5 Ways COVID-19 Will Change Retail

The coronavirus has certainly disrupted just about every industry. Retailers are among the hardest to get hit. Between stay-at-home orders, job losses, and low consumer confidence, merchants from virtually all categories are finding themselves on shaky ground. But, in the midst of it all, retailers are finding ways to stay connected with customers and move product.

How retailers are connecting with customers will certainly influence the future of the industry. While there’s still a lot of uncertainty in the industry, we are seeing trends that give us an idea of what may happen when the dust settles. 

Below are 5 ways COVID-19 will change the retail landscape. Which of these do you see happening in the near future?

The rise — and rise — of ecommerce

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Let’s start with the obvious: this pandemic has pushed even more consumers to adopt online retail. This is particularly true when it comes to categories like food and grocery. 

Not that this is big news. We all know that ecommerce has been increasingly gaining share of retail revenue. Before coronavirus, eMarketer forecasted US food and beverage sales to increase 23.4% in 2020, accounting for 3.2% of total retail sales. 

But thanks to COVID-19, the growth of online shopping will increase faster than anyone previously predicted in certain categories. For instance, according to research from Rakuten Intelligence, online grocery order volume from March 12 to March 15 rose 210% compared to last year. 

eMarketer cites data from a CivicScience poll. It found that “the percentage of those who said they increased their online grocery shopping jumped from 11% to 37% from March 1 to 22.”

5 Ways Covid-19 will change retail - ecommerce chart

“Ecommerce share is going to grow organically because customers that didn’t purchase online before are now forced to do it. The pandemic will activate ecommerce latent demand,” points out Eduardo Vilar, founder and CEO of Returnly.

“At Returnly, we see the pandemic as the forcing function for traditional retailers to fully embrace omnichannel and go digital for good. We expect them to increase investment to update their technology stack and enable a seamless shopping experience across customer touchpoints, including buy in-store, return online.”

This shift also calls for better management of warehouses and fulfillment centers. Retailers need to equip their facilities with systems and technologies so they can store, pack, and ship products in the most efficient way possible. 

And once those procedures are set up, regular inspections and audits are a must. Retailers need to ensure that the facilities are compliant with the company’s standards and other regulations. 

Key takeaway?

Once we get past COVID-19, retailers will see more customers shopping online. Companies that have a solid digital infrastructure and seamless navigation between stores and ecommerce offerings will be in a better position to serve customers and drive revenue down the line. 

Rethinking order fulfillment

In line with the growth of ecommerce is the need to implement smooth and efficient order fulfillment. Consumers’ need for speed when it comes to getting their hands on their orders hasn’t changed. The retailers that will win are the ones that can effectively leverage their assets (i.e., physical stores, warehouses, fleets, etc.) to optimize their shipping and fulfillment logistics.

Here are some of the things we can expect going forward:

Hybrid fulfillment models

Buy online, pickup in-store and curbside pickup have been around for years. In 2020 and beyond, they will be the go-to fulfillment options for many shoppers.

“Hybrid models such as buy online pickup in-store (BOPIS) or curbside pickup will continue to grow in usage. So retailers that have invested in those fulfillment models will see further growth,” comments Carlos Castelán, Managing Director of The Navio Group.

“Retailers that have considered adopting those models or have emergent versions will accelerate their efforts to adopt similar capabilities given how widely used they have become during this period of time.”

Last mile services

Retailers will also focus on winning the last mile. The last mile is defined as the movement of goods to the final delivery destination. Companies will come up with more innovative ways to ensure that people’s purchases end up at their doorstep safely and affordably.

“It is estimated that retail executives spend 41% of their supply chain investment on last mile services for their stores. Last-mile solutions typically involve innovative technology (such as apps and platforms which connect consumers with nearby truck, van, and trailer owners) paired with delivery services that help customers get their purchases home,” says Michael Decatur, CMO at Truxx.

“We expect this to jump to over 50% due to COVID-19 and the ever-mounting pressure from ecommerce retailers.”

According to Decatur, they’ve seen a spike in the implementation of last-mile services because of COVID-19. They anticipate this trend to continue. 

“Offering innovative last mile services makes it easy for customers to schedule a driver with a pickup or van who can help them load their goods and haul them to their destination. It’s convenient and helps reduce the friction to buy,” he adds. 

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Contactless commerce

Another trend to keep on your radar? Contactless commerce. 

“Following on the trends coming out of China, we expect to see a lot more interest in “contactless commerce” – the idea of selecting and taking possession of purchases while minimizing physical contact with anyone else,” says Nikki Baird, VP of Retail Innovation at Aptos.

“Whether that’s more online ordering, even if the inventory comes from a physical store, or more contactless delivery of lockers or delivery or set pickup locations of some kind.”

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Making “reality” more interesting

With more people social distancing, retailers will realize that they need to make shopping from home a lot more interesting and enjoyable. This is where technologies like augmented reality (AR) come in. 

Shoppers want to see how products look in their physical environments. AR gives them the means to do so. 

To be fair, many retailers have been implementing AR shopping for years. The Amazon app, for example, has a built in AR feature which lets shoppers “place” certain items in their physical environments. Meanwhile, Sephora’s mobile app allows users to virtually test different looks without having to physically apply the makeup products. 

5 Ways Covid-19 will change retail - Amazon Example Teddy Bear

eMarketer expects that 83.1 million people will use AR at least once per month in 2020. This represents 25% of the population. That said, that number may increase as the pandemic continues to drive more online shopping. 

