Has Retail Shopping Decreased Permanently Amid the Pandemic?

The retail landscape has been in a state of constant flux for several years now. Department stores have been struggling openly, with several names that were once mall staples declaring bankruptcy or falling to hedge funds one after the other.

In 2017, when the country was still in the middle of an economic recovery, hundreds of malls and shops were closing their doors. This even led to many referring to the period as the “Great Retail Apocalypse.”

Fast forward to this year, and the upheaval caused by the COVID-19 pandemic will seemingly continue to alter both the retail landscape and the brands that rely on retailers to sell them.

The ranks of distressed retailers were struggling to stay above water going into 2020. At the beginning of the year, American consumers seemed willing to spend and were quite optimistic despite last year's trade wars. It didn’t translate into good numbers for many, however, when retail shopping decreased sharply in the fourth quarter — the be-all and end-all for making yearly numbers in a business dependent on the high volumes during the holidays. And then the pandemic hit, shuttering stores and malls, most of which will need to heavily restructure the business in order to continue scaling upward in the future. This applies even more so to the supply chains being managed by those companies, many of them turning to 3PLs such as Redwood Logistics for help.

So has retail shopping permanently decreased amid the pandemic? Not necessarily. It has, however, spurred an acceleration of the evolution of retail as we know it. 

How Retail Shopping is Evolving

The social distancing requirements as a result of COVID-19 have forced grocery retailers, in particular, to make quick adjustments and stay on their toes.

Grocery was essentially one of the last categories to make the switch to e-commerce that was causing havoc in malls and traditional retail, and as a result many brands have stumbled while trying to meet the massive increase in demand for direct-to-consumer grocery. The stumbling, however, will likely be temporary, as grocery chains find ways to better implement e-commerce orders, streamline picking for orders, and facilitate order pickup. 

Traditional retail is improving on their BOPIS (Buy Online Pick Up In-Store) model, which will make the transition from stores being closed completely to the limited contact options required, as states slowly begin their re-opening processes, smoother. The transition for some stores may become permanent, and we may see more “pick-up only” stores in the future. There is also likely to be an increase in the checkout-free retail model, as demonstrated by Sam’s Club Now and Amazon Go- where contactless payment methods, scanning, and automation make interacting with someone in a retail space almost completely extraneous. 

Looking to the Future

As retail shopping decreased on nearly every front, the chaos of the pandemic has forced many major retailers to reevaluate their e-commerce strategies, their physical store and warehouse footprints, their supply chains, and what adjustments need to be made to drive more consumers into their stores. With the impacts of COVID-19 likely to last for quite some time, the dramatic shifts in the plan have to now take into account a continued unwillingness for many to go to large, potentially crowded public spaces. Foot traffic will not be a point to rely on, but agile retailers with a responsive strategy and a focus on their e-commerce and BOPIS channels of business have a better chance of surviving.

The consumer will always have wants and needs, and retailers will remain channels through which they can acquire goods. The key will be in how easily they can be procured, how quickly they can be delivered or picked up, and eventually- how desirable an in-person interaction may need to be to drive consumers into the retail store itself. Retailers and brands that have an experience-based model may thrive in a future where most retail is e-commerce based and contactless. 

Shopping as we know it has changed, and smart retailers will take the steps to change with it. The first step that any supply chain manager can do during this time is to reach out to a professional 3PL like the team here at Redwood.