Free Subscription

  • Access 15 free news articles each month


Try one month for $6
  • Unlimited access to news,insights and opinions
  • Quarterly and weekly magazines
  • Independent research reports and forecasts
  • Quarterly webinars with industry experts
  • Q&A with retail leaders
  • Career advice
  • 10% discount on events

Top retail challenges in a post-Covid world

This year has been a challenge for retail globally. And even though New Zealand managed Covid swiftly, periods of isolation and closure still affected retailers significantly.

Latest stats show retail sales in New Zealand decreased 14.2 per cent in the second quarter of last year, over the same quarter in the previous year. Retail sales YoY in New Zealand were estimated to be down around 5 per cent at the end of last year. In the long-term, New Zealand retail sales YoY are projected to trend around 2.5 per cent this year and 4 per cent in next year.

So while this year is projected to be better, Covid is unlikely to completely diminish, even after an effective vaccine is distributed. All this adds up to a continuation of retail challenges. Here, we look at the top retail challenges expected this year, and some possible solutions.

What to do with physical stores?

Physical stores have become the will they/won’t they of retail strategy. Brands which relied heavily on physical stores found themselves facing massive closures and staff layoffs last year as foot traffic diminished. However, it would be a mistake to think of physical storefronts as unnecessary. The fact is, they will still make up a significant part of the retail strategy for brands moving forward, they just might not be the final point of sale.

Rather, physical stores are serving multiple purposes now, and this requires a big change in thinking. Clever brands are using stores to facilitate click and collect, as well as fulfillment centres and last-mile deliveries.

Stores are also becoming more experiential for consumers, more destination events, as opposed to being a place to make sales. Culture Kings is a fantastic example of experiential shopping. Shoppers in stores can get a haircut, play some basketball, play video games and watch YouTube, all while surrounded by the latest merchandise. Its stores are increasingly known as a place to ‘spend a few hours’ rather than as somewhere to shop.

Which channels to use?

There are multiple channels brands can now use to reach their potential, and already loyal, customers. The basic online sites and physical stores aside, there is also social shopping, mobile shopping, pop-ups, and large marketplaces. So where is the best place for a brand to be to improve sales? The answer is where your customers and potential customers are. 

For a younger demographic, online, mobile and social shopping is key. For older demographics, physical stores and online are best.

The trick is to select the right channels depending on the audience you wish to attract, and then make your entire brand experience cohesive and consistent across all. A confusing, incohesive customer experience across channels will actively discourage consumers, and most brands are starting to understand this. In fact, in a 2020 report, PWC found that the number of companies investing in the omnichannel experience has jumped from 20 per cent to more than 80 per cent.

Demand fluctuation and scale

Agility is vital in these times – that is, the ability to scale up operations, sales and distribution, and scale down, as the market dictates. This is where brands with a good ecommerce strategy have the advantage. In fact, by this year, organisations with scalable digital commerce will outperform other organisations by 30 per cent, according to Gartner.

Why? Because having a good ecommerce platform means brands can handle sudden spikes in demand, or offer flash sales, or handle fulfillment and delivery globally, along with differing currencies, without needing significant back-end alterations or an IT expert on staff.

As an example, the accelerated growth Gymshark was experiencing from its inception through 2015 required a platform that could handle significant spikes in traffic and grow in lockstep with the brand. Its existing site crashed on Black Friday for eight hours and cost Gymshark an estimated £100,000.

Since migrating to Shopify Plus, the Gymshark team is able to focus on growing the brand and experimenting with new products. Trusting its ability to scale as needed helped the company reach £41 million in sales during 2017 and become one of the fastest-growing global fitness and apparel brands globally.

Building resiliency for the future

There is no doubt retail is experiencing significant challenges. But by changing old thinking and adjusting a strategy to include ecommerce, omnichannel and experiential shopping, the future can absolutely still be bright for retailers in New Zealand beyond the pandemic.

About Shopify Plus: We simplify the complex with commerce technology that’s both powerful and easy to use. We make the tools you need to evolve, scale, and thrive. We give you the freedom to experiment and expand your brand in game-changing ways.

You know retail, we know tech. We’re Shopify Plus.