News, Retail

How Retailers can Prepare for the "New Normal"

News, Retail | April 28, 2020

“When do you think life will get back to normal?”

It’s the question we’ve asked ourselves, our friends, our families, and our coworkers. It’s what we’re all itching to know. The challenge, of course, is that nobody knows when that time will come or what our new normal will really look like.

Retailers in particular have had their businesses turned upside down by the COVID-19 pandemic and have had to adapt to the immediate situation while preparing for the future. Store closures, supply chain disruptions, employee layoffs and reduced consumer spending has created a perfect storm for many businesses. But as some states begin to cautiously consider how they will open up, retailers must start to prepare too.

What will become of in-store shopping?

McKinsey found that nearly 30% of consumers say that when the COVID-19 situation has subsided, they plan on going to the mall less than they used to. Additionally, research from Morning Consult shows that 24% of U.S. adults say that won’t feel comfortable shopping in a mall for more than six months. 

This data has many retailers bracing for the long-term economic impact of COVID-19. In a filing with the Securities and Exchange Commission, Gap Inc. warned that, “Consumer spending generally may also be negatively impacted by general macroeconomic conditions and consumer confidence, including the impacts of any recession, resulting from the COVID-19 pandemic. This may negatively impact sales at our stores and our e-commerce channel and through our franchise agreements.”

On the other hand, some retailers are feeling more optimistic. In a survey of 98 senior retail executives, 47% of apparel brand executives say they believe they will return to pre-COVID-19 store traffic levels in two to six months, and 40% think it could take anywhere from six to 24 months.

The store of the future

Regardless of whether in-store shopper traffic ever returns to what it was pre-COVID-19, it's undeniable that physical retail will look and feel different than before – especially in the near-term. Here are five ways that we see the store of the future changing.

1. Employee and customer safety will be re-prioritized.

Increased deep cleanings, mandatory distance between customers, and employee PPE will be necessary to keep employees and customers safe and healthy while in-store.

2. Customers will need a reason to shop in-store.

Many consumers have developed new buying habits and recognize the convenience of online shopping. Retailers will need to take a fresh look at their brick and mortar stores and determine what their role is in the buying cycle. Perhaps it’s promoting product launches or developing in-store exclusive merchandise. Regardless, it will be harder than ever to draw customers out to stores.

3. BOPIS will be a necessity, not a nice to have.

This is another consumer behavior that has taken off since COVID-19 and will continue to be used. Retailers need to train employees and review the layouts of their physical stores in-order to make BOPIS (buy online, pick-up in store) as seamless and convenient a process for consumers.

4. Reliance on wholesale will be reduced, DTC will reign supreme.

Department stores have been struggling for years, but COVID-19 has fast-tracked their demise. Brands with their direct-to-consumer retail strategy need to lean in on it in order to maintain control over its operations, marketing strategy and customer data.

5. Store associates will need to create an omnichannel experience.

Leading retailers will arm their store associates the with ability to see an in-store shopper’s online purchases in order to make informed decisions that provide value to the shopper.

How do you see retailers changing as we settle into our new normal?

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