The future of retail: How COVID-19 will change shopping habits

covid-19-5077645_1920

The COVID-19 pandemic has destabilised the world. It is now a question of rethinking the world in which consumers and businesses will have to adapt; a world in which the unusual can become the new normal.

Businesses now face many new challenges, with the closure of international borders, the closure of physical establishments, and the isolation of people at home. Many companies are faced with temporary or even permanent closure.

Consumer behaviour was forced to change immediately, on a large scale. Those who are isolated or locked up cannot perform their usual tasks, especially since many local stores have been forced to close for security reasons. Concerns about the availability of goods have prompted the panic buying of bulk items – remember the loo roll episode?

Financial uncertainty and the prospect of a severe, long-term recession create a difficult environment that has had an impact on consumer outlook, perceptions and behaviours.

How shopping centres will look post-pandemic

Before, consumers could choose between shopping online and in-store. However, with store closings in many countries, shopping online becomes the only way to acquire certain items.

Even before the pandemic, traditional commerce was under pressure. For example, in the decade before the global financial crisis, almost 5.5% of stores were vacant in American malls. 

Physical businesses will certainly not disappear, but, since occupancy rates have never recovered from the global financial crisis, owners will find it increasingly difficult to rent their stores and malls. In addition, the nature of these stores may change. They will probably become simple showrooms where people will come to test or try the products before buying them online. And this transition, from the high-performance store to a simple showroom, will influence the willingness and even the ability of store owners to pay their rent.

How COVID-19 is boosting bigger retailers and damaging faltering ones

Large internet commerce sites have seen an increase in orders as consumers, confined to their homes, buy basic necessities online. The shares of the American retail giants Walmart and Amazon fell on March 16, a dark day for the world’s stock exchanges.

Walmart then recovered 25% from the start of the week and Amazon also picked up colors.

“We are seeing an increase in online shopping and, as a result, some products such as basic household goods and medical supplies are out of stock,” said Amazon.

“For their part, small independent businesses are suffering”, said Mike Cherry, president of the British Federation of Small Businesses, but it’s boosting the biggest retailers and online businesses.

How businesses can adapt

It is the forgotten – or neglected – question of strategy, the one that nevertheless conditions everything else, the question of “why”.

We will reserve the philosophical debates for later. But how can you establish a strategy without knowing which goal the company is aiming for? Be profitable? Certainly, because otherwise the collective adventure stops, but to go where? Little mental exercise. Imagine that in the “next world” your business does not exist: what will the world miss? The answer to this question is fundamental, because it determines whether or not to maintain the company’s “social license to operate” – hence, ultimately, its survival.

The choice of a trajectory determines the path you will take: in which arena the company will position itself, what value it will create, how it will produce and protect it, which in turn will allow progress on the chosen trajectory.

When the storm is raging, you must not lose sight of the course and stay on course. You also have to keep calm, observe and adapt as the uncertainty dissipates.

How will local shops be affected? 

Even before the fallout from COVID-19, when the economy was humming, many retailers were grappling with changing shopper preferences and habits as well as with cutthroat competition. The COVID-19 crisis has only magnified the pressure, with headlines suggesting a “survival of the fittest” environment. From department stores and malls to iconic retailers and small local stores, the industry must brace for major upheaval in the coming months. 

First, consumer businesses depending on the physical presence of customers lost foot traffic due to stay-at-home policies. While some have moved online, this salvages only a fraction of revenue. Second, quarantining at home also reduces consumers’ need for certain products and services such as professional clothing, festive outfits, and salon services.

And third — and possibly most enduring — consumers’ propensity to spend has decreased, resulting from income losses. 

Everything goes virtual

How to organise events when rallies are prohibited? The answer is provided by virtual reality, this controlled digital world where no pandemic can rage. Since the start of containment, many companies have turned to virtual alternatives to circumvent, without breaking the law, the obligation of containment. This is how webinars and videoconference meetings became widespread, but not only. Much larger events (conferences, fairs) are organized in virtual, such as the Laval Virtual World from April 22 to 24, or the Spark + AI Summit organized by Databricks in June.

E-commerce sales are booming and offline retail is largely being avoided by a conscious populace. “More than 40% of our customers say they won’t return to our brick-and-mortar stores but will continue purchasing from our online store”, claims Sarah Cole from PURC.

In recent weeks, Virtway, the platform that offers immersive 3D services, has seen a 575% increase in requests compared to the previous month, from companies looking for a more personal and entertaining solution to organize their meetings and events online.

Globally Driven Decisions

One of the most effective ways to deal with this crisis is to communicate accurate information in a timely manner. An informed public is better able to make good decisions, including on trade-related issues. 

The priority of governments around the world must be mounting the strongest possible economic and public health response to the COVID-19 outbreak. Industry is a ready and willing partner in these efforts. Digital technology has a fundamental role to play in the global response to and recovery from the pandemic.

Tags: , , , ,

Related Posts

by
Previous Post Next Post

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.

0 shares