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5 Jun 2020

How COVID-19 Changed the Landscape of the Retail Industry

As the COVID-19 pandemic continues to escalate, some countries have managed to slowly enter the recovery phase. One question that remains intact for most businesses is that is it possible for them to operate as usual. 

Can Businesses Operate as Usual?

Some of us may be entering the recovery phase and businesses are slowly being allowed to operate again, but one thing we will have to accept is that it will not be business as usual, at least not in the near future. In every offline retail store now we can see safety precautions being enforced such as: 

  • Physical distancing signage
  • Guards stationed at every one-way entrance and exits 
  • Hand sanitizers are provided in the mall and outlets at entrances and exits
  • A limited number of people were allowed to go into a store. 
  • Information collected for contact tracing (manual / digital)

It has changed the way we navigate our businesses. Businesses will have to re-look into:

  • The space density of their stores including the store design, fitting rooms mechanisms, dining areas, and counter queues. 

Although economies are slowly reopening, businesses will have to continue with these practices for as long as needed and this will create a new business environment entirely.

 

The Changes in Customers Behavior May Be Here to Stay

In general, as an aftermath of the pandemic outbreak, the changes in our behavior and business practices may change permanently, these changes will inevitably cause inconveniences for customers. 

Customers will have to bear with long queues, wear masks, and limit their purchasing time inside a store. Due to that, some might opt to shop or order online as it is easier and offer more convenience. 

Some of those that are still in quarantines may have changed their priorities and don’t see the need for shopping anymore while some may continue to be anxious and concerned about their safety and may avoid going to physical stores to shop altogether. 

In Malaysia, the Movement Control Order (MCO) is reshaping the business landscape as some reported a drop in sales of up to 90 percent.  

The retail market in Singapore on the other hand has suffered the biggest drop in 22 years as sales plunge by 13.3 percent year on year and experts are saying the worst has yet to come as the Circuit Breaker measure has also started recently.

Only 4 out of 14 retail categories experienced increased based on the report with wearing apparel and footwear category declining the most.  

According to GlobalWebIndex’s ninth release of its coronavirus research, it reported that nearly half of global consumers are not expecting to return shopping in brick-and-mortar shops for ‘some time’ or ‘a long time’ once lockdowns ease.

As a way to accommodate these changing demands and survive, we are seeing more retail businesses turn to e-commerce to generate sales and ride on the thriving online environment. On the other hand, retail businesses with an existing e-commerce site are experiencing a surge in customer visits and purchases.

On the other hand, a report by eMarketer, also showed that not only has e-commerce sales surged ever since stay-at-home restrictions took effect, but April’s average daily sales are also 39% higher as compared to March’s averages. 

The pandemic outbreak has undoubtedly accelerated the adoption of e-commerce. The boom of e-commerce signals the start of a new era for retail businesses. Now, selling online is no longer an option but a necessity and all retail businesses, whether small or big are adapting to this new trend by turning to e-commerce.

 

Technology Helps Enhance the Experience of Both Merchants and Consumers

Customers are strictly sticking to contactless shopping. Even credit and debit cards may increase the risk of virus spread as it can latch onto plastics and steel surfaces for up to two to three days. 

According to the Research Market, the global contactless payment market size is expected to grow from USD 10.3 billion in 2020 to USD 18 billion by 2025.

On another note, the switch to contactless is further propelled by organizations such as WHO (World Health Organization) which urged businesses on going contactless as the Covid-19 virus has the same ability to latch on cash as it has on other surfaces. 

FavePay mobile payments

With that said, more retailers are now exploring ways to go contactless and while contactless payments are not something new, many traditional retailers were not ready to brace the idea of going contactless before the pandemic.

Now, these traditional retailers are more than willing to shift towards contactless and are slowly beginning to understand its benefits, this includes reduced time spent on transaction tracking, increased revenue, improved efficiency, and reduced risk of stolen cash. Mobile payments at retail stores have also helped customers speed payment processes and reduce queueing time at the counter.

 

Innovated Technology and Services to Bring Offline Experiences Online

In order to stay relevant in the current business climate, many businesses are innovating their services to deliver the offline experience online. As a result of that, we are seeing a drastic change and bloom in technology such as the use of augmented reality tools that allow shoppers to have the same experience as offline stores. 

For instance, online shopping can never offer the same experience as offline shopping in a sense that customers are not able to physically touch, inspect and try the product before making their purchases but it does offer customers the convenience of purchasing from the comfort of their home. 

To make up for that shortcoming, e-commerce platforms are innovating with technology to provide customers with an experience that is as close to retail experience as possible without having customers go to physical stores. 

Shopee Beauty Cam

Image source: Shopee

For example, Shopee has a feature that enables customers to try on different lipstick colors before purchasing.

ASOS augmented reality

Image source: Evening Standard UK

Asos is also joining the augmented reality (AR) trend by providing a simulated view of its products during the Covid-19 crisis. The feature will provide customers with a realistic view of up to 500 clothing items per week on six real-life models. 

It doesn’t stop there as businesses continue to innovate to survive the pandemic crisis. According to phase three results of Econsultancy and Marketing Week’s Covid-19 Business Impact Survey, 60 percent of large global organizations have identified new processes that could be used beyond the outbreak. 

The birth of new innovations is not only encouraging businesses to make their move online but also helps create a more favorable environment for businesses to grow as it helps them compensate for the loss of offline operations.

 

Seeing Crisis as an Opportunity

Although the current climate has enforced drastic changes to retail businesses, one way to process these changes is by seeing it as opportunities for us to grow, learn, and advance the way we carry out and navigate our businesses. 

To top it off, in this pandemic, we have also been seeing many businesses come together to help each other overcome these hard times, a truly heartwarming act that inspired us to continue to push forward and work hard. 

If you’re a business owner or managing a brick and mortar business, we want to hear from you! Tell us about the inspiring story behind your business experience on what are the challenges you’re facing and how did you overcome it You might just be in our next merchant story to be featured across our various channels such as blog posts, email, and social media. Submit your story here.

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