The disruption of Covid-19 has been devastating for the retail industry. The future of brick-and-mortar stores faces a lot of challenges for survival. Most retail giants have had to close hundreds and thousands of stores worldwide amidst the spread of the coronavirus. The closure of stores and the changing landscape of consumerism begs the question of what’s the future of the retail industry?
Many experts believe that the future of the retail industry lies in the integration of offline and online technology, ultra-fast delivery, digital dressing rooms, and bespoke experience and customer service. Retailers such as Target, Walmart, and Amazon are already implementing these measures to ensure sustainability in an unpredictable environment.
A lot of retailers are expecting a recovery post COVID, as a result of pent-up demand during isolation and lockdown. For example, Hermes bought in a staggering $2.7 million on its first day of reopening in April in Guangzhou. Sadly, this optimistic opportunity won’t be a reality for all brands. With strict social distancing guidelines established by governments all across the globe, retail stores will find it difficult to match their pre-COVID in-store sales in a post-COVID world. In Germany, the government has mandated a distance of 1.5 meters between each person. This translates to retailers being able to accommodate a few customers in-stores at any point in time. Elsewhere in China, luxury retailers are allowed to let in a limited number of customers at a time. Such measures, although necessary, impact the footfalls of a store which essentially affects profitability. Retailers must weigh the pros and cons of keeping stores open amid high rents and low revenue. This would either lead to closure or downsizing of locations.
Pessimism in consumer spending would also affect the retail business especially fashion stores. The loss of millions of jobs, global economic recession, and consumers’ reluctance in spending money on frivolous purchases would hit the merchants hard. When stores across Germany were finally allowed to be open, retailers expected a gush of shoppers in their stores. Quite the opposite happened, as people instead choose to stay home and save their money for a rainy day. The fear of infection has pushed consumers to become more reclusive. This trend has given a massive boost to e-commerce. Online shopping has been a big threat to retail stores even before the pandemic. Now, the demand for contactless home delivery, online orders before store visits, and curbside pick-up have risen exponentially. The future of retail brands lies in the proliferation of retail technology and the integration of e-commerce and in-store experience. Successful brands will leverage both online and offline into a unified commerce system to mitigate risk and competition. Major retailers are already integrating their physical stores with a digital-first market environment to create new experiences for customers.
Even with the roadblocks ahead, the retail store isn’t dead. In fact, in countries like the US and China, a majority of all transactions(85% in the US and 80% in China) are still done in a physical environment. Retail stores of the future will evolve to offer more immersive, interactive, and experiential experiences to their customers. Brands like Nike and Gucci are already experimenting with concept stores with Insta-worthy interiors that integrate technology to give consumers an exceptional shopping experience.
When it comes to curated customer experiences, brands are exploiting big data to understand customer behaviour and create tailored shopping experiences. A run of the mill option of garments is no longer enough to appease the new age consumer. Customers are looking for bespoke services and are willing to pay more for them. In-store only sales, unique hosting, theme events, and interactive experiences are helping retail stores to cater to the high demanding consumer. An example of a success story is high street retailer Rebecca Minkoff, who able to triple clothing sales with interactive touch-screens that let shoppers choose products to be sent to their dressing rooms. The dressing room mirror, integrated with digital screens also enabled them to view those same items styled with different colours, sizes, and looks. Luxury retailers are also using driverless cars to chauffeur their high-end clientele. Brands are also incorporating digital dressing rooms in their apps and websites to entice customers. Recommendations are based on the purchasing history of the buyer.
The augmentation of technology in both in-store and online is the key to the survival of the retail ecosystem. It can no longer be a tug of war between brick-and-mortar stores vs online shopping, Retailers would need to adopt an omnichannel approach post COVID. Experts believe that stores of the future will be more mobile. Offline physical stores will exist as a point of fostering customer relationships rather than a sales point. Pop installations, already popular with younger generations, will become a bigger trend. Brands like Revolve have been able to create a buzz with their pop-ups events in Coachella. Such installations will bring convenience to consumers and bigger engagement for brands. Survivability of the retail industry will depend on the customer-centric approach, customisation, and integration of technology.