The Future of Retail After COVID-19
It was a ticking time bomb: in a pre-COVID, increasingly omnichannel-driven world, many areas of North America and Europe were already oversaturated with physical retail. And now that the COVID-19 pandemic has either forced or prompted consumers to shop differently — often online for the first time — the shift to e-commerce has dramatically accelerated.
Without a unique value proposition, the weakest, most vulnerable retailers that struggled before the worldwide health crisis will be the ones likely to suffer from lack of foot traffic, as consumers tighten their pocketbooks and pull back from nonessential trips to brick-and-mortar stores. In fact, investment firm Gordon Brothers projected 25,000 stores could close this year, while investment firm UBS suggested the acceleration to online shopping could result in 100,000 closures by 2025.
No matter what happens in the coming months, learning to adapt on your feet is key to coming out of the crisis stronger. Let’s take a look at what a post-COVID industry will look like.
Adoption of Online Shopping and Options Like BOPIS Will Increase
As of late May, all 50 states had started reopening to some extent. In some areas, consumers were allowed to re-enter nonessential retail stores and malls. But that doesn’t mean shoppers will flock back. An NBC News/Wall Street Journal poll found 58 percent of respondents felt the U.S. will reopen too quickly.
In order to observe social distancing measures, an increasing number of shoppers have turned to options including delivery, curbside pickup, and buy online, pick up in-store (BOPIS). According to research by Brick Meets Click/Symphony RetailAI, online grocery sales reached $5.3 billion in April — a 37 percent increase over March. Total online orders went up 33 percent.
As more people from all generations shop online and order groceries or food to be delivered to their homes, they’ll get used to the convenience. In-store shopping, once COVID-19 has passed, will continue, but to a lesser degree. Many retailers will continue to feel the pinch.
Sales for Certain Retailer Types Will Grow, Regardless
Discount, grocery, and drugstore and health food retailers are the exception. They'll continue to grow as consumers spend on food, vitamins and other provisions to keep them healthy and strong. Big-box retailers such as Walmart, Target and Costco sell it all — which keeps consumers coming back, online and in-store.
Drugstores like CVS and Walgreens have grown their delivery models to deliver medications to customers’ homes, which has allowed these retailers to thrive during the pandemic.
In fact, although an additional 1.54 million Americans filed a new unemployment claim in the week ending June 6, many grocery and discount stores are still hiring. Retailers defined as discretionary aren’t faring so well, as consumers re-prioritize their spending. Toilet paper and eggs are a must have, new shoes are not.
Data Can Help Retailers Adapt to the New Landscape
As the shift away from brick-and-mortar accelerates, it’s critical to understand and adapt to your customers’ changing needs. Focus more on adopting new delivery models, determining which locations are performing better and understand why. Do your customers insist on contactless pickup and, if so, how do you implement such a program?
If you’re not paying attention to your master data, now is the time to do so. Master data enables you to understand and manage operational characteristics, such as customer pickup options (location data), preferences (customer data), and business rules about the goods you sell (product data). Understanding each of these characteristics allows you to develop a 360-degree view of your customer — and better meet their needs.
It’s true that operations will likely never return to the way they were before COVID-19, but you can capitalize on these changes and reset your company for new growth opportunities. Listen to your customers, sell to them in their preferred platforms, and continually gather feedback to refine the customer experience.
Brian Cluster is director of industry strategy, CPG and retail, Stibo Systems, a provider of master data management solutions.