eCommerce and COVID-19: The realities of retailing in the ‘New Normal’

challenges and opportunities to retail industry

As the world came under the quarantine blanket and consumers went on an online shopping rampage, retailers struggled to adapt. They might not appreciate the timing and manner that led to this digital revolution, but they did agree upon the pandemic having a significant impact on their business. From a surge in online orders to disrupted supply chains, changing customer behavior, closed retail quarters, and increasing reliance on alternative digital channels- the COVID-19 shook the retail industry to its core. Merchants and online retail stores leaders understand that the situation is changing rapidly, and they have little time to respond.

If there is something that eCommerce retailers must do to survive and thrive in the ‘new normal’, it is to understand their customers and their wants, deliver them relevant solutions and scale and evolve with time. While it might sound easy to read, it’s challenging to practice and achieve.

Pandemic-driven recession: A major blow for the apparel and beverage & food retail industry

After governments worldwide announced a state of emergency, only essential retail sectors that handled food and daily necessities received business continuity requests. Other retail businesses like apparel houses, electronics, and luxury goods were forced to close. As a result, the retail industry faced substantial shifts; however, the truth is that annual growth in retail sales had already dropped throughout 2019 and 2020, much before the pandemic, which undoubtedly led to further ramifications. For example, the clothing retailers in the US experienced a drop of 89.3% in April 2020 year-on-year, whereas the sales of groceries increased by 13.2%. A similar effect was felt everywhere worldwide, including the US, Asian, and MEA markets.

It won’t be an overstatement to say that online shopping acted as a cloud with a silver lining during such challenging times. The digital economy grew enormously and at unprecedented levels. With retail outlets shut, lockdowns imposed, online retail stores were the only means for consumers to buy essential products like medicines, groceries, food, etc. Even the hardest-hit nations worldwide achieved record-breaking online sales and a double-digit increase in eCommerce transactions (81% in Italy), with consumers spending hundreds of billions while shopping online.

The impact of the COVID-19 crisis on the retail industry was of heterogeneous nature leading to three derivative conclusions: 

  • Only physical retail stores that dealt with essential daily needs stayed neutral or were moderately impacted. Groceries won, but at higher operating costs, and are now pacing fast to convince and keep serving omnichannel consumers and remain responsive to demand shifts. 
  • Lockdowns and social distancing measures accelerate the ongoing shift from brick-and-mortar to online retailing. In the years to come, merchants will increasingly invest in digital transformation efforts and reserve capital for retail technology by reducing physical store expansion, operation, and maintenance.
  • Retailers with different abilities but linked via liquidity positions will coexist together to weather the pandemic crisis and reverse their losses in revenue. That means B2C merchants, logistics services, and manufacturing factories will adopt digital commerce to streamline operations and armor for any similar events in the future.

Consumer spending will continue to decline and may take time to recover

Not just the retail industry, but the pandemic has had a profound impact on consumer lives too. Consumer behavior now seems to be driven by new circumstances- reconsidered product priorities, panic buying, restricted spending on non-essential items, and so on. Such instances have caused a significant deviation in consumer attitudes, behaviors, and habits as they adapt to the new normal. For example, 33% of consumers are shopping more consciously than before due to lesser disposable income, whereas 26% enjoy richer and more leisurely pursuits due to an increase in disposable income and time.

Even after the pandemic, consumers will remain uncomfortable or scared of visiting public places with pharmacies and grocery shops excluded from this distinction. An Accenture report says that eCommerce purchases will increase by 160% for new and low-frequency users in the near future. With consumers indulging more with omnichannel services like home delivery, live chat, virtual consultation, in-app ordering, and buy online- pick up in-store (BOPIS) solutions, undoubtedly, online shopping practices will thrive and stay relevant for a long time. In fact, 58% of consumers say that they intend to use BOPIS services even more after the pandemic.

Reduced footfall: A trend likely to continue even in a post-Covid era

With physical retail outlets, globally, going from serving customers to shut doors, offline retail was unable to hold its fort. However, lost sales were not the only damage they sustained- continued overheads like rent, wages, and inventory pushed them over the edge. However, that’s not the only scary part. With shoppers enjoying the convenience and price comparison while shopping online, they will be more likely to continue to graze less of physical outlets and more of online retail stores.

Supply Chain Chaos: The desperate requirement for a technology-friendly model

The pandemic was the biggest shock that the supply chains have faced since the advent of globalization. This shock wasn’t only in terms of the limited ability to get supply from your suppliers with governments halting all vehicular movement and imposing lockdowns, but what happened with the end-consumers as well. Suddenly, consumers started panic buying some products in a lot more quantity than they needed while the demand for other products was negligible to none. This further put a strain on the supply chain to readily make products available, which ultimately pressured suppliers, distributors, and manufacturing units.

Promotional offers did more harm than good:

Retailers both renowned and new, heavily discounted their 2020 inventory online and offline to facilitate sales and interest customers in conducting mass purchases. Although this trick mostly has a positive impact on sales and revenue, the conclusion; however, differed this time. 

The apparel, department, and other online retail stores reached their peak promotional frequency. In addition, since every other brand was discounting their collection, it became difficult for retailers to differentiate their offers and stand out to the customers. Promotional campaigns like flash sales, buy-one-get-one, or 60% off did not drive expected conversions, eroded profit margins, and eventually became expensive to manage.

