Post-Coronavirus: Adapting to the New Retail Environment

Given the current state of society during the coronavirus outbreak, it’s easy to imagine life hesitantly, or maybe never, returning to normal. The disease will most likely impose a “new normal” when it comes to many aspects of life, especially the way we interact and do business. The restrictions placed on us by governments and ourselves to prevent contracting and spreading the disease have altered centuries of human socialization. Businesses looking to thrive during and after the outbreak will need to adapt to a new retail environment. 

Retail experts predict that the new retail environment emerging from the coronavirus pandemic will be one that is much leaner with fewer stores – investment pundit Jim Cramer has suggested big box retail will have just three retail stores – and new shopping behaviors to which independent retailers will have to adapt. 

Not All Gloom and Doom 

The retail shutdown hasn’t exactly been equitable. The calls for all “non-essential” businesses to close have often left business owners to decide for themselves if their store is “essential” or not. It would seem all businesses are essential to those who own them and depend on them to pay their bills and buy their “essential” goods and services. 

Most governmental entities – federal, state and local – have used their own judgement to determine which are essential businesses, landing on basics like food, healthcare and pharmacies, and shelter – which has included everything from hardware and LBM retailers to essential construction companies. And while the majority of non-essential businesses have closed, by both the foresight of their owners or by governmental edict, many of those essential businesses have flourished. 

“What we’re seeing from our clients is that either they’re doing well, holding their own, or are either struggling or closed as a non-essential business. Some of them tell us their businesses are booming,” says Jeff Rogers, marketingsales and partnerships director for Paladin Data Corporation. Paladin provides software and hardware solutions for the hardware and LBM, pharmaceutical and general retail industries. “Tightwads Discount Building Supply (a hardware and LBM store in rural Prineville, Oregon) – their business is up 70% with many people using the stay-at-home orders to do home repair projects.” 

In a report from Hardware Retailing, Eric Hassett, who owns five Hassett Hardware stores in the San Francisco Bay Area, reflects similar success with his sales increasing 71% the week after California Gov. Gavin Newsom issued his shelter-in-place order. In April, Ace Hardware announced it was looking to hire 30,000 new associates. Tractor Supply disclosed profits for the first quarter of 2020 were up 7.5% and that is was hiring 5,000 workers. 

Likewise, pharmacies are busier than usual. On the front line of any health emergency, large retail pharmacies are hiring when other industries are laying off. CVS announced recently it needed to immediately fill 50,000 full- and part-time positions. Walgreens is seeking 9,500 new workers. And Amazon, which has dipped its toe into pharmaceutical delivery, is looking for 100,000 workers in its fulfillment centers. 

Grocery stores and delivery businesses have prospered, too, during the health and economic crisis. According to Nielsen, groceries accounted for just 4% of online sales in the United States since 2019.  Now, online grocery purchases and delivery app downloads are surging. Comparing average daily downloads in February to those from March 15, Instacart, Walmart Grocery and Shipt have seen increases of 218%, 160%, and 124% respectively. In a report from ForbesRakuten Intelligence data shows online order volume from grocery stores rose 210.1% from March 12 through March 15, compared with the same period a year earlier. 

How America Shops 

The new retail environment that will emerge from the coronavirus outbreak is being formed as consumers work their way through the health and economic crisis. Businesses that are prepared for the new retail environment will survive and some will thrive. 

Many business experts believe that the behaviors learned during the pandemic and societal quarantines will remain with people for at least the short term and with many consumers for the long term as well. 

A Digital World 

Shoppers are expected to continue to lean toward e-commerce, a trend that started close to 20 years ago but was hastened by the coronavirus outbreak. Sale volume in e-commerce marketplaces grew 14% from March 23 to March 30, according to a report from Retail Dive. 

Those digital sales reach far beyond a store’s website, too. Making an online sale is the first step, but retail businesses need additional tools, both digital and physical, to fulfill those transactions. The use of programs such as BOPIS (Buy Online Purchase in Store) and delivery options were already trending before the COVID-19 virus began sweeping the globe. Year-over-year growth of BOPIS was up 28% in February and 18% in January, according to Adobe Analytics. 

These trends and numbers reinforce the need for retailers to have cohesive sales processes across all channels – online and physical. 

In-Store Solutions 

Those consumers who return to brick-and-mortar stores – before the economic shutdown approximately 80% ototal sales were done in physical stores – are going to seek out locations with low- or no-contact solutions such as contactless or mobile checkout and payments, or programs such as buy online, pickup in-store (BOPIS). The research firm Shekel reports that more than 70% of shoppers are already using touchless self-checkout options or shopping at frictionless markets, while only 29% are shopping online. 

Awareness of these tech options is increasing, too. Half of consumers today are aware of touchless self-checkout options, where items are automatically scanned and recognized without needing to touch a pad or screen to enter their names. 

Changing Behaviors 

No matter how long the coronavirus lasts, business experts say retailers will have to adapt to a new retail environmentIf we weren’t germophobic enough before the virus, the pandemic and resulting social distancing and isolation will have a lasting impact. 

Buffets, salad bars and complimentary food samples so commonly offered before the virus are likely to become less popular. Shoppers will likely be hesitant to use touch screens or keypads on payment terminals in retail stores, restaurants and even libraries. Low-contact checkout and deliveries could become standard operating procedure. Instructional classes and workshops may be slow to regain popularity. Retailers will have to develop shopping experiences and operations that place their customers’ demand for cleanliness at the forefront. 

Social distancing or personal isolation has forced consumers to change their behaviors and learn new ones. With gyms among the nonessential businesses closed by many local governments, people are now exercising at home or outdoors. Others are now cooking their own meals instead of eating out or relying on delivery services. And with public gatherings at sporting arenas, theaters, concerts and other events closed, people are finding in-home avenues for entertainment. Those behaviors potentially could last well beyond this outbreak. 

Retail Reset 

Whether your business is thriving, holding its own, or struggling to survive, on the back side of this health and economic crisis will be a new retail environment. To thrive in it, experts say your business needs to: 

  • Be prepared for the next one. Your business should be operationally and technologically ready for a similar shutdown. Omnichannel sales processes – a strong online presence, mobile capabilities for sales and management, and programs like BOPIS and local delivery – can keep cash registers ringing even when the store’s physical doors are closed. This can keep you and your employees working. 
  • Offer fresh and optimistic customer shopping experiences. When this pandemic ends people will be ready to get back to normal, whatever that may entail. As never before, consumers will be focused on clean and healthy retail environments, products and services. Stores that feature ample aisle space, clean and bright sales floors and speedy checkout will help shoppers overcome the trepidation of social distance shopping. 
  •  Be ready for a delayed recovery. This health and economic disaster won’t end with the stroke of a politician’s pen. Jason Goldberg, chief commerce strategy officer at Publicis Communications, and chairman of the board of shop.org – the digital retail arm of the National Retail Federation – wrote in Forbes that the country will likely “emerge from the pandemic in a recession.” 
  • Communication now is key. Stay in touch with employees, even those who have been furloughed or laid off, because you’ll have positions to fill. Maintain relationships with vendors and contractors. In some cases, businesses might have had to develop new relationships with local vendors to keep products on their shelves during the crisis. And stay in touch with customers. This can be done through emails to loyalty program members or social media messaging.  

As the popular slogan says, “We’re all in this together.” With some adjustment, effort and planning, we can survive this challenge and thrive in the new retail environment. 

Brian Bullock

Author