It’s no secret that COVID-19 has had a disastrous effect on a brick-and-mortar retail industry that’s already struggling. The first few months of the pandemic saw vast swathes of people avoid the shops and stay at home, and retailers’ sales dropped as a result. In the US, the value of transactions dropped by over 19% in April 2020 compared to the previous year, and in the UK sales saw the largest annual fall on record.
For physical retailers, 2021 is going to potentially be even harder to bounce back from due to the shift to online shopping. The amount of purchases from new or low-frequency ecommerce users is expected to increase by 160%, shifting more and more people away from stores and towards online retailers.
Of course, the retail industry isn’t a monolith. While many industries are struggling, others have been succeeding throughout the pandemic. In the EU, for example, sales of non-food products dropped by 23.8% in April 2020 compared to April 2019. However, sales of food and tobacco rose by 1.2%. In most OECD countries, demand for ‘essential’ items rose, while falling for ‘non-essential’ purchases.
While some sectors of retail have been succeeding, others have been struggling for a while now. Even before the pandemic hit, monthly department store revenue in the US had declined by more than $4.5 billion since 2010. For many industries, COVID-19 simply hastened a decline that had been going on for years. Faced with this retail apocalypse, what can businesses do?
One advantage that ecommerce has over traditional retail is its convenience. That’s certainly the narrative that’s been stated over the last few years. But is finding a product online, ordering it and receiving it the next day really more convenient than heading to a shop and picking it up straight away?
A retail business can gain a considerable advantage over ecommerce by emphasizing convenience at every step. That means removing as many barriers to your customers making a purchase as possible.
For example, the pandemic has increased the number of people making quick, convenient contactless payments. More than half of Americans use contactless payments, along with over 80% of the UK. If your store doesn’t take them, you’re presenting your customers with an unwanted barrier.
Many retailers are embracing this philosophy of convenience. For example, 7-Eleven has introduced an expansion to its app that allows customers to order and pay for their items ahead of time, before heading to the store to pick them up. This limits the amount of time they actually have to spend in-store and boosts the convenience of the experience.
Learn more: Just Walk Out Shopping: Is Amazon Fresh the Way Forward for Retail?
Focus on physical retail’s advantages
While online shopping is useful, quick and often cheaper, it still has a number of disadvantages compared to traditional retail. Rather than trying to beat ecommerce at its own game, businesses can provide customers with aspects of retail they can’t get online.
According to Raydiant’s State of Consumer Behavior 2021 report, the main reason customers prefer shopping at physical stores is the ability to see and feel the products. Display items can therefore go a long way towards giving customers a positive experience, enabling them to experience your products outside their packaging.
Customer service is another key area to focus. The same Raydiant report found that 90% of customers are more likely to return to a store if they have a positive experience there, while 61% are likely to spend more. Providing the best possible service is therefore an important aspect of physical retail, particularly as it’s an area that ecommerce can’t hope to compete with at the moment.
Wait out the ‘apocalypse’
What if the downswing in retail isn’t going to affect you? Despite the COVID-19 pandemic, fewer US stores closed in 2020 than in 2019. Does that mean the retail apocalypse is made up? Not quite. Physical stores are still struggling, but it certainly indicates that conditions are improving as companies work out how to compete with ecommerce.
In fact, there’s a lot to suggest that conditions are becoming more positive for retailers. While ecommerce's share of the total retail market did rise due to the pandemic, it quickly peaked and settled down. It only increased its share of retail from 13% to 16%; hardly apocalyptic levels. The lesson here is simply to avoid planning for failure and focus on the strengths of your business.