. Not just locally sourced products, but also to go into more local retailers. People are going to the local butchers more and everything like that. Hopefully, if we continue that trend then we'll be less reliant on exports coming into the UK anyway because we'll be utilising our UK-based goods.

Chris: It goes back to some of the things we talked about earlier – about how local retail is going to come back. People are not travelling to work in the same ways or in the same numbers that they used to. They're still going to need goods, so local businesses – local shops, butchers, greengrocers, the newsagents, convenience stores – these are all areas that I think will see a much better recovery from the current situation than big stores within the city centre.

It does open up opportunities tied to the fact that people will enjoy supporting their local community, and I don't think it's necessarily about sourcing goods in the UK. If your customer base is a very local one, having goods sourced in that locality and clearly marketed to leverage the story and the narrative can be very powerful.

Aaron: That's great news and it's nice to finish on a positive note, isn't it? That positivity is something that we really do want to emphasise. So finally Chris, your last question for today... One of the community members has asked: One thing that's clear from many of the questions we've looked at is that retailers want somewhere to turn for information, guidance and reassurance, so where should they turn?

Chris: So I guess I'm biased after ten years at Retail Week, which is a trade magazine. I still think it's the best source of information with regards to what's going on in the retail sector. There are great stories, great case studies, lots of data and it's truly a champion of the retail sector. It highlights the good news stories and the examples of where things are going well, so I would encourage you to take out a subscription to Retail Week.

I think organisations like the BRC (British Retail Consortium) and BIRA (British Independent Retailer Association) are great and they are very strong believers that the recovery of retail is pivotal to the recovery of the whole of the UK economy. One of the ongoing frustrations for me is that the powerful retail story is not being told. Retail does a fabulous job of employing so many people, particularly young people. It's often the place where people get their very first job. This story needs to be told better and it needs to be heard more by those in Westminster.

I think it's really important that organisations like Retail Week, like BRC, like the retailTrust are seen as ecosystems that everyone in retail should join, because collectively and together we've got a much more powerful voice. We can affect change for the better for the sector which, in the long term, will be for the better of the whole UK economy and society.

Aaron: Without a doubt. I'd emphasise that I come from a small retail background. My first job was in small retail – I was a butcher. I really do think that people learn so much from that industry. There's so much that can be learned, shared and experienced – life experience can be gained. We need to be singing its praises! Here in the show, we talk about a lot about #LeaveNoSmallBusinessBehind and, for us, the retail industry is one of those industries that just cannot be left behind.

Merlie: I couldn't agree more and I think you used a word that we feel very passionately about too: the power of the ecosystem. I think this is all about ecosystems – we can't nail this individually. If we act collectively with the right resources, with the right guidance, with retailTRUST and the Consortium, we've got a chance of staying on top of the data and of making sure that we really do know our customers. If there's one overriding message from today it's 'know your customers'. Really look at what they're doing, how they're buying, when they're buying, whether you fit into today's immediate buying habits. Make sure you're addressing them more than anything.

Chris Brook-Carter, that was phenomenal! Thank you so much for sharing all of those nuggets of wisdom, the data, the insights and the terrific empathy that you have for this sector and the people within it. It's truly inspiring!

Folks, don't forget to like, comment, subscribe and send in more of your questions. We are going to be going through these episodes on themes that are really important to people during these times as well, as the businesses that surround them and that employ them.

Aaron, another great session today – it's been such a joy to interview Chris, hasn't it?

Aaron: It's been brilliant. Chris you've been an absolute star and, on top of that, really kind of awesome!

Merlie: We have another successful interrogation under our belts! If you want to send in questions, or if you want to like, comment and subscribe, don't forget to check out the hashtag #GoFarFast. That's what the show does – we'll get you, our wonderful small businesses, to the places you need to be – with the answers that you need to get there fast. Until then, it's bye from us for now.