This post was originally published on Forbes.com.
Lockdowns and shelter-in-place orders are still in effect all around the world but many retailers are starting to prepare for what happens after they can start to reopen. “Uncertainty” seemed to be the defining word for individuals, businesses and governments going into this crisis and it will remain that way while everyone adjusts to the new post-pandemic reality.
Undoubtedly, many retailers hope to quickly bounce back to their pre-COVID-19 business as usual. Some are even expecting a boost because of pent-up demand from many customers being stuck in their homes for weeks while stores were closed. For example, earlier in April, Hermès brought in $2.7 million on the first day that its flagship store reopened in Guangzhou.
But it is probably too optimistic to expect that things will go back to normal anytime soon. As a counterexample, last week Germany allowed stores of up to 800m2 to open again, including car dealers and bookstores, on the condition that they enforce social distancing and hygiene rules. However, according to the national retailers association, Germans chose to stay home and save their money instead of rushing to the reopened stores.
So with this uncertainty in mind, let’s take a look at what retailers should be prepared for.
Many governments are expected to impose strict regulations on retail stores when allowing them to reopen to limit the spread of COVID-19. Stores will have to comply with these regulations to reopen and might even come up with additional voluntary initiatives.
As an example, IKEA in Germany is asking shoppers to keep a 1.5 m distance between each other. Luxury retail stores in China have been reported to only be letting a limited number of shoppers in at the same time. In Denmark, many stores voluntarily put coloured stickers on the floors to remind queuing customers to maintain distance. Restrictions and caps on the amount of customers in stores, whether imposed by regulation or voluntary, could have a significant impact on the turnover of retailers. This in turn might make it harder to justify the cost of rent to stay open and could eventually lead to downsizing or closing of locations.
One proposed solution to maintain social distancing between customers and employees is for stores to use booking systems and offer appointments. A customer can book an appointment online or over the phone, show up at the store at the agreed upon time and spend their allotted 15-20 minutes browsing while avoiding crowds. But this will most likely only be an option for luxury and premium brands that have well staffed stores and make up for the low amount of customers with bigger individual sales and higher markups. Mass market and fast fashion brands will not be able to scale this solution to their customer base or justify the costs if it is to be implemented.
I imagine we might see a rise in technologies that measure how many people are in stores and how long they stay there, both to comply with regulations and to offer stores better metrics for strategic purposes. While such technology could be useful, it is important that we remain vigilant and critical of how it is developed and implemented, seeing as the societies we live in are already under increased levels of surveillance by governmental and private actors that infringe on our rights as citizens and consumers.
We have seen many hygienic measures become the new normal – like wearing a mask, relentless hand washing, avoiding handshakes etc. These are useful habits to develop and maintain when fighting a pandemic and hopefully something most people are doing. But what does that mean for retail stores?
According to Nikki Baird, VP of Retail Innovation at Aptos, the way non-essential retail stores have reopened in China could provide a template for other countries. She expects measures like wearing masks, a cap on customers in stores, daily or hourly deep cleanings to be adopted. She also cites Chinese consumer behaviour to predict that demand for contactless commerce will continue to grow, with initiatives like online orders before store visits, home delivery or curbside pickup becoming more popular even as stores reopen.
There are already signs of changing consumer habits in new research. A whopping 87% of U.S. shoppers prefer to shop in stores with "touchless or robust self-checkout options", according to a survey sponsored by store automation company Shekel. In the same survey, more than two-thirds of respondents say they are using some form of self-checkout frequently. The move towards self-checkout and cashless payments has been underway for years, but I think it is safe to say that this pandemic has only accelerated the development.
Omnichannel has been a growing trend for some time. Now, in the midst of a pandemic, that trend is here to stay. Ecommerce traffic is growing as shoppers want to avoid crowds and might prefer to order online before coming to the store to try things out and pick them up. This could be a big boost for local corner stores, those that offer curbside pickups, and those that have focused on and invested in convenience shopping.
In my recent piece, How Fashion And Beauty Retailers Can Overcome The Lack Of Touch And Feel In The Time Of Social Distancing, I discussed the challenges facing fashion and beauty retailers when customers are unable to touch and feel the products they are buying or are hesitant to try on clothes others have tried. We might see more stores investing in virtual fitting solutions, for example digital mirrors that let customers see what items will look like on them without trying them on physically. There are also virtual reality solutions for beauty products to see how different shades will look like on a customer. Unfortunately it seems like these technologies are still in their infancy and are far from being accurate, scalable or even affordable for many retailers.
Product packaging has long been an important aspect of the retail experience, because of the marketing, usability, and environmental dimensions and it seems like another facet is about to get a lot more attention than before: hygiene. It’s not hard to imagine consumers preferring (and regulations demanding) packaging that is more resistant to germs and contamination while being easier to disinfect. Customers and employees alike of course want to avoid the risk of infection and it will be interesting to see how developers of packaging respond to this.
This could be problematic from an environmental and ecological perspective. The cheapest option might be to use plastic and a lot of it. Products that were not wrapped before might have to become wrapped, maybe even in multiple layers to signal their safety. This will unfortunately push the world in the wrong direction and be actively harmful to goals like lowering global carbon emissions, lowering our dependency on unsustainable plastics, and lowering the terrifying amounts of plastic waste in our countries and oceans.
The big question is whether the reusable and sustainable packaging that was becoming more popular will survive this pandemic. Hopefully retailers and their suppliers will invest in developing sustainable packaging solutions that are more ecologically and environmentally friendly, while still being easy to clean and disinfect.
From the perspective of retail staff, working conditions might also change significantly, if not permanently then at least for the foreseeable future. We’ve already seen how some retailers, instead of firing or furloughing employees, have decided to repurpose them - for example to do virtual assistance sessions with customers or ask them to perform e-commerce related tasks.
I think this is something we are going to be seeing more of. As fewer retail workers are needed, many are likely to start performing other functions like helping with personal styling, shopping assistance or e-commerce related activities. For example, the Chinese department-store chain Intime had its employees sell products on the live streaming service Taboao Live. According to Fung Business Intelligence, this brought in $14,000 of revenue in one hour, all while its 27 retail stores remained closed due to the pandemic.
It is not just changes to how employees work but also when. With limits on the amount of customers in the store and more time needed for cleaning, changes in working hours are to be expected. Similarly, better planning of staff shifts could help with limiting the risk of exposure and contact tracing in case of exposure. “In China, retailers started instituting controlled shifts so that they aren't mixing different workers on different shifts. That way, if one shift was exposed, it doesn't potentially require shutting down the entire store.”, Nikki Baird explains.
The retail experience has been turned upside down for customers and employees alike, and stores should do everything they can to prepare for this new reality. The changes in consumer expectations and safety mandated restrictions and regulations are bound to stay for the near future and it will probably be a long time before a return to “normal”. I haven’t even touched on the long term consequences of a developing financial crisis, as millions of people have lost their jobs and incomes and are struggling to get by, which obviously lowers the demand for non-essential retail goods.
In the retail sector, this crisis is likely to lead to an increased interest in technological solutions for many of these challenges. Suppliers will rush to develop and sell solutions and stores will scramble to deploy and adapt. Anything that makes it easier to keep shoppers re-assured, build better and stronger customer relationships, and allow retailers to survive will be in high demand. But it’s important to keep in mind that no technology can replace the need for proper planning and thinking ahead. Preparation is key for surviving this unprecedented crisis for retail.
