Retail Fallout & COVID-19: Bankruptcy, Store Shutdowns & Change
The pandemic has ensued unprecedented challenges for commerce. Businesses big and small operating in the retail industry are facing excessive disruptions, far-reaching consequences and impacts to revenue. These issues are both short and long term. The commercial space that we enter as businesses post-COVID-19 will be a very different landscape indeed.
A new wave of bankruptcies, shutdowns and emergency measures have been rolled out across the nation. But just how bad is it?
At the forefront of these woes is undoubtedly the tectonic shift in customer retention and acquisition amidst the pandemic, an eye-opening figure highlighted the sharp decrease in foot traffic for retail stores since lockdown measures were implemented with as much as a 98% reduction in the month of March.
And so, it is not just businesses that will have to re-adapt post-pandemic. Consumers themselves will emerge in a brand new environment, in turn, sending retail stores that survive the fallout ‘back to the drawing board’, which means learning enhanced marketing tactics to reach this new kind of customer.
Going digital: Can businesses keep up?
These challenges have forced many businesses to adopt new approaches. Strictly brick-and-mortar service-based companies have taken to the digital space to reach customers. More restaurants are offering in-app deliveries and fulfilment than ever before.
A report from Apptopia highlighted that grocery-delivery apps like Walmart and Shipt have experienced an immense boom since February, doubtless due to new consumer approach, experiencing surges of 160% and 124%, respectively.
Experts have compared the current situation to the retail apocalypse of 2008 following the economic downturn; an evolution of buying habits and changes to market sentiment doubtless causing significant impacts.
Going digital will mean the inevitable avoidance of brick-and-mortar burdens, namely delivery costs, overhead and heavy logistics. If retailers haven’t built their online presence, these problems will be magnified when they emerge post-pandemic.
How germs have changed businesses
Faced with this new retail atmosphere, reconstructions of delivery and fulfilment for retail businesses have taken place:
- No-touch deliveries have become standard procedure and they may become the new way of providing services.
- Retail businesses will need to adapt their store layouts and sentiments in the new commercial age (where people will be naturally more wary of one another).
- No-touch customer experiences with a direct and severe emphasis on quality hygiene will be rolled out.
Furlough of workforces, pay-cuts and lay-offs have plagued the industry in recent months. Marriott International, for example, has furloughed tens of thousands of employees.
The UK and US have devised their own plans of furlough; consisting of 80-100% of worker salaries in spite of revenue drops. These schemes are placing immense pressure on retail branches in particular, perhaps unsustainable in the long-term and no doubt crippling to future plans for rebuilding. Cutbacks are rife and extend far beyond workforce, however.
This new situation has caused wide panic, driving retail stores and brick-and-mortars into a state of survival, cutting expenses where possible and creating a new dynamic for physical businesses; a ‘lean’ approach, dropping anything that doesn’t capture revenue or result.
Changes to demand are damaging everyone
It would be misinforming to suggest that businesses who have simply adapted to selling online are doing absolutely fine. E-commerce has seen gains somewhat, though long-term these numbers are artificial. While these businesses may not be directly affected by the foot-traffic problem, natural consumer behaviour will cause long-term fallout.
Vogue, for example, projects an estimated loss of $10 billion for the retail industry in 2020 with COVID-19 to blame. It is no secret that Asian imports are a driving force of many fashion retailers and this market of buyers has gone quiet itself.
The consumer has changed as has the modern retail business. Companies small and large are feeling the detrimental effects of COVID-19 as its far-reaching impacts shake the nation. Consumers are wary. People are not leaving their home and sales are on the ropes for many brick-and-mortar stores.
It is not certain how long this imprint on the industry will last. Only brands that adapt will survive the turmoil.