Council Post: In A Post-Pandemic World, Will Retail Ever Look The Same?

It does not take an expert to understand that retail shopping was already on a different trajectory before the pandemic, and there’s no doubt that COVID-19 has accelerated some of those changes. The average consumer understands they can have nearly any item delivered to their doorstep, typically for about the same price (and sometimes for less), by simply ordering it online. Under the current circumstances, consumers are happy to pay a premium to have exactly what they want delivered to their home in a day or two, even if that means increased delivery costs or longer wait times.

The short-term benefits of offering as many flexible delivery options as possible to consumers should be obvious. More importantly, the systems are in place for this trend of consumers opting for delivery to grow substantially for many years. Retailers that respond quickly will lead the way for a new generation of commerce. Here are some insights into the current trends in retail and how they might play out on the big stage in the years to come.

Retail Closures

The pandemic has accelerated the death of traditional retail shopping, and although some retailers may survive, it is likely that retail shopping will never look the same. If you’ve dropped by any mall over the past few years, you’ve already seen firsthand that in-person shopping experiences are not as high in demand as they once were. This certainly doesn’t mean people won’t shop in person again; it simply means businesses will need to adjust to different demands from their customers if they want to have retail locations that stay relevant this decade.

Although it is not welcome news to any of us that retail stores will continue to close at a record pace, it should also not surprise anyone. The so-called retail apocalypse has been going on for about 10 years, and with more than 9,300 closures, 2019 was a record-breaking year. The foot traffic in shopping malls has declined for years, too. Meanwhile, major retailers have been slow to adapt to changing customer expectations.

Added Complications From The Pandemic

Many retailers around the country are having to make extremely difficult decisions about how they can possibly keep some store locations for an undetermined amount of time when they’re unable to even be open. This challenge has increased the need for bankruptcy protection for most large retail chains, but that process has also become more complicated.

RetailDive published an article on the internal details for many large retailers as they pursue these challenging decisions for their company, shareholders, employees and customers. The article highlighted that a mass exodus of retail stores is looming in the wake of the pandemic, once retailers assess liquidity issues and determine solvency in a post-pandemic world.

What Are Big-Box Retailers Doing Right?

Although we can still expect another record-breaking year of closures, some retailers might survive if they adapt to the new normal. Target is an interesting example of a company that keeps finding creative ways to meet consumer demand. Target recently announced that its digital sales had grown 275% in April, and that this steady growth more than made up for the decline in in-store sales.

Target reported an uptick in retail sales to the tune of 300%, with food and beverage increasing by 20%, while apparel and accessory sales declined by 20%. A similar story is unfolding at other big-box retailers, too.

Some Retailers Retain Sales, While Others See Increases

Retailer Best Buy announced in a press release that it has retained 70% of sales during the crisis by making it easier for customers to buy online and pick up in-store (BOPUS), and by integrating stringent protocols for all workers. Other larger retailers such as Costco and Walmart have announced restrictions on shopping hours and the number of people allowed in stores, with some stores even updating the aisles to be one-way and adding new sneeze-guard screens to checkout counters and social distancing markers for shoppers.

While Target and Home Depot may have seen in-store sales decline, unsurprisingly, Walmart has enjoyed a 20% increase in sales nationwide, year over year. The biggest difference between these retailers and their results is simple to connect: The retailers that offer perishable goods, the items that are most in demand, are still earning profits.

Will Retail Ever Look The Same?

The biggest question is: Will retail survive the pandemic? The answer is yes, but it’s complicated.

Some experts forecast that some consumer behavior that changed during the pandemic will stay in place long after, with many consumers choosing a digital route of purchase and reduced brand loyalty in the aftermath.

A related Forbes article predicts that brick-and-mortar retail outlets, primarily malls, will “be challenged to recreate and reimagine malls and centers with new urgency and purpose.”

Some Brands Won’t Survive

The eye-opening reality of the impact of this pandemic on commerce is that some brands simply won’t survive. The ones that do will have strongly positioned themselves to capitalize on e-commerce, BOPUS and third-party same-day delivery services that give them the leverage to compete with Amazon’s coveted Prime service while still twisting the profit dial in the right direction. Indeed, commerce is about to change forever. But it will survive.