Covid-19 hit the retail sector hard.

Shops were closed. Consumer spending shifted online. High street stalwarts struggled or, in the case of Debenhams, collapsed.

Even with the vaccine rollout well underway and lockdown now behind us, shoppers are yet to return to the high street in the same numbers. Footfall was down by one third in July on the same month in 2019, according to the British Retail Consortium.

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Despite these immense challenges, many retailers such as Boots and Hillier Nurseries have innovated to improve efficiencies and meet online demand. They’ve shown what’s possible when a willingness to invest in digital combines with smart and ambitious thinking.

And if the rest of the industry follows, there could be exciting opportunities ahead.

Our study with the Centre for Economics and Business Research (Cebr) shows continued digital transformation in retail could add £21bn to the sector’s value by 2040.

To grasp this opportunity, leaders need to prioritise digital investment.

They must rethink conventional and inefficient processes. They must embrace smart collaboration platforms to make hybrid working a success. And they must build first-class customer experiences – both online and in physical stores – responding to permanent changes in shopping habits.

Rethinking the conventional

As retail leaders switch their thinking from survival and stabilisation towards the rebound, they need to rethink processes which are holding back productivity.

For the leading retail analyst, Richard Hyman, this is a significant obstacle preventing businesses from behaving with more agility.

One that can only be solved by digital transformation.

“The turnaround times for orders is too long,” he told us, “and the solution has to be to embrace digital innovation. It makes you light on your feet and cost-effective.”

Boots has taken bold steps to do just this.

It has turned to digital technologies to streamline processes and adapt rapidly to market conditions.

In the words of Tracey Clements, the pharmacy chain’s COO, “To meet the growth of online sales and customer expectations, we had to innovate the way our supply chain works, and the answer was automation.”

The company invested in state-of-the-art automated packing machines, able to tailor-make parcels at the rate of 500 boxes an hour. This meant it could deal with the massive rise in online ordering as national lockdown was imposed.

And it allowed the pharmacist to make significant cost and environmental savings – using about 30% less cardboard than previous years.

Boots’ success shows what’s possible when businesses carefully evaluate existing internal processes and ask whether they’re fit for purpose.

If the answer is “no”, then they should turn to digital innovation such as AI and automation to address inefficiencies and boost output.

This also applies to the customer experience, where retailers must meet soaring consumer expectations to recover and prosper.

Mike Smith, director of large enterprise and public sector, Virgin Media O2 Business

Building first-class customer experiences

Successive national lockdowns meant that consumer spending shifted to digital platforms.

And the signs are that this change could be permanent.

43% of consumers expect to shop even more online over the next two years, according to a survey by the British Retail Consortium.

So retailers need to step up investment in their online customer journeys.

Hillier Nurseries’ response to lockdown shows just how powerful getting this right can be. With its garden centres shut by the national lockdown, the business turned its attention towards its online shop – a dormant entity that hadn’t been updated in five years.

The company worked with a web development and design consultancy to rebuild its website from the ground up, partnered with a courier company and created a brand-new dispatch system – all in a matter of weeks.

And the results were astonishing.

Online sales went from zero to almost £250,000 a week in barely a month. In a little under a year, the company was nudging online sales of £1m a month.

And the decision to invest in digital opened the business up to new markets and audiences they previously weren’t reaching.

Digital technology can also support the in-store bricks and mortar experience by providing richer data to support decision making.

O2 Business has launched a new ‘Spatial Insight’ AI technology designed to enhance customer experience in their stores and other public spaces – delivering insights to managers around customer movement and flow. The technology provides business leaders with insights to make better, informed decisions about store layouts, as well as helping monitor customer experience metrics such as dwell time, queue lengths and conversion rates.

Adopting this technology will reduce service and transaction times, ultimately helping aid store management, staffing levels, marketing, product ranging decisions and the wider customer experience.

Getting hybrid working right

Only 15% of retail employees (excluding those working in shops) would want to return to working every day from the office, according to a recent study by Fujitsu.

And hybrid working – staff operating from multiple locations ranging from the home, the office or a café or client site – is seen as critical to surviving future crises with 77% of the C-Suite and 65% of employees saying that it makes their organisations more resilient.

Asda, Dixons Carphone and The Very Group are just some of the prominent retailers to unveil long-term flexible working policies for their head office and support staff.

But getting this right is about giving employees the ability to communicate instantly and painlessly.

Poor networking applications and infrastructure could mean that retailers are unable to build cohesive teams. It could lead to the development of siloed cultures between those working in the office and people operating mainly at home.

So retail leaders need to ensure their networks are fit for purpose. They should turn to advanced connectivity solutions capable of providing the flexibility, agility and resilience needed to make hybrid working a success.

Looking ahead with optimism

Retail leaders have been faced with unprecedented difficulty over the last eighteen months.

But the findings of our research with Cebr should drive optimism.

They show that a willingness to invest in digital – combined with strategic thinking about efficiencies, productivity and employee collaboration – could deliver a £21 billion boost over the coming years.

So leaders should seize the opportunity. Take bold digital decisions. Unlock the benefits for staff and customers.

And watch their business, as well as the retail sector, recover and prosper.