In accelerating some trends that were already underway, and adding plenty of new factors into the mix, the last 12 months have constituted a ‘perfect storm’ of unprecedented challenge to the continued survival of the retail and hospitality industries. Successive lockdowns in countries around the world have seen stores and venues remain closed for extended periods, meaning that the general trend has been in favour of significant reductions in sales – with the result that many businesses are now in the process of downscaling or even indicating that they won’t return post-pandemic.
Recent data by the Office for National Statistics provides insight specific to the UK retail sector, although many of the extrapolations could be applied elsewhere. In 2020, total retail sales fell by 1.9% compared to the previous year – the largest annual fall on record. Clothing was one of the sectors most badly hit, recording a fall of -21.5% when compared to 2019. With stores closed for months on end, it’s no surprise that the shift away from physical to online sales accelerated significantly, reaching a record high of 33.9% as a share of all retail spending.
While takeaways have been a lifeline for some businesses, it’s likely that the long-term impact of Covid-19 on hospitality will prove to be even more significant. Surveys conducted during the past six months have variously reported that between one- and two-thirds of hospitality venues fear they won’t reopen at all. And as with retail, it’s probable that there will be a further significant shock to come when furlough or other business support schemes come to an end. Some major name casualties before the pandemic began had already prompted a discussion about a crisis on the high street, but in light of current events we’re surely only at the start of a long journey to reinvigorate retail and hospitality.
All this means that Installation’s latest ‘health-check’ feature doesn’t exactly offer a portrait of sectors in robust good form – but it’s far from being all bleak news either. Although the number of new projects or upgrades has certainly dipped, there are tentative signs of new investments on the horizon. More cheeringly for AV in particular, there is also a feeling that technology will have a role to play in luring customers back after such a long hiatus. Hence it’s evident that plenty of thought is being given to the ways in which vendors and systems integrators can work in partnership with these sectors, as well as the kind of solutions that will best suit their needs post-pandemic.
Establishing the current ‘state of play’ was the starting point for most of the conversations that fed into this article. No surprise to find that there is a general recognition of the huge challenges these sectors are facing, and will continue to do so for some time. Despite the adversity, though, conversations about new investments are taking place, and it seems that price-point is far from being the chief priority. Instead, the indications are that stores and venues who can invest in new technologies will be making carefully targeted decisions that make their premises both more enticing immediately – and which also contribute to long-term digital transformation.
Jon Raines, end-user account manager at Sharp NEC Display Solutions, comments: “We have to be realistic – retailers have been greatly affected by the pandemic, and short-term rebuilding of customer bases and balance sheets is an immediate need for them.” Like many vendors Sharp NEC is able to provide solutions suitable for a range of projects, but in this context that “isn’t really the issue”. The main challenge, says Raines, will be to “justify that an area of investment takes precedence over other areas of their business” as customers are welcomed back.
“We will definitely see some effects from the financial pressure the market is facing,” says Jørn Olsen, head of marketing and analytics, ZetaDisplay Norway. “However, retailers are looking at installations from an ROI perspective and thinking long-term about their investments to make strategic decisions.” In order to facilitate these choices, Olsen is clear that “data and analytics are an essential side to this so that we can advise our clients as to which solutions will perform best for their type of business.”
Toni Moss, managing director of systems integrator CDEC, recalls initial thoughts at the start of the pandemic that will surely have been shared by many others: “I did start to think about how tough it could become, and what the long-term impact was likely to be. In fact, we had a massive project [in another sector] due to roll-out when the pandemic began, and that was immediately delayed. It should have started in June, but ultimately it didn’t begin until December.”
But as the months went by and Covid workplace restrictions solidified, more work was able to take place than initially feared. At the time of interview, Moss reports a major potential project in automotive retailing, and comments: “While the pandemic has put a pedal on [new investments], it’s more a case of slowing down rather than stopping altogether.”
In fact, one of the pressing concerns right now is availability of stocks – an issue that, in the UK, is surely being aggravated by Brexit. At present, observes Moss, it’s not uncommon for suppliers to be “unable to guarantee shipment or delivery on specific days – instead it will be within a range of days, and there will be some days where deliveries don’t happen at all. So that’s been an ongoing challenge.”
