The past six months have proven to be a testing period for us all and whilst some sectors such as tech and pharmaceutical have thrived, others have felt the impact of the new world we live in. I have delved into the numbers to learn more about what have been going on across Retail, Hospitality and FMCG worlds and how this is affecting Reward within these sectors.
With everyone cutting back on social interactions, consumers have adapted to a more online world over the last six months. People’s habits have also changed, instead of visiting restaurants and bars we have taken to stocking up in the aisles of our local supermarkets and entertaining more at home. Supermarkets have had a great year as a result with, Tesco and Asda have seen a spike in sales growth with the companies announcing 30% and 10.5% growth respectively. Of course, COVID has forced change and people have had less opportunity to shop in the same way with lockdown restrictions but also some have been forced due to changes in their personal circumstances and job security etc.
Our headlines have been flooded with doom and gloom from the retail and hospitality sector and the death of the ‘high street’ which of course has been amongst the hardest hit by the pandemic. Matalan recently announced a staggering 44% drop in profits over a 13-week period during Q2 while Boots expressed a similar trend with sales dropping 16.7% over the same timeframe. Many retailers have found it incredibly difficult to continue operating at the level they were before the pandemic hit. Companies such as Debenhams, Monsoon Accessorize, TM Lewin and Victoria’s Secret UK have gone into administration, closing down stores and making employees redundant.
This “new way of living” has introduced new spending habits. A breakdown of figures from the British Retail Consortium over June-August showed diverging fortunes of online and bricks-and-mortar retail channels, with online sales up 44.2% but in-store sales down by 17.8%. Those that were able to adapt to an online customer have been able to capitalise on a captive audience at home who are clearly willing to spend more from the comfort of their sofa. An obvious example is Amazon – an online retailer that has taken the industry by storm. Sales were up 42% in Q2, subsequently allowing them to create 7,000 new permanent jobs. ASOS, the online clothing retailer, have seen their sales rise 18% year-on-year according to their full financial statement. Nike experienced a similar success with the company managing to counterbalance a loss of instore revenue with a 82% growth in digital sales in the second quarter. L’Oreal saw their ecommerce sales leap by 53% compared with their previous year.
Product lines have played a big part in the success within the FMCG sector – Reckitt Benckiser’s share price has been driven higher by rising demand for hygiene products this year whereas Diageo have hard a harder time due to due to the reduced demand within the hospitality sector for alcohol.
So, what does this mean for Reward? We come into this year’s annual salary and bonus review period in the knowledge that many in retail and hospitality will be operating with limited budgets, it seems as though the bonus pools will be low and many salary increases will be on hold for the foreseeable. We are seeing drive for good data expertise and the use of HR analytics to allow businesses to make better informed decisions around their people.
The world of Employee Benefits seems to be heavily centred around Wellbeing with many focussing their efforts introducing financial wellbeing support for their staff. COVID has focussed the need for better education around financial management and the responsibility of employers to support this. Aon published data recently which showed that 71% of employers believe they have a responsibility to influence employees health and change behaviours. 62% of respondents also saw employee’s financial wellbeing as their responsibility with 48% of companies planning to implement initiatives in the next year.
Adaptation has been key across retail, FMCG and hospitality this year and I watch on with interest to see how Reward and HR will adapt in light of the challenges in their businesses. Please do share your thoughts and reach out for more information about the Reward market or your job search via LinkedIn or email - email@example.com