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Future of Retail

Survey data from YouGov reveal around half of consumers feel uneasy about returning to physical stores again due to fears around forced proximity to other people. 

By: Adi Gaskell, Katerva’s Futurist 


The coronavirus pandemic has had a profound impact on many sectors of the economy, but few have been so transformed as retail.  Food retailers have seen a huge increase in demand, as people initially panicked as lockdown procedures were implemented across the world, and while demand has settled down since then, social distancing has become the norm, with most stores rationing the number of people who can shop at any one time.

By contrast, non-food retailers have had an extremely challenging time, with data from the UK’s Office for National Statistics highlighting that the sector has been one of the hardest hit, especially among retailers without an online presence to offset the forced closure of their high street footprint.

Deprived of an e-commerce operation, clothing retailer Primark reported an evaporation of sales, from approximately £650 million per month before the lockdown to nothing in the midst of it.  Even though fellow fashion retailer Next has an online presence, their sales had plummeted, with the company cancelling orders of garments in a response that will reverberate throughout the supply chain.

The changing shape of retail

In the immediate aftermath of covid restrictions, the prospects for the retail sector are far from clear.  Survey data from YouGov reveal around half of consumers feel uneasy about returning to physical stores again due to fears around forced proximity to other people.  The decline in sales, coupled with the shockwaves that has sent through the supply chain, renders a quick rebound uncertain.

The immediate aftermath is likely to have a number of contrasting factors at play.  Firstly, there is likely to be a degree of pent up demand to return to normal.  People may have reduced their spending during the lockdown, they may want to treat themselves after a period of denial, they may simply want to do things they enjoy and buy things they want rather than necessarily need.  The flipside to this is that many people will have undergone financial disruption, whether due to unemployment or a reduction in hours and/or income, which will render personal finances fragile.

The pandemic is also likely to result in a shift in behaviors and priorities among people.  The concern around being in close proximity to others mentioned earlier is likely to endure until effective vaccines are released.  The restrictions associated with the lockdown are also likely to result in a renewed focus on the family, while consumers are likely to remember those retailers who treated their staff and other stakeholders well during the pandemic when they return to the shops.

The shift to online

Online sales have been growing year on year for some time, and the pandemic has only accelerated that trend, with companies such as Amazon performing particularly well during the lockdown.  The convenience afforded by online shopping along with the personal safety from online retail has encouraged people to buy a growing range of products online, with online grocery sales showing particular growth.  This trend is likely to continue into the medium-term, especially while a health threat remains.

For bricks and mortar stores, this is likely to deepen the anxieties faced by the sector, and despite government support, it is almost certain to result in an escalation of bankruptcies and store closures, with the grim record achieved last year inevitably going to be surpassed in 2020.  Indeed, initial analyses suggest as many as 15,000 stores could close their doors during the year, which would be 50% higher than last year.

Retailers such as L Brands and J.C. Penney were already retrenching their operations and borrowing as much as they could to give them sufficient cash to survive the pandemic.  They provide a stark contrast to retailers such as Apple and Nike, who are in strong cash positions.  The longer the lockdown continues, the worse our recollection of just what shopping in these non-food stores will be like, thus opening the door even further for speciality online stores to take market share. 

Time for a rethink?

For the malls and shopping centers that have largely been shut during the lockdown, it’s time for a rapid continuation of the rethink many were already undergoing as part of their ongoing battle against online retailers.  This had helped to position physical stores as experience centers, that were as much a social space as they were a commercial space.  It’s unclear whether such spaces will remain in demand in the medium-term, but in the short-term it’s likely to require a period of adaptation for physical retailers.

It’s possible that shopping centers will need to reinvent themselves, and contain more shared, safe social spaces, with parks and public gathering spaces taking center space, and trees and walkways the heart of the facility rather than the periphery.  Outdoor arenas can help to give facilities character and meaning, while adding to the experiential nature that stores are trying to capitalize on.

The future of retail will have an indelible covid style footprint on it, and I will attempt to cover some of the key transition grounds over the coming weeks, including how supply chains will be affected, delivery services changing, and customer experiences provided.

If you loved this article–our ‘Future of’ series will explore new topics released weekly every Thursday–stay tuned!
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