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at 94 per cent. GPT may be feeling more of the pain with 45 per cent of its retail portfolio in Victoria, the hardest hit state. As previously noted, the Covid crisis has deeply affected consumer confidence with monthly swings never seen before. It has also sharply and rapidly changed spending habits, sale channel usage, consumers’ perception of value, and wants versus needs. The most recently published ABS retail sales data showed that in the five months up the end of July, retail sales were five per cent higher than the same point in 2019. However, spending patterns had radically changed. Clothing, footwear and personal accessory were down by 22 per cent, and that includes a surge in leisure and active wear. The restaurants/café sector was down by 41 per cent, but liquor sales were up by 34 per cent. Consumers spent on their home environment as sales in electronics, hardware (DIY), and other household goods were up by 21 per cent. Consumers who have never shopped online have discovered or been forced to use the channel out of necessity. Online sales in the five months to 31 July rose by 63 per cent compared with 2019, with online sales representing nine per cent of total sales, as Australians catch up with other more mature online markets such as the US, China and the UK where online retail sales market penetration is greater than 15 per cent of total retail sales. One of the consistent trends in retail over the past few years has been consumers positively responding to brands offering experiential depth and a reason to shop in person as well as online. Another trend has been consumers’ view on value being influenced by a brand’s corporate values and provenance. Those consumer ‘wants’ have in part been replaced by ‘needs’ such as a safe in-store experience, channel options that are adaptable and fast, and real value in terms of affordability. Some of these changes will be permanent, while others may be temporary but will persist while the pandemic remains a part of our lives. As we know, how long that is and how impactful it will be in one month (let alone six to 12 months) are difficult to accurately predict. With the likely continuation of the Covid-driven uncertainty, it’s important that retailers adapt to perform and thrive in these new operating conditions through an agile operating model. Retailers should think strategically at a micro level, while attempting to implement the following approaches: • Plan locally. While broad branding strategies might remain relevant, tactical planning and strategies should be much more local. • Work the portfolio. Put resources into areas less affected where possible, while changing tack in others to limit pain. • Follow confidence data (public and local) and communicate accordingly (including promotions) to meet customer demand. • Continue to offer customers choice of channel. Many customer preferences have changed permanently, so it’s important to effectively serve those customers through other channels. • Partner with suppliers to order differently, to modify buying processes, to conserve cash and share risk. INDUSTRY INSIGHT About Jason Ireland Jason has more than 20 years’ experience working with businesses to help improve operational and financial performance. As an expert in his field, Jason established the McGrathNicol Cash and Working Capital Centre of Excellence,which focuses on helping businesses increase cashflow by implementing practical and effective procedures to forecast, track, save and generate cash. About McGrathNicol Advisory McGrathNicol Advisory services deliver tangible, sustainable and valuable benefits to businesses and help management teams proactively focus on setting and achieving strategic objectives and reducing risk, while also ensuring a timely response to challenges and change. McGrathNicol Advisory services include forensic, governance, risk and compliance, strategy and business improvement, transactions, technology and cyber, and transactions. OCT 2020 RETAIL WORLD 23