COVID-19 and the retail sector
Posted on: October 29, 2020; Updated on: October 29, 2020
By
Chris Horn, [email protected], 803-777-3687
Retail sales in the U.S. account for about one-half of personal consumer spending
and nearly one-third of the country’s gross domestic product. But COVID-19 and its
accompanying ripples — social distancing, lockdowns, layoffs and changes in consumer
behavior — have unleashed turmoil in the retail sector.
Jeff Campbell, an associate professor and chair of the retailing department in the
College of Hospitality, Retail and Sport Management, offers his perspective on the
current landscape in retailing and what lies ahead.
Some brick-and-mortar retail stores were on shaky ground before the pandemic, and
the subsequent shutdown and changes in consumer behavior might be the death knell
for retailers like Neiman Marcus, J.C. Penney and Pier 1 Imports, all of which have
announced bankruptcy. Why are some retail sectors surviving the pandemic better than
others?
The retailers who did a better job integrating e-commerce as their primary contact
point have certainly fared better in the COVID landscape. Others have struggled as
customers stayed away. Malls had already begun a transformation over the past few
years, and COVID-19 has really moved up the speed at which this is happening. It’s
difficult to have a retail experience in a brick-and-mortar store when you’re wearing
masks and observing social distancing and interacting through plexiglass. E-commerce
has made the shopping mall less attractive, and customer options via online have really
pressured traditional department stores and shopping malls overall.
Will there be some pent-up demand for in-person shopping in a post-pandemic world?
Or are we seeing a long-term shift in consumer behavior in favor of the digital marketplace?
There’s been a steady growth in the digital marketplace, and I think more people are
now seeing the value, for example, of ordering groceries or food online as well as
other retail products. Yes, there’s going to be some pent-up demand as shoppers want
to get out of the house and buy something to make themselves feel better. Shoppers
want to interact with their products and the stores that sell them. The last few months
have shown the retail shopper is resilient. However, continued unemployment will have
an impact on future demand, and as more people continue to work from home, the digital
retail marketplace should benefit greatly moving forward.
Which retail sectors will have the best prospects of surviving the pandemic’s ongoing
effects, and which are most vulnerable to losing critical market share?
Clothing retailers are certainly struggling. Big ticket items such as auto sales continue
to struggle as people stay home, and many are continuing to adjust to being at home
for longer periods. However, other sectors such as home improvement items, electronics
and routine needs sectors of food and grocery all remain strong and should continue
being positive as we work through the crisis.
Retailers have been rolling out some innovative gimmicks to lure customers. Which,
in your opinion, have been successful and which have been flops?
It’s interesting to see the different strategies that companies are using to connect
with customers, particularly through television, radio and print media. Many retail
companies and brands are offering discounts for medical personnel, first responders,
military and educators, which might prove successful and are good business practices,
even if temporary. Customers are more understanding when retailers and brands acknowledge
the situation without appearing to leverage it for profit purposes. McDonald’s, for
example, splitting their golden arches or other companies like Volkswagen and Coca-Cola
splitting their brand logos to support social distancing might cause some to see these
actions as more of a gimmick rather than meaningful support. High-end retailers also
have to balance advertising aspirational products when many Americans have lost their
jobs or been furloughed.
What advice would you offer to mom-and-pop retailers who are trying to hang on during
this desperate time?
Don’t try to be everything to everybody, and really take the time to understand your
core customers and what their expectations are for your specific products and services.
Make sure your employees are keenly aware of great customer service during this time.
Also consider your product assortments and how you can connect with your customers
online in a unique way and make your products compelling enough to buy. Having both
a brick-and-mortar location and online presence will certainly be of great benefit.
Most importantly, don’t give up. Customers will always remember great service, which
can be a positive interactive experience in the store, a personal email to your customers
or fast and free shipping. All of it matters right now.
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