Retail

Retail in the time of COVID-19

Retail in the time of COVID-19

Retail in the time of COVID-19

Kostya Polyakov | Author,

As the dust settles on a new normal—the shock of mandatory quarantines, curtailed consumer mobility and spending has now subsided—retail will likely continue to feel the impact more than most. While retailers to date have rightly been making short-term decisions to help them get through the immediacy of adaptation, it's time to shift focus to a long-term approach.

Why? Because the pandemic will eventually pass and, when it does, many of the things we used to take for granted will have been transformed. Retailers will similarly have to transform if they expect not just to survive but to thrive in the consumer environment that awaits. Unfortunately, the hard reality is that some businesses may not survive, but you can take steps now to help ensure yours isn't one of them. Some of these steps are the result of hard-won lessons learned from our global counterparts in their experience dealing with COVID-19, such as in China. Despite the differences in the situations between our two countries, Canadian retailers will benefit greatly from understanding how Chinese retailers have operated under restrictions.

One step at a time

The first priority: keeping people safe. To win the confidence of customers and staff alike, you will have to demonstrate a vigilant, safety-first culture. This will require you to identify the trigger points for re-opening stores (e.g., when the curve flattens, when restrictions are lifted, when footfall reaches a certain level) and consider options to change opening hours and staffing levels over time.

Supply chain resilience is also paramount. Your suppliers will have their own challenges to deal with, and you'll need to think carefully about ways you can prevent those challenges from becoming your own. This will mean treating suppliers fairly and considering options to help them stay in business rather than searching for, and switching to, new ones.

Meanwhile, use this time to review your operating models and accelerate changes that prepare for the new normal. You can probably already anticipate a number of future consumer habits that are sure to have an impact, including a decline in social gatherings in public leading to a likely increase in entertaining at, on top of working from, home. This will present an opportunity to market directly for such situations—whether it's household goods, clothing, office supplies and productivity-enhancing tools, or literal entertainment products.

Of course, the big question (and the one hardest to answer) is, "What will the new normal actually be?" Well, I don't claim absolute certainty about what will have changed in the world of retail once this pandemic has receded. However, I am beginning to form a genuine conviction—namely, that this is a once in a lifetime opportunity for retailers to completely transform their market share. My sense, then, of the kinds of changes that could arise—and even in some cases that, I think, should arise—follows from that.

What schemes may come

The long-term outlook for retail, in my view, is not necessarily bleak. But we mustn't kid ourselves: some adaptation and evolution will be required—especially in terms of our capacity to capture and analyze data. Traditional retailers will need to get up the learning curve on this very quickly if they are to compete online.

E-commerce was already ascendant before the pandemic began and has only grown since. Much of this growth is the logical result of physical distancing and mandated closures of non-essential businesses. But because some of it is also owed to Baby Boomers having joined the ranks of online shoppers, I don't think online sales will decline very much even after every store that wants to open does in fact open. E-tailors and online grocers in particular could very well reap a tremendous benefit from this almost entirely new customer segment.

The immediate result of sustained e-commerce growth could be a change in physical store footprints, and from there a change in the way consumers interact with physical products. I can imagine existing big box stores in particular drastically reducing their storefronts and converting the surplus space into showrooms. Consumers could still be welcome on location, but perhaps only by appointment. A sales person would be designated to assist and advise the customer on product selection and any applicable customization, after which an order can be placed and the items delivered directly to the customer's home.

That, of course, would all be in addition to the combination of updated regulations and lingering consumer concern driving stores and malls to reduce traffic and reconfigure their spaces to allow customers both to keep wider distances from one another and to feel comfortable interacting with products and engaging services. In certain cases, this will be a huge opportunity to leverage augmented- and virtual reality experiences.

For restaurants and other food and beverage operations especially, floorplans are sure to become more spacious—meaning an end to tight, intimate settings and communal seating alike. This, too, because health and safety regulations will have evolved to bolster consumer and employee confidence. Similarly, restaurants will need to intensify their sanitation processes, leading to "bring your own cutlery" (BYOC) or "bring your own glassware" (BYOG) policies becoming commonplace.

For independent restaurants, I think we're going to see the emergence of shared kitchens to meet the increased demand for food delivery. For example, a neighbourhood steakhouse might still operate a (re-configured) dining room in its usual location while also partnering with a few other restaurants nearby to generate additional, delivery-only capacity for all of them, complete with pick-up windows.

Gather no moss

Even as various businesses begin to re-open across the country (depending on the province they're in), many retailers are still in the reaction phase. But a fact remains: those who already had omni-channel strategies in place are in better shape today than those who didn't. By next year or possibly even the end of this year, all retailers should be firmly in the resilience phase, which will allow them to better understand how to serve their customers in what promises to be a dramatically altered environment.

Yes, the road ahead is still long, its destination still uncharted. But standing still is no way to get there.