Navigating the New Normal: What are the retail industry’s immediate prerogatives?

Retail is always centered around the customers. With customer experiences taking the spotlight, it will soon overtake price and product quality as key differentiating factors. Over 81% of retailers will be competing for customer experiences even after the pandemic, just a different kind, which retailers will have to adapt to.

In a nutshell, retailers with a good street presence need to devise ways to get customers back to the physical stores. It obviously means to take a different approach than before the pandemic, but it should still complement or implement an omnichannel model. That includes providing a more personalized in-store experience with AR and VR while employing digital commerce solutions to launch alternative sales channels, including online retail stores. These online retail stores can give customers a more personalized experience via customizing their orders, receive product recommendations based on their browsing history, send automated emails of products they might be interested in, and predict customer demands better than before.

That said, retailers now have to stay abreast of their priorities and implement them without hesitation.

Repurpose both physical and digital stores:

A true multi-channel strategy isn’t about having multiple stores but managing them via a single platform. For many retailers, the pandemic served as a correction process of attaining the right balance between physical and online presence. It has forced retailers to identify the purpose of physical stores amidst more digitally-focused customers, fulfilling more digital-centric customer journeys. For brands, physical stores should function more as experiential stores and marketing exercises where a store’s turnover is not necessarily a primary objective. As customer journeys become more frictionless in the coming times, and consumers will merge more of physical and online retail stores purchases. At the same time, physical stores need to move beyond the traditional sales and distribution process but repurpose them for customer discovery, interaction and building long-term relationships.

Stores can target consumer preferences to penetrate the market where hyper-personalized marketing campaigns can engage customers to visit stores for lifestyle consultation adding value to their buying journeys. Moreover, services like buy-online-pickup-in-store (similar to walk-in fulfillment) further improve the profitability of the online channel and make handling returns significantly less costly.

In the current scenario, a store’s performance will depend on the new performance metrics, how well they fulfill their customer-contact role and their customer acquisition ratio. In addition, commerce retailers need to clarify their cost-attribution models, revenue models, omnichannel ROIs, digital spend, and street presence. With advanced customer insights, data analytics, and artificial intelligence, retailers can improve their cross-channel selling power and take data-powered investment decisions. All these factors will play a critical role in resurrecting a brand post-pandemic.

Practice the DTC approach:

Initially, brands relied on retailers to act as intermediaries for product distribution; however, it led to inconsistent shopping experiences, eventually asking brands to gain deeper insights into their end customers and their shopping patterns. Today, this data can play a competitive role in discovering customer preferences, fostering relationships via digital channels, and conducting more meaningful interactions. Social channels like Instagram and Facebook have made it easy for brands to convert their stores into social spaces, integrating an easy checkout process on their social networks.

In fact, established brands have the opportunity to further capitalize on this idyllic customer purchasing behavior and elevate browsing times by increasing marketing budgets on product pages and launching mobile apps to act as a direct route for shoppers to engage with a brand on-the-go.

That said, DTC models have further thrived as eCommerce penetration achieves new heights. Established brands like Nike with over 250 million application users, and assisted customers with their purchases sold 30% of their goods via online retail stores. Using its real-time data analytics, it noticed a traffic spike on its app and swiftly initiated marketing campaigns to serve the growing customer base with their product range. Along with free shipping, loyalty programs, coupons, and massive discounts, Nike was able to accomplish its 2023 sales target in 2021 only. In the long run, a DTC model will ensure brand survival, satisfy customer needs, and offer competitive services while scaling as per the online demand.

Forge a digital data strategy:

Today, everything is about consumer data: the more you know about your customers, the more intelligence and insights you gain, and easier it becomes to devise a marketing strategy to close the data gaps. In a digital process, consider the role of each touchpoint in the customer journey. For instance, a website informs customers about the store’s open hours, running promotional campaigns, hygiene measures, social distancing measures, customer service support, product portfolio, and buying options. On the other hand, the application plays a different role with its personalized content, offers, customer reviews, product launch details, order history, and live tracking. Other additions to consider are email newsletters, social media, SMS, self-service kiosks, social stores, etc.

Quickly launch eCommerce stores:

After experiencing severe revenue and sales losses in the previous quarters, retailers are in no position to wait months before launching their eCommerce stores. Therefore, this leaves no choice but to explore opportunities that accelerate eCommerce development and reach-to-market in a matter of days and weeks and not months.

Reinvigorating retail via digital commerce accelerators

The pandemic made one thing clear for brands-they need a digital storefront, and they need it now. However, brands now need to figure out the right eCommerce platform to be the best alternative sales channel for your business that solves the challenges and opportunities to retail industry. And luckily for you, we have an answer- eCommerce accelerators.

With quick time-to-market, easy scalability during peak traffic times, personalized integrations, in-built data analytics to accelerate digital growth- the right digital commerce accelerator speeds your journey into today’s digital future. It empowers retailers to harness the power of digital technologies and shape next-gen shopping experiences right now.

Undoubtedly, eCommerce accelerators help you reach the market faster, in a limited time-frame and budget. However, with so many accelerator programs in action, here comes an inevitable question, ‘which eCommerce accelerator to choose?’


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