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‘New normal’: Traditional retailers prepare to downsize amid massive online shopping shift

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“We’re staring at our logistics capabilities and thinking how we morph them for a period of time,” he told The Age and The Sydney Morning Herald. “Because at some point, we’ll reopen the stores.

“So I’m a pure-play online retailer for now, but at some point, I’m going to have to pivot back, so you can’t go so far down a path you can’t bring back the other way.”

Data from warehouse and supply chain consultancy TM Insight show sales for pure-play online retailers increased 15 per cent in February and March, but shot up by 30 to 50 per cent for traditional bricks and mortar retailers.

TM Insight managing director Travis Erridge said in some cases, online sales had jumped as much as 100 per cent, a dramatic switch which he predicted would prompt many traditional retailers to review their sales strategy.

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“Those who have set themselves up for e-commerce will thrive and those who have not will need to rapidly enhance and adapt their system platforms, back-of-house fulfillment operations and transport model,” he said.

Chief executive of Accent Group Daniel Agostinelli believes retail will see a “major shift” to digital following the coronavirus recovery.

“That’s something we’re all going to have to deal with, it’ll be the way of the world,” he said. The ASX-listed footwear retailer was forced to stand down more than 5000 workers and close 522 stores last week.

But as retailers scramble to scale up their online offerings, a growing number are simultaneously looking to downscale their physical store footprints in response.

Lawyer and consultant Olivia Hitchens is advising some of the country’s largest retailers and landlords. A number of retailers will re-open post-coronavirus with reduced store footprints, smaller front line workforces and a much stronger online model, she said.

“I can say with confidence that most of our big clients are looking at downsizing store footprints, and using this as an opportunity to potentially close stores that weren’t performing,” she said.

Accent CEO Daniel Agostinelli has decided to close all the retailer's stores for four weeks.

Accent CEO Daniel Agostinelli has decided to close all the retailer’s stores for four weeks.
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Mr Agostinelli said while his company wasn’t looking to shut any more stores than usual, he acknowledged it would be a “real discussion point” as the closures continue to roll on.

“What’s going to dictate that is what we find when we open, and we certainly don’t expect to be at full strength when we open up again,” he said.

“If things don’t change in the six months after, I think we’re all going to be forced to review [shutting stores] very, very carefully.”

eBay Australia managing director Tim MacKinnon said the online marketplace saw a material increase in the number of people shopping online after the GFC and expects this economic crisis to be no different.

“We may see a step-change people’s behaviour because if you once you develop a habit around, shopping online and getting things delivered to your home, people will keep that habit,” he said.

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