With today’s technology, the economy is already seeing a shift in the shopping behavior of consumers including their preferences and buying habits. However, with the emergence of the COVID-19 pandemic, the situation has forced people to quickly adapt to the new normal. With the malls, shops, and local retailers closed due to lockdowns, businesses are scrambling to find ways to earn revenue to avoid closing down for good.
In the coming months, the global economy will continue to experience the downfall of many businesses. Several major retailers already filed for bankruptcy protection while other retail companies are closing down dozens of their stores. Even as retailers start to reopen their businesses, they will continue to face new challenges, especially with new guidelines set in place including social distancing. How COVID-19 Has Affected Businesses Reports show that in March and April retail sales in the US experienced a downfall. Numbers went down in March and even took a dip further in April when the pandemic continued to worsen. Businesses who are relying on their physical stores were forced to close down due to stay at home orders. Meanwhile, some stores are slowly opening their doors to customers but are faced with very low foot traffic. Due to the quarantine, people have less need for clothing and other related products which in return has become a major blow to the fashion industry. Many businesses were also forced to scale down their operating expenses and had to lay off their staff. Hence, millions of people are now without a job due to the effect of COVID-19. Data shows that over 33.5 million Americans have lost their job since mid-March. Faced with uncertainty, people are tightening their pockets spending less. The majority of those who are quarantined at home, on the other hand, prefer not to splurge their money on trivial things. Instead, they are directing their budget towards essential items such as food and medicine.
Effects on the Retail Industry Reports show that an estimate of 15,000 retail stores will be closed within 2020. Even major retailers such as Adidas, Apple, and H&M among many others are closing many of their stores. Meanwhile, some businesses have already reduced their workforce as well as working hours. Employees of stores that have reopened are faced with challenges of their own as they are more exposed to the virus. As a response, some companies are starting to modify their compensation packages and benefits. Why Small Businesses are Hit the Hardest Small businesses are having a hard time due to the spread of COVID-19, especially those who are relying on physical stores instead of an online presence. This situation creates a huge setback for small local businesses as they are hit the hardest. They depend on their community for income. Since people aren’t allowed to go out, many small local retailers are also forced to close their doors. Hence, businesses will have to come up with innovative ways to revive their operations. The Growth of E-Commerce Before the pandemic, the economy is already seeing a boost in the e-commerce industry. However, it has been magnified as a result of lockdowns in major cities and countries all over the world. Thus, the spotlight is thrusted on the digital landscape which means that if businesses want to survive this pandemic, they must be able to shift their operations online.
The dramatic surge of online shopping clearly shows a change in the behavior of consumers. Many businesses have been putting most of their efforts to create a user-friendly online experience for their customers. At the same time, they are pouring their budget into social media marketing, content marketing, email marketing as well as other digital strategies. According to reports, the advertising spend on e-commerce has already doubled since news of the pandemic started to spread. How COVID-19 is Changing Consumer Behavior The spread of COVID-19 has not only affected our physical and mental health but our buying behavior as well. It has forced consumers to alter the way they normally do things. With new rules set in place, people are minimizing their social interactions. As a result, many are scared to even step out of their house to buy their daily necessities including food and groceries. Hence, many are resorting to online shopping to get their needs. According to a study, there is a huge shift in consumer behavior which indicates a shift in their buying habits in retail stores. Some are limiting their spending to necessities while others are on a shopping binge. More people are becoming more engaging online and e-commerce sites are receiving more online reviews. Consumers are now more responsive to brand messages. Challenges Faced by Retailers Businesses must be able to quickly adapt to the changing landscape and tailor their products and services to cater to the needs of the consumers. Retailers are most vulnerable and thus would need to create an effective strategy to survive this pandemic. Lack of inventory. Online retail businesses are also faced with different issues such as shortage of inventory, production delays, and shipping delays. With strict quarantine rules, there may be logistic problems in certain areas. Some e-commerce sites are having a difficult time serving the needs of their customers in a timely manner due to a surge in orders. Disruption in the supply chain.
Since airports are shutdown due to the pandemic, shipping has now become a challenge for businesses. Many shipments are coming from Asia and Europe. Most logistics companies are also having a hard time balancing their movements.
Another concern is the safety of the workers in the shipping industry. This involves their hygiene as well as the strict implementation of wearing PPEs. However, in some areas with strict lockdowns, some warehouses are forced to shut down their operations. Therefore, the customers they serve are also affected by this.
