1. Retail Shifts Continue Amid Ongoing Pandemic: Examination of the Persistent Effects
In the new year, the COVID-19 pandemic seems like a dim memory, but its impact on the retail industry is still being felt. As major health organizations declare the pandemic no longer an emergency, many of the changes that retailers had to implement in 2020 are becoming less necessary. However, the industry is far from returning to its pre-pandemic state.
The Hybrid Workplace Transforms Retail Landscapes
The shift to remote work has been a game-changer for retail. With most people now preferring a hybrid work arrangement, this has led to a surge in local shopping or online shopping from home. According to a survey by WD Partners, zero respondents said they would ever again work at their office five days a week. This seismic shift in work habits is leading to a 21st century version of the post-World War II flight to the suburbs, but this time with millennials and their families leading the charge.
This migration to the suburbs has a direct impact on where people go to shop. Nearly 40% of consumers now frequent retail businesses within three miles of their home, with 10% going to malls. The decline in downtown foot traffic is concerning for retailers near corporate centers, as many companies evaluate their downtown office leases.
The E-commerce Boom Continues
While physical sales continue to dominate, e-commerce has seen a significant boost due to the pandemic. Though e-commerce sales growth is expected to be 10% or less in the coming years, its growth through 2025 will still be more than double the rate of store-based sales growth. Many consumers have grown accustomed to the convenience of online shopping and are unlikely to revert back to their old habits.
Inventory Remains a Problem
The pandemic has wreaked havoc on supply chains, and while recovery has occurred, optimization is now the focus. Retailers are working to optimize supply chains and reduce transportation costs. Out-of-stock issues persist, and retailers are grappling with excess supply.
BOPIS Endures
Buy online, pick up in-store (BOPIS) has become a crucial service for retailers during the pandemic and is here to stay. The service has been particularly handy during the holidays, allowing shoppers to avoid shipping delays. Target is even rolling out a new store format that includes more backroom space for fulfillment. However, some retailers are now trimming the extra expense of store-based fulfillment, as curbside and ship-from-store options are less financially viable unless it's an unwieldy object or a large basket size.
Self-Checkout May Not be the Future
Self-checkout stations became common during the pandemic, but retailers are now grappling with the downsides. Shrink and theft have become major issues, and several grocers have had to devise ways to deter shoplifting at checkout kiosks. Retailers are recognizing that the costs of shrink associated with fewer associates outweigh the value of reducing labor costs. In 2024, it's expected that retailers will begin to move away from self-checkout and focus more on loss prevention.
The retail industry is in a state of flux. To survive and thrive, retailers must adapt to changing consumer behaviors, workforce dynamics, and technology trends. The road ahead may be challenging, but those who embrace change and innovation will find opportunities for growth.
[1] "How COVID-19 is reshaping the retail landscape". https://www.mckinsey.com/business-functions/retail/our-insights/how-covid-19-is-reshaping-the-retail-landscape[2] "The New Normal in Retail: 2021" https://www.hbr.org/2021/10/the-new-normal-in-retail[3] "The Pandemic's Perpetual Impact on Retail".https://www.forbes.com/sites/forbesagencycouncil/2021/07/22/the-pandemics-perpetual-impact-on-retail/?sh=274dca916675[4] "The New World of Retail in Post-Pandemic Life" https://www.business.com/articles/new-world-of-retail-in-post-pandemic-life/[5] "Retail's inevitable hybrid hiring model". https://www.retaildive.com/news/retails-inevitable-hybrid-hiring-model/600295/
- The government is monitoring the continuous impact of the pandemic on the retail industry, understanding that it will take more than a year to fully recover.
- Despite the decline in downtown foot traffic, government policies are encouraging retailers to revitalize urban areas, promoting a mix of both digital and physical retail experiences.
- In attempts to address inventory issues, the finance industry is investing heavily in AI technology for supply chain optimization.
- Businesses in the retail sector are collaborating with labor organizations to establish fair industry-wide policies for remote work arrangements.
- The retail industry is aggressively adopting technology to enhance customer experience, with AI-powered chatbots becoming a norm for e-commerce platforms.
- Fashion retailers are focusing on sustainability and ethical manufacturing policies, as consumers are increasingly favoring brands that prioritize the health of our planet.
- We can expect retailers to explore space-based innovations for storage and delivery as alternatives to optimize costs and reduce dependence on traditional transportation methods.
- The pandemic has highlighted the importance of vaccine research in ensuring the safety of workers in the retail industry.
- According to various reports, crime rates in retail stores have dropped due to the surge in online transactions, but new challenges related to online fraud and cybersecurity have emerged.
- The labor market is witnessing a significant demand for skilled workers in technology and e-commerce, causing retailers to rethink their job hiring strategies and focus on training and upskilling their employees.
- With the rise of omnichannel shopping, retailers are striving to create a seamless shopping experience across multiple touchpoints, integrating data from brick-and-mortar stores, e-commerce sites, and mobile apps.
- As shopping habits and trends continue to evolve, retailers are partnering with retailers to offer consumers a more personalized shopping experience, incorporating AI algorithms and machine learning technologies.
- In 2024, retailers predict that the sports industry will experience a resurgence, with physical sports events leading to a surge in sales of sports-related merchandise.
- To stay competitive in the post-pandemic era, retailers are becoming increasingly proactive in addressing social and political issues, such as supporting Conflict-Free Sourcing initiatives and addressing war-related human rights violations in their supply chains.
