5 Critical Lessons That COVID-19 Has Taught Retailers So Far

Samantha McDonald

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As government officials continue to loosen lockdown restrictions, many retailers reopening their doors to the public must now navigate a new shopping landscape.

The pandemic has given rise to hand-sanitizing stations, plexiglass barriers and social-distancing markers in stores, as well as hazard pay for employees and special hours for seniors or other vulnerable consumers. As they work to protect their workers and shoppers, companies have also been pressured to safeguard their operations, which are under increasing strain as the coronavirus impedes certain types of demand and disrupts business as usual.

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Four months after it took hold in the United States, here’s what the COVID-19 outbreak is teaching retailers.

No Contact Is Key

No-contact services for in-store payments, as well as online pickups and delivery (think signature requirements), have become the new normal as a growing number of Americans avoid human-to-human interactions to help prevent the spread of COVID-19.

Walmart, for instance, has invited customers to use a barcode scan through its app — instead of touching the screens at its self-checkout terminals — to pay for items at its locations. Meanwhile, chains like DSW, Kohl’s and Dick’s Sporting Goods are encouraging shoppers to go curbside, which eliminates the delivery fee and diminishes the amount of time consumers spend in stores. Other forms of payment, such as Apple Pay, are also expected to gain more momentum against the backdrop of the pandemic.

Be Robust With Digital

The coronavirus outbreak has accelerated digital gains — and experts say this growth is only going to continue in the near future. According to a recent report from The NPD Group, online shopping will maintain its strength into the foreseeable future, particularly for fashion purchases, as consumers are still uneasy about in-store shopping due to the health crisis. Shoppers will also have acquired new digital habits that they are unlikely to ditch even after the pandemic has dissipated.

Although experts have cautioned that profits from digital platforms won’t be able to make up for brick-and-mortar’s losses, a consistent and reliable online experience across devices and channels can offer retailers a cushion as a spike in new coronavirus cases lead many states to scale back on their reopening plans.

E-commerce, however, brings its own set of challenges: For one, online sales are known to result in a higher volume of returns. Additionally, a slew of companies had grappled with shipping slowdowns from March to May, forcing numerous retailers to notify shoppers that they should expect delays, which isn’t exactly a boon to business.

It’s Time to Get Serious About Supply Chain Diversification 

Although they have long been aware of the risks, many companies have continued to single-source the procurement process to reduce costs and produce more product in less time, among other reasons. These firms entered the health crisis at a disadvantage: Their reliance on one manufacturing hub — more often than not in China, where the outbreak originated in December — resulted in higher shipping costs, significant sales declines and an inability to shift resources as the crisis hit certain nations hard.

On the other hand, a number of companies that not only spread out their supply chain but also invested in mapping their networks for better visibility were already aware of their at-risk partners, facilities and raw materials. This allowed them to mitigate the pandemic’s chokehold on many supply chains. Such firms were able to, among other measures, produce a bill of materials, which aids in identifying the products that might be impacted by shutdowns at their suppliers’ locations.

Experiential Retail Isn’t Dead — It’s Just Different

Pre-coronavirus, experiential retail had been on the rise as companies looked to drive foot traffic and cut through the digital noise. However, features like trunk shows and in-store cafes, as well as high-tech activations and A-list-filled events, were put on pause as shoppers were forced to remain indoors.

But, that’s not to say experience is over: Retailers can bring the brick-and-mortar experience to customers by live-streaming such in-store activities, for example. They can also curate customer-generated content or encourage peer-to-peer recommendations on social media or introduce special features such as virtual one-on-one appointments through their mobile apps. What’s more, as the pandemic accelerates the shift to digitization, it has created an environment in which augmented reality and other innovations that support customer personalization and engagement can thrive.

Keep an Eye on China

As China emerged from a pandemic that was steadily gripping the United States, Nike implemented the so-called playbook it had developed from its learnings in the country to develop a strategy to safeguard its U.S. operations. The sportswear giant, unable to connect with shoppers in person, leveraged its digital platforms, offered free and exclusive material through its subscription app, continued to release new products and delivered powerful messages through its marketing campaigns.

Rival Lululemon also used the emergency in Asia to plan for a recovery in demand, bolstered by the athleisure boom led by quarantined consumers who seek to remain active and are trading their trousers for sweatpants. “We have early learnings from China, which show us that our business will bounce back,” CEO Calvin McDonald said in the company’s fourth-quarter earnings call in March. “We are not yet back to pre-closing volumes, but the business is getting stronger week by week.”

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