Emma Bigg is director of Octavius RE, which provides AV systems design and project management services, as well as advice on technology investments and procurement. “In the initial lockdown pretty much everything was put on hold as people figured out what to do,” she recalls. Towards the end of summer 2020, however, “as building sites worked out how they could operate in terms of the restrictions, projects started to come back online.”
Where projects have gone forward, a wise pragmatism appears to be the dominant mindset. “I think some people have downscaled a little bit, but in general people have done what it is they intended to [before the crisis],” says Bigg. In hospitality, where a lot of Octavius RE’s work is concentrated, temporary closures are frequently required to undertake major fit-outs, so projects often proceed during a phase of diminished revenues. Looking ahead, Bigg recognises that companies will be seeking stability in the next financial year, adding: “If they are going to spend money they need to work out carefully where is the right place to spend it.”
Ultimately, the speed at which retail and hospitality regain their lustre will be determined by the return of footfall. This is a hard one to predict, with rising unemployment rates in many countries and worries about financial security among a complex web of underlying factors. But whatever the immediate future, it’s clear that AV is going to take a starring role as shops and venues focus on developing memorable experiences in which increased interactivity and synergy with operators’ digital experiences are at the top of the priority list.
Rather than an entirely new phase in retail and hospitality, it’s more accurate to perceive what comes next as a continuation of a trend that was underway pre-Covid. “There was a looming crisis in retail before the pandemic, but one thing that I think has happened is that people have started to rediscover their local shopping areas and the things that are immediately around them,” says Bigg. A renewed interest in local retail, she adds, “will help to naturally reinvigorate a sector that had been on the downslide for many years, and should attract some bigger names out of the larger cities into smaller towns as well.”
Once in situ, these stores are going to want to do all they can to retain customers. “AV is going to be critically important for several reasons,” notes Bigg. “In particular, people will no longer be visiting a store for one thing – they will be going there for multiple things. The concept of the physical presence [of a brand] is going to tie in more closely with the digital presence, but in ways that make people more excited to come to stores rather than shopping online – and that will involve creating more interactive experiences with products and brands.”
In conjunction with its current raised importance as a means of managing visitors to maintain social distancing, digital signage is going to be a pivotal technology here – hence our separate article on retail signage in this issue (see page 30). But from more impactful audio to innovative use of video and lighting, companies across the vendor landscape stand to benefit from a greater emphasis on innovation.
“Consumer preferences were fuelling a digital evolution long before the coronavirus pandemic, which acted as a catalyst for changes already underway in the sector,” remarks James Morris-Manuel, EMEA managing director at immersive 3D specialist Matterport. “Long-term, it will fundamentally change how the retail and hospitality sectors engage with consumers and guests, and we see this shift as permanent. Successful brands will be those that engage consumers in ways they prefer to discover and shop, and provide authentic, interactive opportunities to amplify their offerings.”
Nonetheless, there is a recognition that – at least for the initial part of the recovery period – investments are likely to be smaller and more selective than might otherwise have been the case. Among the vendors who spoke to Installation, there is evidence of a response to this requirement that foregrounds versatile solutions that can address current needs – and help with probable future ones as these industries begin the trek back
“Businesses in these sectors will be looking for cost-effective solutions to install in their venues while they recover from the results of the pandemic,” says Tim Matthews, senior B2B product manager, Vestel. “We are thinking of the current needs of businesses with the ranges we are launching, having recently introduced the Q Series family of affordable ELED displays. AV solutions also need to be versatile, as businesses in these sectors adapt to the changing regulations and ‘new normal’. There could also be a temporary move away from interactive displays due to an increased awareness of hygiene around the pandemic.”
Morris-Manuel anticipates that the use of digital twin technologies – whereby a virtual model is created of a process, product or service – will continue to accelerate. “The role of AV/VR and digital twin technologies is pivotal to bringing customers back,” he says. “66% of respondents in a global Matterport survey cited ‘crowded stores’ as their top concern around returning to physical shops, so reassuring customers and guests that spaces are safe will clearly be a key factor to building consumer confidence.”
