The top priority for sellers in the past few months as COVID-19 has spread worldwide has been the health and well being of their employees and customers. With this in mind, any retail business had the chance to start an online journey.
Many retailers in China have shut down their shops and limited employee travel to and from the region at the end of 2019. At the beginning of the year, the National Retail Association confirmed its forecast of this year’s retail sales growth of 3.5% to 4.1%.
However, at that point, the coronavirus was already making its way around the world, and in some cases even pushing down guidance. It has only spiraled out of control since. According to the World Health Organization, we currently sit on more than 3.2 million cases worldwide. While health officials are still working out how far and for how long it will propagate, a host of problems have appeared in the retail industry. The supply chain has been adversely affected, as factories shutter within China and other countries, with the total or partial loss of their incomes.
The lockdowns vary in severity, but in most countries the only retail taking place currently is online, leading to a dramatic increase in digital platforms and solutions aimed at successfully shifting the retail industry into the digital era.
The Changing Face of Retail Amid the COVID Crisis
With the current levels of infection, many people understandably hesitate to gather in crowded public spaces, hurting traffic to physical retailers, particularly malls. According to Loss Prevention Media, more than 15,000 stores in the United States could shutter permanently in 2020, far surpassing record 9,548 closures in 2019.
Coresight analysts also expect that far more retailers will file for bankruptcy this year, and even more companies could end up completely liquidating. The increasing closures and bankruptcies in 2020 can be directly linked to the coronavirus pandemic, but the damage isn’t limited to conventional retail outlets.
But still, Most of us are turning into digital nomads while under lockdown, and trying to build online websites for our businesses.
What Will The Future Bring?
1. Mobile payments and eCommerce will thrive
If you haven’t started to use digital payment systems yet, the technology might be forced upon you very soon. As we avoid germ-riddled credit card machine’s ick factors, we may find ourselves moving towards the future of digital payments. We will utilize digital payment solutions like Smartwatches or smartphones to pay at checkout, and skipping checkouts entirely by shopping online is likely to increase in popularity and market share.
Online retailers will have to make smart decisions when it comes to their online payment platforms and backup systems, which should come with AES encryption for protection. There has been an unparalleled rise in online shopping with shuttered brick-and-mortar shops, with transaction rates in most retail business sectors seeing a 74% increase over the same timeframe last year.
Yet analysts are willing to point out that, according to the US census, e-commerce accounted for just 11% of all retail sales in 2019 and that the e-commerce conversion rates are still lacking behind. There are some experts like…? that still believe that shoppers are ready to return to stores once the lockdown is lifted. The question is what they will find when they arrive.
2. The sale of all sales
Retail businesses of most industries are currently frozen until further notice. This has led to a massive spike in the popularity of e-commerce as retailers try to keep their income going. Once the traditional stores reopen, everybody will have the wrong product for the wrong season at the wrong location, and at the wrong time.
They will want to quickly get rid of their out of season items to get cash on hand and restock. We’ll most likely experience the sale of all sales. In the meantime, those stores that were able to remain open would still have to worry. Many have limited their spring promotions to make sure that they don’t attract crowds to the shops. Now they will have to revisit the equation once more:
Do they cut costs to compete? It took a long time for retailers after the Great Recession of 2008 to get back to a point where people wanted you to pay something similar to what the ticket price is. That is pretty much the same condition, but worse.
3. Department stores and malls will take the most hits
As large retailers serve as anchor tenants, this is bad news for shopping malls where they have stores. Just before the pandemic struck, vacancy rates at low-end malls were high. Going forward, more security will be in place to discourage group gatherings, and temperature checks on your way into the store could be the norm.
Fortunately, this event could intensify the lower-tier malls’ ultimate collapse, but it could also lead to spikes in Software-as-a-Service (SaaS) or digital service offerings, as the industry’s focus lies in making engaging websites and apps available to businesses that can be easily accessed. The move to SaaS in particular can help companies to cut operational costs by delivering easier access to data, increasing global collaboration, and offering external support teams.
A Welcome Boost For E-Commerce
It is true that digital sales will increase as customers stay away from traditional brick and mortar shops, and they have every reason to do so. Delivery services also saw their volumes rise significantly between January and March, most mainly due to coronavirus fears with more people working remotely and avoiding crowds.
Some delivery services adjusted their prediction models to better assess demand throughout this unusual crisis, and effectively managed to stabilize their inventory levels. The crisis may also stimulate investment in omnichannel technology. Trends in optimizing clicking and collecting and delivering will double their previous investments as a result of people avoiding crowds for the next ninety days. There will definitely be significant increases in remote tools, steps to decentralize the production chain, and AI, machine learning, forecasting technologies, and analytics.