The Future of Retail: Beyond the Pandemic

As states across the U.S. are relaxing stay-at-home orders, and with restrictions on everyday activities easing, Americans seem to be finally settling into a new routine. The burning question now is: How must retailers adjust to the new normal to best serve the post-pandemic consumer? According to the most recent EY Future Consumer Index, a survey of more than 1,000 Americans, consumers are comfortable getting back to normal, pre-pandemic activities. In fact, over the next days and weeks, 50 percent would be comfortable dining at a restaurant, 51 percent would shop in-store, 60 percent would visit a hair salon, and 62 percent would like to go back to work. This reflects a rapid shift in comfort levels as states and cities reopen, even from our data from last month’s survey.

However, there's a critical element that U.S. consumers require now more than ever: trust. Retailers would be wise to consider where the post-COVID consumer is placing their priorities, time and money in order to win back and drive loyalty as the pandemic evolves.

Is Trust the New Currency?

As the pandemic continues, trust has become the most important factor in what motivates consumers in their path to purchase. They require transparency from brands and products, and will only shop in-store if it's a safe environment. Simply put, trust can make or break a retailer.

Despite this imperative, there remains a large trust gap among consumers. Among respondents, only 21 percent say they fully trust brands and only 20 percent fully trust retailers. That’s a huge opportunity for companies planning for the future. Brands must ask themselves how can they make changes today to earn the trust of the consumer of tomorrow?

Some 64 percent of U.S. consumers say that in the next one year to two years, they will prioritize brands they’ve purchased from before. Furthermore, 94 percent say that authenticity and honesty is important to them when making a purchasing decision. When the incumbent advantage can only take you so far, offering transparency in new protocols, sourcing and supply chain may be the competitive advantage retailers and brands need to deliver the experience the pandemic consumer demands.

More than ever, consumers want to understand where and how their products are made and how operational details illustrate a company’s values. So much so, consumers will make buying decisions based on whether a brand’s values align with their own.

Prior to the pandemic, it’s likely few customers thought about supply chains. Today, most consumers want to not only know where their goods are sourced, but they want it to be nearby. Our survey shows that 87 percent of consumers said that transparent sourcing is important to their purchasing decision, and the same percentage said that products sourced locally to their community is important to them. That’s a clear signal to retailers that creating shorter, more transparent supply chains is key to success moving forward.

Given this knowledge, companies should consider bringing all or part of their supply chains to the U.S., or to their communities if possible, to accelerate time to market, provide greater transparency, win consumer trust, and (as a bonus) increase resiliency in the face of future uncertainty due to less reliance on foreign markets.

A Digital Strategy for a New Era

As the effects of the pandemic continue to ripple through consumer attitudes and behavior, retailers are seeing the rapid adoption of new shopping models. It’s no secret that online shopping has taken off in recent years, only to be fueled by widespread store shutdowns this spring. While retailers knew the digital model was the future, few were prepared to roll out a seamless omnichannel strategy within a few months.

As stores reopen, we’re seeing an increased symbiotic relationship between digital and physical.

We know that physical stores lead to a gain in overall traffic to a retailer’s website and increase its share of web traffic within the market — i.e., the “halo effect.” But throughout the pandemic, there’s been a triple-digit increase in buy online, pick up in-store (BOPIS) frequency, proving that the value of digital retail is growing exponentially, and the role of the physical store is shifting.

As consumers adjust their preferred ways to shop in-store and online, retailers should consider the profitability of their online channels, weigh operating model implications, and consider the physical implications of digital operations to shift successfully to the new retail landscape. It’s important for retailers to bring their customers seamlessly along as changes are made to emerge from the pandemic stronger than ever.

As always, consumer expectations will continue to evolve, and new operational models will emerge to fulfill them. Regardless of the length of this pandemic, retailers and brands that can successfully pivot their operations to meet consumer needs around trust will be poised for success.

The views reflected in this article are those of the author and do not necessarily reflect the views of the global EY organization or its member firms.

Jeff Orschell is EY Americas’ retail and global account leader. EY provides consulting, assurance, tax and transaction services that help solve its clients' toughest challenges and build a better working world for all.