As fear pervades and consumer confidence plummets, retailers which already face a challenging climate are being hit with supply chain disruption, declining footfall and a noisy climate in which to communicate brand messages.
In countries with major Covid-19 outbreaks, retail has been one of the hardest-hit sectors. In Italy, sales plunged 25% and as much as 50% in China by some estimates, according to Business of Fashion. ‘[Coronavirus] will be like adding jet fuel to an already exploding segment of retail,’ says Doug Stephens, author of the book Reengineering Retail. ‘Amazon and a handful of others will be the beneficiaries of a windfall.’
In past times of uncertainty, consumers have been encouraged to go out and spend. The challenge that retailers now face is how to stimulate meaningful consumption at home. ‘Retailers small and large are recognising that, by switching to mostly digital channels, they are expediting new products and services that engage consumers from the comfort of their own homes,’ says Rachael Stott, futures analyst at The Future Laboratory.
Over the past two years, the retail sector has moved away from brands dictating how, when and where items are sold, purchased and shared, to consumers embracing direct-to-consumer models or creating their own peer-driven platforms. The impact of Covid-19, however, has seen shoppers flock back to trusted household names and brands they recognise as safe and supportive.
Bricks-and-mortar: With public spaces, bustling stores and queues quickly becoming no-go areas for shoppers, Nike, Apple, Patagonia, Primark, Urban Outfitters, Zara and Glossier are among the retail brands that have shut stores. As footfall fell, a rise in digital commerce was noted, as shoppers found solace in online retail.
Employment: Retailers closing stores have been redistributing staff or appointing temporary personnel to cater for shifting demand. In the US, Amazon is hiring 100,000 temporary workers and Walmart 150,000 to deal with surging spend online and in-store, while convenience store chain 7-Eleven plans to recruit 20,000 staff for its stores.
Rental and resale: Growing consumer awareness of germs, combined with the cancellation of events and the rise in working from home policies are set to hit resale and rental markets. As a result, companies such as Rent the Runway are allowing members to pause their memberships.
Phygital retail: Other retailers are looking at ways to support suppliers through phygital initiatives. In China, e-commerce giant JD.com teamed up with a local record label to host a virtual clubbing experience, working with alcohol brands including Rémy Martin and Budweiser to deliver drinks to self-isolating customers.
1. In future, retailers will be encouraged to embrace Eco-logistics as online ordering and delivery volumes swell, recognising the need to offset the negative carbon impact of e-commerce.
2. Internally, retail businesses must invest in working from home tools that allow design, procurement and buying teams to interact with ease across both digital mediums and continents.
3. Retailers using Marketplace Models will be most resilient, connecting people to local stores or nearby traders as shoppers look for convenience and community in their neighbourhoods.
4. Navigating losses within bricks-and-mortar stores, brands will work on new concepts that combine online spend with meaningful phygital experiences that consumers can enjoy at home.
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