With digital twin technology it is possible to create a 3D model of a space which can be utilised to map customer flows, incorporate space requirements, and include details such as sanitation stations. Morris-Manuel adds: “Capturing immersive digital twins of retail stores also enables merchants to remotely train staff and create more engaging learning experiences for teams operating on the shopfloor” – including with regard to safety-related measures.
But along with the continued emphasis on consumer wellbeing, there will be a return to the pre-pandemic focus on AV technologies that “not only offer the wow factor and drive business into stores, but that deliver the highest reliability and warranties,” says Keith Dutch, MD EMEA at Peerless AV. Versatile LED video walls inside stores will be one manifestation of this requirement, but the role of external technology will also grow.
“Outdoor AV was, and still is, another trend becoming more prolific in the retail and hospitality sectors – ideal for taking the message outside to the consumer and for infotainment purposes,” he adds. “Weatherproof outdoor displays and TVs, outdoor digital menu boards and smart city kiosks offer the ideal solution for replacing static signage on the high street, as well as outdoor areas in cafes, restaurants, hotels and bars.”
There is also an expectation that complete solutions that are easy to manage and maintain will be in demand. Lee Dent, AV sales head at BenQ UK, remarks: “Increasingly in these sectors customers are looking for end-to-end solutions that encompass the software, integration with existing business management platforms and physical hardware so that they can quickly get up-and-running and have full control of the digital ecosystem.”
In talking to multiple vendors it is apparent that hotels are expected to be more dynamic than some other aspects of hospitality, with venues aware that they must go the extra mile to attract customers during a period when bookings are likely to remain comparatively low for some time. A good return on investment (RoI) will therefore be essential, and in this regard PPDS is highlighting the value of Android-powered TVs, such as those in its Philips MediaSuite range, in ensuring that hotel TVs ‘never feel old’. TVs with this capability can be provided with regular updates that mean they have the latest features and functionalities, contributing to a consistent user experience
in every room.
“There has always been a need for hospitality companies to renew their TVs because of age and the desire to offer new features, and so it makes sense that there is an interest in having TVs that can be more ‘future-proofed’,” says Peter Vinke international key account director hospitality at PPDS, adding that the company is also helping customers with a more imminent concern – minimising the risk of visitors catching Covid-19 from TV remote controls by providing an app they can download onto their own devices: “With our new cloud-based remote control app, PPDS GuestConnect, there is no need to use a conventional remote control at all. That’s a major bonus as the remote control is very often the most contaminated item in a hotel room.”
But creating a forward-looking visitor experience isn’t just about visual technologies – the sound system is also critical (see page 26 for our audio-specific retail and hospitality feature). Sami Mäkinen, business manager – AV installation at Finnish loudspeaker brand Genelec, says that “the view that audio quality, and the overall quality of the product, really matters” has become increasingly universal in retail and hospitality in recent years. Compact form-factor and discreet aesthetics have contributed to the success in these sectors of Genelec ranges such as the 4000 Series AV installation speakers, while Mäkinen also highlights a growing tendency “among high-end venues to think about providing more than background music – they have the ambition of creating a real ‘sense of place’ that may include an immersive audio production.”
In this regard, a project currently being finalised at Kakslauttanen Arctic Resort in Finland could prove to be something of a pacesetter for hospitality venues wanting to push the audio envelope. A new restaurant building will feature 116 Genelec 4430A Smart IP speakers and two 7360A subwoofers, with the sound system devised to reproduce a specially composed music/art piece by Lauri Porra, Teho Majamäki and Pauliina Saarman.
If bespoke music might not yet fall within the remit of many venues, this project nonetheless illustrates what can be done when there is a determination to create a memorable experience – memorable enough, indeed, to make repeat visits more likely. As retail and hospitality start to return to active duty, it’s probable that those businesses with a flair for innovation and a focus on quality will be best-placed to prosper once more.