The major challenge for retailers is how to bring back their customers into the stores once they reopen while adhering to the health and safety guidelines. Customers should feel safe when they are inside the stores. Some shoppers still prefer buying on-site compared to online shopping.
Before the pandemic began, 80% of sales from retail stores are attributed to on-site shopping. Post-pandemic, physical stores will continue to remain crucial for retailers even if they have a strong digital presence.
Physical stores allow customers to experience first-hand shopping experience and person-to-person interaction which cannot be provided by online shopping. While setting up an e-commerce website is the future of retail businesses, you should not ignore the importance of having a physical location. Many brands are operating physical stores while having a strong digital presence which brings in revenue both online and offline.
The Future of Retail
The impact of COVID-19 will most likely continue to take effect in the coming months and years. This pandemic will transform the way retail businesses operate and will have a long-term effect on the global economy.
Many consumers particularly the older generation are more conservative when it comes to interacting with other people. They are not willing to take the risk in exposing themselves to public places where they may potentially pick up the virus. Many have expressed that they will refrain from stepping into public places until a vaccine becomes available.
Meanwhile, people who are originally not into online shopping are now quickly adapting to the perks of buying online. Most purchases are now being done online.
Consumers are now starting to be more frugal when it comes to purchases. They are prioritizing the things they need over what they want. Therefore, retailers can expect to see more of conscious buying into the next few months. How Businesses are Surviving Many are asking if there are going to be any long-term effects of COVID-19 once the crisis is over. Before the global health crisis took place, economists are already talking about the impact of technology on the economy and the workplace. Now that we are facing a global crisis, most companies have shifted to remote working in order to protect their employees from the virus. Thus, causing a major shift in the workplace. Meanwhile, this health crisis has also affected the way people are conducting their business including the habits of consumers. While businesses and workers are struggling to adjust to the current situation, now is the time to rethink your strategy. Use this situation to transform your system into more innovative ways. Crisis management.
Go into crisis mode and come up with ways on how to address the direct challenges you are currently facing. Work with your team and brainstorm on the possible solutions each problem presents. Expand your sales channels digitally in case you haven’t explored it yet.
Due to the lockdowns, overseas production and shipments also took a major hit. This highlights the importance of diversifying resources and supply chains. Some businesses may consider moving their manufacturing locally.
Businesses should think about innovating their products, systems, and processes. We may also see an increase in the support of locally made quality products as local brands start to become more appealing to consumers. In most cases, many brands are coming up with new pandemic-related products such as face masks even though they may not be entirely part of their main product line.
Click and collect Prior to the pandemic, the sales from online grocery shopping are minimal and serve as a supplement to their physical stores. Now, most consumers are placing their orders online. Thus, resulting in a dramatic increase in e-commerce sites and home delivery services. However, this trend will continue to remain even after the quarantine has been lifted. Businesses are shifting to online ordering with options for home delivery or store pickup referred to as click and collect. This setup is convenient for many customers as it minimizes their risk of catching the disease due to less social interaction. The process of online ordering makes it simple and easy while eliminating the waiting time in checkout counters. However, if you are availing of home delivery services, you may have to expect some delays in the delivery. Pickup orders, on the other hand, may be faster as it does not require meticulous packaging and waiting time. Change your approach. The current situation presents plenty of challenges for retailers as to how they conduct their businesses. Even customers are aware of how brands are having a hard time keeping their business afloat.
Try new and different initiatives to help support your company. For example, musicians are doing live concerts and are asking for donations to support their causes. Retailers can think of innovative ways to follow that business model.
More companies are now going digital and coming up with a variety of online marketing campaigns to reach their customers and tap new markets as well. Now is the best time to be creative and try new ideas, especially with the rise of various digital platforms marketers can tap into. Final Thoughts Businesses all over the globe are coming up with unique ways on how to respond to challenges presented by the COVID-19 pandemic. Consumers, on the other hand, are also changing their buying habits and are becoming more mindful of their purchases. Hence, retailers should learn to quickly adapt to the changing times in order to survive the uncertainty the future brings. E-commerce presents a huge opportunity for businesses to cope up with the current situation. Therefore, a strong digital presence is crucial if they want to be able to reach and serve their customers. Retailers must go back to the drawing board and come up with ways on how to shift their operations offline to online and attract new markets. At the same time, they need to be able to devise a strong digital marketing strategy to ensure all bases are covered. Businesses should know how to transform the threats into opportunities to be able to keep up with the changing economic landscape.