How Will Retail Be Reformed To Thrive In A Post-Covid World?
Retail was one of the industries most affected by the Covid-19 pandemic last year. The various global lockdowns and quarantine measures shuttered almost all non-essential retail, leaving many cities with only pharmacies and food stores still open.
Some retail brands thrived in this challenging situation because they boosted customer outreach on social channels and focused entirely on e-commerce, however for most retail companies it was a difficult time. Many had not focused on their app or online offer and relied primarily on in-store sales – when the stores were closed revenue dropped to zero. Industry analysts predict that at least 100,000 stores will close over the next 4 years in the US. Major brands, such as JC Penney, have had to completely restructure their business using Chapter 11 bankruptcy to survive.
As I write this article in mid-2021, there is a greater sense of optimism about a recovery from the pandemic. Several vaccines are now available globally and nations are working hard to ensure that their population gets vaccinated following the frontline health workers and the elderly.
However, this experience will change how retailers plan and behave in the future. In the immediate short-term we need to continue exercising caution because it may take most of 2021 to complete a vaccination program, but I believe we will see a lasting change to the way that retailers interact with their customers – even when Covid-19 is history. Here are a few of my thoughts:
- Adoption of online: many customers were forced to shop online during the lockdowns. Digital grocery sales in the US soared by 37% last April. Many customers who were new to online ordering will have found it easy and convenient and will continue to shop online, even when they can easily just use stores and malls.
- Greater focus on data: pickup options and customer preferences are getting more important and smart retailers will drill into the data they have on their customers so they can predict what customers need and also increase revenue through intelligent recommendations and deals marketed to individual shoppers.
- Autonomous and drive-through: we will see drive-through becoming a much more popular retail option for brands that may never have considered it a possibility in the past. Also, many retailers will have learned from the Amazon Go rollout that some stores can be operated without employees – autonomous stores will move from an interesting experiment into the mainstream.
- Showrooms: brands like IKEA have shown that you can truly blend the online and offline shopping experience. Over 80% of IKEA customers start their journey online so the stores are used as showrooms, to let people see the products in context – many IKEA customers don’t even purchase in-store. They research a product online, go to see it at a store, then complete the purchase online. I believe many other brands will follow this example of how to blend the online and in-store experience.
- Physical barriers and social distancing: I don’t think that some of the physical distancing measures introduced by Covid will go away quickly. Certainly, they remain essential in 2021, but I think that once most people are vaccinated there will be a lingering sense that we should be more careful about hygiene so stores will continue to encourage customers to use alcohol gel and to remain distant from other customers.
In terms of the immediate changes for most retail brands, there are two key elements that need to be managed – customer outreach and communication and online shopping channels, along with all the logistics this requires. Both these processes need to be dramatically improved if retailers want to succeed in a post-Covid business environment.
When we emerge on the other side of this crisis it is likely that we will have seen retail disruption in both 2020 and 2021. This experience will have changed how your customers behave. It’s time to get ready for this period of change and transformation because there is no way that retail will return to what was normal in 2019.