AR and VR graph

Retailers are getting creative with how they serve and engage customers from afar. Many are launching remote experiences and services to connect with shoppers while their physical locations are closed. 

Online events and classes

“[An] impact on retail that is likely to linger for the foreseeable future is the adoption of remote experiences. The widespread stay-at-home orders have shown that many things can be done virtually,” remarks Megan Higgins, general manager of marketplaces at Avalara.

“For example, the fitness industry will likely change indefinitely. We will begin to see an increase in the number of providers who offer remote alternatives to long-standing norms as well as changes to how pricing models work (pay per class, extensions to existing subscriptions, etc.).”

Prince Ghuman founder of PopNeuro.com and author of Blindsight, echoes this. He observes, “the retail fitness industry will commit to long-term digital delivery of products previously thought unimaginable.”

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“Online live yoga classes have been around for over a decade. It took COVID-19 to push the consumers to give them a try en masse. Big Box gyms will adapt as consumers realize virtual workouts are not bad at all. Expect the $10B industry to seize the opportunity to provide new value to gym-goers and also capture a new segment of customers who only feel comfortable working out at home.”

Richer customer service experiences

It’s not just about virtual classes and events. Because of the coronavirus pandemic, many retailers are now emphasizing virtual services. 

CVS, for example, is heavily promoting its telemedicine services. The service allows patients to be evaluated for many conditions from the comfort of their homes.

Meanwhile, L’Oréal Australia doubled down on virtual customer service by using the tool Inside. With Inside, customer service reps can view online visitors as avatars. Having a visual representation of the user enables L’Oréal’s customer support staff to get a better handle on where the shopper is in their journey and how they’re feeling. 

As Glossy explains:

If the avatar has a suitcase, it means the customer is visiting the Australian website from another country. If the avatar is blue, it’s their first visit. Yellow is for a return visit, and green means the customer is logged into an account.

Avatars also have faces, which can quickly show representatives whether a customer appears angry or happy, based on their activity on the website. For example, if a customer is logged in on the website and appears to have ordered a product a week ago, the customer service representative can begin a dialogue (via a pop-up on a customer’s screen) asking if everything is OK.

Livestream shopping

Livestream shopping, is a retail concept that lets customers shop for products during livestream broadcasts. Think of it as buying from the Home Shopping Network or QVC. Instead of watching TV, you’re on your phone, tuning into a brand’s or influencer’s livestream. 

The trend has made massive waves in Asia. It hasn’t hit mainstream adoption in the US just yet. But all the social distancing brought about by COVID-19 could change that. 

“China saw a big uptick in livestream shopping,” Baird points out. “They have the platforms in place that support that kind of interaction, but there has been great interest from Western retailers to figure out how to adopt the practice themselves”

Watch this space, as we may see more and more brands get into livestream shopping. They will do this by either setting up their own broadcasts or by teaming up with influencers. 

Level-up the in-store experience

Everything we’ve mentioned above (i.e., ecommerce growth, digital experiences, and livestream shopping) may ultimately lead to a decline in foot traffic — at least for retailers that cannot offer amazing retail experiences. 

We’ve discussed the need to improve retail experiences in the past, but the concept is worth mentioning again, particularly with what’s happening today. Since more consumers are discovering the value and convenience of online shopping, brick and mortar retailers need to work extra hard to get people to go out and visit their physical stores. 

Why? Because experiences will dominate the physical spaces of the future.

The pandemic isn’t over yet, but we can already see this happening. American Dream, a 3 million-square-foot development in New Jersey, was slated to have a mix of 55% entertainment and 45% retail tenants. But thanks to COVID-19, American Dream is apparently modifying its leasing strategy to 70% entertainment and 30% retail

So what does this mean for the rest of the industry?

More than ever, brick and mortar retailers need to demonstrate the value of physical locations by giving customers experiences they won’t find online.

For some merchants, this could be a matter of upgrading the look and feel of their locations to make them more immersive. For others, it could mean introducing technology to make shopping even more convenient. In many instances, retailers will need to invest in their in-store workforce and empower their employees to connect with shoppers more deeply. 

Whatever the case, the retail companies that survive the COVID-19 pandemic will need to rethink their offline experiences if they want to drive traffic and sales. 

And it’s important to ensure that those experiences are always on point. Accomplishing that entails regularly evaluating each store’s operations, program execution, merchandising, and more. 

Getting more comfortable with remote work

On the staffing side, companies that have been resistant to remote work may start singing a different tune once they realize that people can still be productive even while working from home. In the retail sector, people who aren’t in customer-facing roles may increasingly work remotely either on a part-time or full-time basis. 

That being said, work-from-home initiatives will only be effective with the right tools. Companies should arm their employees with robust collaboration and task management solutions in order for workers to be able to do their jobs well and effectively stay connected to the business. 

Changes are coming sooner than we thought

COVID-19 will undoubtedly change the retail landscape forever. 

Here’s the thing, though: the trends and issues we discussed aren’t new. The transformations brought about by ecommerce, augmented reality, and experiential retail have been building up for years. 

COVID-19 is simply accelerating these changes and is pushing retailers to be nimble and move faster than ever before. 

Who do you think will survive and thrive when the pandemic is over? Let us know in the comments. 

About the author:

Francesca Nicasio is retail expert, B2B content strategist, and LinkedIn TopVoice. She writes about trends, tips, and best practices that enable retailers to increase sales and serve customers better. She’s also the author of Retail Survival of the Fittest, a free eBook to help retailers future-proof their stores.

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