It is the end of the shopping world as we know it. The COVID-19 crisis will consolidate e-commerce as the most important retail channel.
Peter Huskins
By ShopAbility director Peter Huskins.
This year started very differently than any other year in history, with bush fires, floods, the spread of the coronavirus, personal and business barriers and collapses in the global market. We had the lot and to say that 2020 was "challenging" so far is an understatement.
We deal with compound problems that we have never had to deal with. A one-time event, yes, but damped together and one after the other, no. This latest event will have a lasting impact on society: how and where we travel, how we buy houses, how securely and safely we get used to it and even which language we use.
Every day more and more people start working from home, which is sometimes distracting, stressful and inefficient, but it forces change and the development of new principles and practices as well as supportive technologies.
As a result, as a country and as an industry, we do not have the resources to provide the guidance and support needed immediately and efficiently at all levels of the community in these challenging times. No country or company has.
Prior to COVID-19, brick-and-mortar retailers generally had problems. Buyer frequency and spending rates decreased, the channel change accelerated and rents and other overheads such as electricity and water pounded them even more.
See how shoppers responded to buying toilet paper, canned vegetables, pasta, pharmacy products, face masks, and other products. Many of them were stored for an unknown future, which may be completely isolated. Possibly.
The supply chains have been broken, inventories have been wiped out and the forecasts are mixed. Profitability requires careful management because sales are either buoyant or non-existent and little happens in the middle. Weekly specials have been drawn, and half-price offers are a distant reminder as buyers ask for the full price for products they have been waiting for before the next promotion.
The escalating lockout will undoubtedly be the cause of death for many already weak FMCG companies as it speeds up the changing face of retail. In fact, thousands of small and medium-sized retailers are on the verge of collapse as cash flow, overhead commitments and business planning problems take their toll. Doors that are closed to support social distancing may never be opened again.
However, it is not just the stationary retail sector that is changing. The global pandemic is also changing the e-commerce sector. For starters, home shopping and click-and-collect purchases have skyrocketed. More people than ever are downloading and using shopping apps.
This move to e-commerce, like the closure of many small and medium-sized retailers, is just accelerating an existing and evolving trend, but one with far-reaching consequences – one that retailers now have to look at in the midst of panic mode.
Of course, even if we wait for the next news magazine at home, we're still shopping – the shift to online that has crept in now extends to all layers of society – and when this virus crisis is over, many of them converted to online, from the procurement of their groceries to the purchase of everything else, will not return to what they previously bought.
The security and convenience of e-commerce has now become a reality for many people. It will be their main shopping method. The face of e-commerce and mobile changes as our circumstances change.
People will return to brick-and-mortar retail, but not on the order of before COVID-19. The often-mentioned entertainment value of shopping will come to the fore as shopping centers and their retail tenants are forced to evolve their models to accept the accelerated behavior change caused by the virus. What would normally take five to ten years to develop as different solutions are tested and implemented in parallel with the demand of buyers and consumers will be concerted in a few months
Retailers generally need to take a close look at how they currently work and think of a more advanced model that fits their offer. Hours, workforce and requirements, supply, breadth and depth of business, size of business, location and environment, pricing, marketing and inclusion strategies, and omnichannel presence should be examined during this vesting period.
What retail will look like after this crisis is still unclear, but this is part of the never ending retail challenge. However, you can do this now as you work on how to deal with the current conditions and what to do next.
The “rules” for buyers and consumers will change and evolution will result in many species not surviving. Will you?
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Peter Huskins is a career retailer that is well known and recognized in the Australian FMCG industry. As a pioneer in shopper marketing, a passionate retailer, speaker and trainer, he has worked with suppliers and retailers for more than 20 years to develop business, category, customer and channel strategies as well as competitive differences. Call Peter at 0412 574793 or send an email to: peter@shop-ability.com.au
