Retail in the Face of Coronavirus Pandemic
Retail in the Face of
March of 2020 arrived. It looked like any other March, except that something was different. Suddenly, people were waiting in lines to enter supermarkets, shelves were emptying. The number of bought groceries skyrocketed. It became official; the new coronavirus was declared a global threat.
The middle of March was marked by the staggering surge in the number of bought groceries. With the talks of lockdowns, people started purchasing large amounts of food and supplies.
At the same time, dining out, visits to shopping centers, and in-store apparel buying hit rock bottom. Nobody was having fancy dinners or buying new shoes. People were only focusing on essentials since nobody knew how this newly discovered virus was behaving.
During lockdowns, groceries also felt a slight fall, but nothing compared to other categories. With the shutdowns of restaurants and shopping centers, people were also unable to buy anything.
Since April, around 5,000 US stores shut down and this number will likely only go up.
Retailers, such as J.C. Penney Co, Forever 21, and Neiman Marcus Group Inc. even filed for bankruptcy protection.
Europe is not faring any better. H&M will close around 250 stores in 2021, while Zara is expected to close 1,200 stores worldwide.
However, the picture is not completely bleak. The middle of June was marked with apparel’s comeback. How? Through online channels.
By the end of September, apparel was experiencing a better comeback than categories such as dining and shopping centers, according to Placer.ai, a foot-traffic analytics company.
Online Shops to the Rescue
The closure of traditional stores was dubbed by journalists as the “retail apocalypse”. It is a phenomenon happening from 2010 till today. It is by no means a new occurrence. However, it is accelerated due to the pandemic.
How are retailers fighting back? They understood the advantages of online shopping, and since their buyers had to move online, they followed suit and moved online, too.
The non-store retailers helped the US retail sales to start climbing back steadily since late May. E-commerce sales in Q2 soared by 44.5% compared with the same period back in 2019, according to The Wall Street Journal.
What is interesting is which retailers fared well. Besides obvious non-store retailers, shops with category of garden equipment, and category of sporting goods, hobby, musical instruments, book stores, did not experience a huge decline. Some of them even sold more goods.
People were shut in their houses and they focused on other tasks and hobbies.
Retailer Giants and Coronavirus
A couple of retail giants’ business was mostly online before the pandemic stroke. eBay and Amazon managed to go through 2020 scratch-free. They even managed to upscale their profit.
eBay experienced the biggest increase in profit margin in Q2, while Amazon doubled its profit during the pandemic. Even though there was backlash considering their well-being during these times, from the economic perspective their success is an extraordinary phenomenon. Particularly since we are still in the middle of the pandemic.
What we can take from these examples is that online shops are a mandatory step for retailers. They need to embrace the new technologies. The customers’ buying habits are constantly changing. Especially now as the world is adapting to the new reality.