The state of retail today could be described as perilous, at best.
We used to publish a blog article each year about the state of retail, immediately following the NRF Big Show conference; this year we’re going with a podcast instead. Mostly because we don’t have a blog on this site any more, we are only doing podcasts.
[LISTEN: The Effects of Mobile on the Shoppers Journey – PODCAST EPISODE]
If you’re not familiar with the National Retail Foundation, they are the industry organizing group for retailers around the US, and to a larger extent, the world. The state of retail at the moment is in peril, with everyone from Sears and Pier One closing down almost entirely to chains like ToysRUs attempting to halt bankruptcy proceedings long enough to reinvent themselves as another brand entirely.
What’s happening with retailers?
Most successful retailers are looking into the Amazon model for insight into what might work going forward; even Amazon has hit a few roadblocks in the past few months. When you add the current coronavirus scare into the mix, it’s likely that we will see brick and mortar stores taking another big hit this year.
Retail has always been a very difficult business model – more stores close than stay open over the long term, and small, mom ‘n’ pop type outfits are often just one rent payment away from shutting down and going out of business. Last year we saw more stores close than open, which could simply be a natural correction based on the over leveraging in the retail real estate market. It could also be the start of a longer term trend, especially in the US, where the political landscape is in turmoil, and people are starting to wonder what the future will bring economically.
We’ve added an update regarding the state of retail – in hindsight – for the month of March 2020.
Retail on the Brink: A March 2020 Snapshot
March 2020 marked a turning point for the retail industry. As the COVID-19 pandemic began its global spread, the once-stable landscape witnessed tremors of uncertainty. This synopsis explores the state of retail in that critical month, highlighting the initial shockwaves and the emerging trends.
Prior to March 2020, the industry presented a mixed picture. E-commerce continued its relentless rise, chipping away at brick-and-mortar sales. Yet, physical stores remained crucial for brand experience and certain product categories. While some sectors thrived, others faced challenges. Department stores, for instance, struggled to adapt to changing consumer preferences.
Then came the pandemic. Public anxieties and government restrictions led to a dramatic shift in consumer behavior. In March 2020, as the gravity of the situation became apparent, foot traffic in physical stores plummeted. Coresight Research reported a significant decline in US retail traffic, particularly following mid-month store closures. This sudden drop wasn’t uniform – sectors deemed non-essential, like apparel or entertainment, saw the steepest declines.
However, a counter-intuitive trend emerged.
Grocery stores, pharmacies, and big-box retailers like Walmart and Target experienced a surge in sales. Consumers stockpiled essential goods, driven by fears of shortages and lockdowns. This panic buying provided a temporary boost to these retailers, but also created logistical challenges in maintaining stock levels.
The pandemic exposed the vulnerabilities of a retail ecosystem heavily reliant on global supply chains. Disruptions in manufacturing and transportation due to lockdowns led to shortages of certain products, particularly those sourced from China, a major manufacturing hub. This highlighted the need for diversification and domestic production capabilities.
March 2020 also served as a catalyst for the acceleration of existing trends. With physical stores shuttered, online shopping boomed. E-commerce platforms reported a significant increase in traffic and sales. This sudden shift forced unprepared retailers to scramble and bolster their online presence to meet the surge in demand.
The month also witnessed the growing importance of omnichannel retail – a seamless integration of online and offline shopping experiences. Retailers with a strong omnichannel strategy, offering features like curbside pickup or buy-online-pickup-in-store (BOPIS), were better positioned to navigate the crisis.
While the immediate future seemed bleak in March 2020, the retail industry began adapting.
Retailers explored new technologies like contactless payments and virtual reality to enhance the shopping experience. There was a renewed focus on building strong online communities and fostering customer loyalty.
In conclusion, March 2020 was a pivotal month for the retail industry. The initial shock of the pandemic exposed vulnerabilities and accelerated existing trends. However, it also presented an opportunity for innovation and adaptation. As retailers embraced e-commerce, omnichannel strategies, and technological advancements, the industry embarked on a journey of transformation, the long-term effects of which are still unfolding today.