It goes without saying that for the vast majority of people here in the U.S., and around the globe, COVID-19 has wreaked havoc on 2020 plans and disrupted just about every aspect of our lives. With winter quickly approaching, colder weather and shorter days will force many folks back indoors, elevating the risk for COVID-19 exposure. Given a rising number of COVID-19 cases already being seen worldwide, it seems likely that rollbacks -- or at a minimum, major adjustments -- of reopening plans that took place during the summer months are on the horizon. This will be necessary from a public health standpoint, but from a business perspective it’s likely to bring about another challenging phase in a Freddy Krueger-like nightmare that just won’t seem to end, particularly for storefront-dependent retailers.
While the pandemic has certainly had a major impact on brick-and-mortar retailers, the reality is that many were already struggling beforehand, and the impacts they faced following COVID-19 prevention measures (reduced foot traffic, supply chain issues) were unfortunately the final nails in their coffins. In August 2020, Business Insider reported that 7,500 retail stores had closed across the U.S this year. This comes after the 9,300 store closures in 2019. Additionally, Retail Dive reported in September 2020 that 27 retailers have filed for bankruptcy in the U.S. this year. In 2019 there were 17 recorded retail bankruptcies.
We spoke with Lauren Langlais, an engagement manager at QuickPivot, to get a pulse on how her retail clients are feeling about the holidays. She commented that, “The holiday season is always a stressful time for retailers, but it’s exacerbated this year as they contend with COVID-19. Despite this uncertainty, our retail clients have expressed confidence in their plans knowing that the QuickPivot CDP provides them with real-time campaign insights should they need to make any on-the-fly adjustments.”
There’s no question that COVID-19 exacerbated the situation for brick-and-mortar retailers, but the “Retail Apocalypse” (as these mass closures and bankruptcies have become known) has actually been claiming victims for the last decade. So if a deadly global virus isn’t the culprit, what’s responsible? The real killer of the brick-and-mortar retailers that have recently shuttered is actually something far less sinister: the rise e-commerce and the changes it’s caused in consumer behaviors and expectations.
Embracing e-commerce is necessary, but finding balance is critical
E-commerce has become so popular among today’s consumers because it's convenience. Today’s consumers can research products and brands, read reviews, compare prices, and buy just about anything their hearts desire without having to leave their home (or their couch for that matter thanks to smartphones and other devices).
This type of customer journey is no longer the exception but rather the rule, and retailers that recognized and embraced it as a priority have done well weathering the ‘Retail Apocalypse’ and now COVID-19. It should come as no surprise therefore that retailers that were late to recognize this shift in consumer behavior and continued to lean heavily on brick-and-mortar business, for example Forever 21, found themselves unable to escape the kiss of death.
However, retailers shouldn't swing the pendulum so drastically that the focus on e-commerce compromises other buying channels (in-store, in-store pickup, wholesale). Our research into consumer shopping habits from early 2020 (pre-COVID-19) found that a majority of consumers still preferred in-store purchases over those made via e-commerce means. What this means is that elevating one buying channel over others could lead you to alienate segments of your customer base and potentially hurt business in the long run.
Therefore, rather ironically, having success in the e-commerce space may very well be directly tied to the success retailers have with their brick-and-mortar operations (and vice versa). Take for example the now incredibly popular concept of BOPIS (buy online, pickup in store). BOPIS combines the best parts about e-commerce (convenience, simplicity, contactless) and brick-and-mortar (guaranteed item availability, no shipping times or costs, easy returns) into one package. So even though a BOPIS transaction begins as an online order, the brick-and-mortar part of the business still plays a key role. This is a perfect display of how e-commerce can complement physical stores and actually add further value and purpose to brick-and-mortar operations. And given possible shipping delays consumers may face this holiday season due to increased online ordering or COVID-related supply chain disruptions, BOPIS may be one of the most popular shopping methods this year.
Ultimately, it’s all about finding a balance between your various channels and allocating resources into business areas (customer service, marketing, operations, etc.) based on the wants and needs of your customers. This is why collecting and analyzing customer data in real-time to unlock actionable customer insights such as purchasing habits, message engagement, and more is so critical for success in today’s competitive retail landscape. Without such real-time customer insights, you’re basing important business decisions on outdated information or gut-feelings, and in a data-driven world that simply won’t cut it.
Blaming e-commerce for the ‘Retail Apocalypse’ is only part of the story
No amount of forecasting or customer analytics could have predicted what would happen to retailers in early 2020 following COVID-19 lockdowns, but the same cannot be said for all that have fallen victim to the Retail Apocalypse. For many of those shuttered retailers, it’s been reported that they were far too slow to recognize changing consumer preferences, and by the time they tried to course-correct, their fates were sealed. But had they been able to identify problem areas sooner and shift their strategies to align with what their customers wanted, how many fewer headstones would there be in the retail graveyard?
So while it’s easy to fully blame the rise of e-commerce for the ongoing fall of brick-and-mortar retailers, it seems much more plausible that their inability to react to changing consumer habits and expectations is the killer’s true identity. Further, if e-commerce is in fact the brick-and-mortar mass murderer, how is it that many retailers that began as brick-and-mortar operations -- including several users of the QuickPivot Customer Data Platform -- have managed to escape its cold grasp and find continued success with their storefronts? The answer is by staying on top of changing consumer habits and adapting their strategies and processes in real-time to accommodate these changes.
“Our retail clients have managed to successfully pivot during a year where many other retailers have struggled,” said Amanda Kaplan, another engagement manager at QuickPivot. “Through customer analysis done in QuickPivot, they’ve been able to identify products and strategies that have helped their business initiatives thrive.”
There's no denying that e-commerce has forever changed the retail landscape, and if you're a traditionally brick-and-mortar retailer the time has come to decide if embarking on an e-commerce journey will be a trick or a treat for your business.