Retailing in times of crisis

The times they are a-changing.

While the duration and scale of the pandemic remains unclear, it’s safe to say that 2020 will not be what anyone could have ever predicted.

Stock markets have plummeted, entire countries are on lockdown and millions of jobs have been lost. Things are already bad and will get worse before they get any better.

Retail is one of the industries that has been hit hardest by the coronavirus. Footfall has plummeted because of store and mall closures, while any offline event had to be cancelled. As this will likely drag on until Summer, we’re still out on the actual long-term impact.

In China – where this all started – retailers suffered for over 6 weeks. Despite some nations relaxing the lockdown, Western countries will not be so lucky as overall measures taken were significantly slower and much less thorough.

Covid-19’s impact on retail

While in many countries non-essential physical retail has mostly been shut down, not all retail is impacted the same.

Grocery stores have seen a huge spike in demand with many witnessing the panic buying of hand sanitizers, packaged foods and… toilet paper. A struggle groceries and supermarkets now face is to hire temporary staff on short notice, as well as to meet the need for increased warehouse space.

eCommerce sales and shopping app downloads have also been booming with whole nations stockpiling. Instacart app downloads were up more than 200% and the company recently announced a need to hire 300,000 full-service shoppers. Walmart's grocery app also hit record downloads, even surpassing Amazon for the No.1 position. The latter eCom giant's stock nevertheless just hit record high as it sees unprecedented demand and will be hiring an additional 175,000 warehouse workers.

Many marketing teams have been rather quick to adjust their messaging and encourage customers to head online for their most pressing shopping needs.

Will Covid-19 be the trigger that brings widespread adoption – and acceptance – of eCommerce & cashless payment to the world?

Overall consumer spending has however significantly decreased, with especially luxury items having been hit hard. Many retailers such as Macy’s, Gap and Kohl’s have already had to furlough thousands of store workers to cut expenses.

Before this is all over, expect many smaller and weaker players to have declared bankruptcy.

How retailers are responding

The Covid-19 challenge is global and unprecedented. Even should your store or mall be open – or possibly even reopen –, footfall is likely to be low and you should prepare for what will be coming your way.

Advice for stores that are open or will soon reopen

• Tell your customers you are open! Don’t assume they’ll know or find out.
• Limit the number of people that can simultaneously be in-store to ensure physical distancing. Walmart’s stores, for example, allow "no more than five customers for each 1,000 square feet at a given time," roughly 20 percent of a store’s capacity.
• Set special hours for senior citizens and other high-risk shoppers (e.g. 9-10am)
• Keep in-store staff to a minimum
• Cancel any in-person event; both internal and external
• Apply “no-touch” rules for all staff
• Install plexiglass windows at cash registers to separate cashiers from customers
• Set up a contactless payment solution
• Install hand sanitizer stations and frequently disinfect the store environment
• Do temperature checks of employees as well as customers entering the store
• Set quantity limits for products in high demand such as hand sanitizer and cleaning supplies. Danish supermarket Meny found a rather creative way to do so (see below)
• Consider reducing opening hours to not just allow for restocking of shelves and cleaning the store environment, but also for staff to be able to shop for groceries before shelves turn empty
• Convert your store to pick-up only as Kroger did

Ideas for stores that are or need to be closed

• Shift your focus and resources to eCommerce as boosting online sales can counter at least part of lost revenue. eCommerce platform Zalando, for example, is using its Connected Retail program to offer struggling retailers the opportunity to keep trading, while waiving all commission.
• Partner! The Dubai Mall – the world's 2nd-largest mall – opened a virtual store on Noon.com allowing customers to shop at 1,300+ retail stores
• Offer free shipping for online purchases or reduce shipping costs
• Prioritize contactless payment and avoid cash as much as possible
• Introduce contactless or curbside delivery
• Extend your return and exchange policy

Of course, not every retailer can make a shift to online commerce overnight. The good thing is that this is the perfect time to be creative. For example:

• Promote the purchase of digital gift cards
• Ask customers to pre-order products with a deposit or full-time payment
• Sell on Instagram or launch an online pop-up store on WeChat
• Convert your space into a live streaming studio. Store staff can act as live streamers giving in-store demonstrations or become fashion and beauty consultants
• Turn your physical space into a warehouse or logistics hub
• Turn your store into a mini supermarket
• Leverage social media and video platforms for virtual styling and personal shopping

Lastly, prioritize brand building. As Mark Ritson articulated so well, this is the time equity is build. Don't just spend your marketing budget on short-term promotions.

Of course, that doesn't mean you should stop selling your products… it’s what we desperately need to keep the economy running. I’m just saying, if you do decide to run sales promotions, be sensitive and make them relevant. There’s plenty of examples of retailers promoting work-from-home wardrobes, sharing ideas for decorating your home office space or even providing tips to help keep your overly active kids busy.

What will the ‘new normal’ look like?

Only time can tell what will happen when restrictions are lifted and when we stop being bombarded with coronavirus updates. Will we immediately flock back to the mall and cinema? ??

While not all new behaviors will stick, a return to shopping normalcy will likely not happen.

Let’s imagine what our post-COVID retail reality could look like:

• Strengthened store hygiene procedures with increased importance of cleanliness
• 'Experiential retail' favors touch-free, contactless experiences (e.g. voice, smell)
• Generational barriers towards digital commerce are broken down
• "Try before you buy" sees advanced digital alternatives
• Cash payment decline in favor of contactless options (and government mandates)
• Delivery and pickup options have kept some of the traction gained
• Supply chains are shorter, more transparent and less complex

There's of course a lot more to be said about all this – and we'll do so in upcoming posts.

But for now, do note that this will not be the last pandemic. It’s very likely we’ll have regular peaks of social distancing and work-from-home going forward.

Should this be the case, how well prepared will you be to handle prompt store closures and manage flexible work schedules? Will your business be ready to meet customers’ needs when circumstances suddenly change?

Drop your thoughts in the comments... ??

Rob van Alphen launched School of Disruption to help organizations build the capabilities, culture and capacity to future-proof their business for the 'new normal'. Previously Rob was a member of the executive team at Al Tayer Retail – the largest luxury retailer in the Middle East, operating 200+ stores with $4 billion in revenue. Get in touch to learn more about his offering, including Keynotes, Workshops and multi-week Innovation Sprints. ?? [email protected].