The COVID-19 pandemic, and its associated lockdowns and public health measures, has forced traditional retailers and those in the food industry to think like e-tailers.
In its latest report, Resilient Retail: How Canadian retailers are pivoting and showing signs of resilience, commercial real estate firm JLL said technology has stepped in to bridge gaps as customers change their habits in search of convenience and safer interactions.
“With only a handful of exceptions, Canada’s top 50 retailers now offer delivery services and around 40 percent offer curbside pickup, in-store pickup of online purchases, or both,” said the report.
As society moves forward from the pandemic, the JLL report indicates these will be key trends for the retail industry:
- Food services will continue to champion off-premises solutions that bring both safety and convenience to customers;
- Both landlords and retailers are expanding their online platforms, making the customer experience more integrated;
- Retailers will increasingly leverage video chats to translate in-store events and experiences to a virtual environment;
- Retailers will adapt their offerings to address the increased need for comfort and health; and
- Retailers will tighten cost structures and think strategically to absorb new expenses.
Graham Smith, Senior Vice President, Agency Retail Group with JLL, said the sector on a whole is in a period of upheaval and transition.
“I think we’re seeing that the retailers that are really putting a strong focus on not only pivoting their business but looking to kind of reinvent or reimagine their business are the ones that are going to be successful once we come out on the other side of this,” he said.
“As it specifically relates to foodservice, I think from a bricks and mortar perspective we’ve seen a lot of physical requirements downsize and everyone’s trying to right size now that require smaller spaces that can accommodate both pick up and delivery without having a large rent overhead as a lot of retailers are just uncertain about occupancy levels will reach pre-COVID days.
“Retailers are looking at tightening a lot of their cost structures and are strategically thinking about how to absorb new expenses and how that works in the greater scheme of locations and also potentially delivering e-commerce as well.
“One thing that we noticed during the pandemic is that there were certain operators that were hungry, innovative, driven, that had the ability to pivot their business, and those are the ones that are going to make it through and be a success at the other side of this pandemic.”
Smith said many of the changes that have taken place over the past year or so due to the pandemic will remain for the long term in the foodservice industry.
“Everyone is seeing the merits right now about delivery service and how much pick up there’s been with not only e-commerce but obviously with all the different delivery apps and grab-and-go. I think that’s a trend that’s going to be here to stay,” said Smith. “I don’t think the restaurant experience of going in to dine with friends is ever going to be completely replaced and I think that’s an important attribute to have of any food and beverage operator. But the new trends that we are seeing are absolutely here to stay. The convenience. The quality. And more importantly just the ability to get it to an end-users’ hands quickly and easily is absolutely paramount. That’s what the population was starving for not only during COVID but in the future as well.”
Ali Khan Lalani, Founder and CEO of General Assembly Pizza in Toronto, who was featured in the JLL report, said that the early stages of the pandemic were very scary with having to lay off 90 percent of staff and walking into a restaurant that was empty. And dealing with the reality that the company likely had only enough cash to last about three months.
“It forced us to come up with new ideas quickly. We launched a pizza kit in March of last year which was crazy how quick we were able to do that because everything we needed was in front of us the whole time. The light bulb didn’t go off until that day,” said Lalani. “We launched the pizza kit to some success that week and almost 48 hours later we saw the opportunity in the freezer aisle in the grocery store as frozen pizza was in very high demand if not sold out at most grocery stores that did have it and had limits on how much you could buy.”
A year ago in April the company sold its first frozen pizza out of its own restaurant.
“We sold a lot of them in the first few days and we developed a strategy to start approaching local grocers, small to medium size grocers, who I knew were having a hard time keeping frozen pizza on their shelves,” said Lalani.
“Our business started scaling relatively quickly in the grocery space and then we made a decision to take it to the next level and develop an e-commerce recurring revenue subscription model. I had never built an e-commerce business before. I thought I was going to do it in a few weeks. That did not happen. It took six months. I grossly underestimated the infrastructure, costs, and resources required to do that. But once we figured out how to do it in September of last year we launched our e-commerce model and a lot of restaurants, including General Assembly, are now what we call omni channel brands. So they have their traditional restaurants. Some of them have grocery products and retail products. They’ve been able to successfully reach their customers in different ways.”
Lalani said tough economic times, like the one we’ve been experiencing due to the COVID pandemic, forces innovation out of necessity for businesses.
“That necessity is the desire to stay relevant and not lose the hard work and the years or days or decades it took to get to that moment of where you are,” he said. “Most people can’t do it alone. Most people need a supportive team behind them to realize those goals and to help turn those opportunities into reality.
“In the beginning it’s survival. We need to do this to survive. And then if just a little bit of that work you actually are in a position to make your business better for the future – on the retail side a lot of businesses have figured out ways to bring in revenue from different places. So that when things get back to normal over the coming year or two most businesses that have made it through this might actually be in a much more robust, stronger position, because they’re not relying on just one revenue source.”