Post-Pandemic Retailing: What Retailers Should Expect
In the midst of the COVID-19 pandemic, many (if not all) brick-and-mortar retail stores in some areas have completely shut down. This leaves them solely to online sales to bring in revenue, which many small businesses do not have. As a result, they are left wondering what the state of their business will be after the economy reopens from its current state. In order to put this into perspective, information on what was expected of the retail and discount/secondhand market was located and compared to its current state. In addition, recommendation on how discount and retail brick-and-mortar stores can compensate and alter their business methods once reopening were located and provided below.
Prior Expectations for Retail (before COVID-19)
- According to the U.S. Census Bureau, eCommerce retail sales accounted for 11.4% of all retail sales in the United States by the end of Q4 2019. This compares with 11.2% in Q3 2019 and 10.1% in Q4 2018. This means that 88.6% of all retail sales were still taking place via brick-and-mortar stores.
- Prior to the COVID-19 pandemic, eMarketer estimated that U.S. retail sales would reach $5.621 trillion, a 2.8% increase from 2019, by the end of 2020.
Prior State of Resale/Secondhand (before COVID-19)
- As stated in the 2019 Fashion Resale Market and Trend Report that was published by thredUP, secondhand shopping was expected to grow by 13% by the year 2028.
- Secondhand fashion was also expected to grow 1.5 times faster than "fast fashion" and have a market size of approximately $64B by 2028.
- At the time of writing, thredUP calculated that 51% of U.S. consumers were planning to spend more money on secondhand shopping over the next 5 years. 56% also said that if off-price retailers (i.e. TJ Maxx, Marshalls, etc.) offered secondhand items, they would be much more included to purchase more items from these and similar retailers.
- thredUP also determined that the three most quickly growing retail segments before the COVID-19 pandemic were secondhand stores, subscription-based resale, and rental.
- The National Association of Resale Professionals (NARTS) concluded that outside of the current pandemic, anywhere from 16% to 18% of U.S. consumers would thrift shop within a given year, compared with 12% to 15% that would shop at consignment/resale stores. This compares with 11.4% that would shop at factory/outlet malls, 21.3% in department stores, and 19.6% in private apparel stores.
Changes to Retail Since COVID-19 Outbreak
- By March 11, Rakuten calculated that online sales for apparel and footwear combined decreased by 37%, ShopperTrak found that brick-and-mortar sales dropped by 58.4% just a week later.
- LEK Consulting also found that 42% of U.S. consumers have began shopping online more since the COVID-19 pandemic. Of these, though, only 48% claim to be remaining loyal to their usual brands, compared with 21% that are buying both their usual and new brands and 19% buying whatever is available regardless of brand.
Reducing Customer Fears
- Harvard Health recommends that stores selling secondhand clothing during the COVID-19 pandemic can wash clothes as an extra precaution, although they do not think the virus is transmittable via fabric.
- Some secondhand apparel retailers have begun steeping clothes in cleaning solutions (while wearing gloves) for a full 24 hours and washing them by hand with antibacterial solution to ensure all germs are fully removed from fabrics before selling them.
- Other precautionary measures for secondhand apparel during this time includes packing them with gloves if selling online and spraying them with antibacterial solution before shipping. Some even suggest providing gloves in aisles to help reduce touching and increase hygiene.
- Professionals recommend that brick-and-mortar stores, regardless of type, place hand sanitizer stations at the entrances and throughout the stores to promote healthy shopping practices.
- It is recommended that store employees regularly wipe down carts, baskets, payment portals, hard surfaces, and self-service stations on a regular and often basis with disinfectants and sanitizers.
- A more strict and available cleaning process in stores should also be implemented once reopened. Experts recommend that this includes ensuring paper towels are available in all restrooms, even if hand dryers are present — this ensures customers don't have to touch door handles after washing hands.
- It is also suggested that restrooms place their cleaning schedule with respective sign-offs in viewing site of users, to provide customers with confidence that facilities are cleaned regularly and efficiently.
- Retailers should make sure that they follow advice on deep-cleaning procedures before opening and whilst remaining open, especially in elevators, air purifiers/conditioners, and HVAC ducts.
- Clearer protocol on employee hygiene should be enacted and posted for frequent reminders. This should include frequent hand washing, use of hand sanitizers, prevention of touching faces, proper cough/sneeze etiquette, and even proper preventative greeting methods (i.e. handshakes vs. elbow bumps).
- Where possible, stores should also communicate with local authorities, organizations, and volunteer groups to ensure that they are making their stores accessible for at-risk groups, including the elderly, handicapped, and immune-deficient. This will help them appear as caring to the public, and will help promote foot traffic during this time.
- Retailers with brick-and-mortar shops should work to reduce the number of employees that they have working at a given time. This will help to reduce the spread of any illnesses and germs in the store. This can best be done by implementing more self-checkout options.
Maintaining Business Traffic
- While many non-essential businesses are shutdown right now, retailers can offer consumers gift cards to purchase for use once stores reopen. This will provide companies with an inflow of cash that they can use right now to keep afloat until they can reopen.
- If doable via non-contact methods, retailers and apparel stores, even discount ones, can work to sell off their C-grade products during this time. One way to do this is via curbside pickup, although an online store is necessary. However, selling off C-grade products, even at a discounted price to ensure they are purchased, will provide stores with some form of income to help them get by.
- Another option is to offer high-value, loyal customers some sort of incentive to return to the store once it reopens. This may include but is not limited to implementing a rewards program, special discounts, etc.
- Shopify recommends that retailers pause and/or redirect some of their marketing efforts during the COVID-19 pandemic to show consumers that they are aware and sensitive to the current state of the economy.
- Brick-and-mortar retail stores are urged to test out eCommerce options during the COVID-19 pandemic, as it poses a very "forgiving" opportunity to take some risks, since the entire economy is struggling right now.
- For apparel stores that are testing out eCommerce, eMarketer recommends trying out online showrooms to showcase their goods to consumers in a time when they are building new habits.
- Even once non-essential businesses reopen from the current pandemic, including retail and discount stores, 48% of U.S. consumers stated that they do not expect to change their prior shopping habits. This indicates that many will return to the stores they once shopped at before.
Expectations for Discount Stores After Coronavirus
- JP Morgan analyst Matthew Boss is expecting discount stores such as Dollar General and Dollar Tree to actually excel because of the COVID-19 pandemic, as they provide low-cost options to consumers during a financially tense time.
- Other stores that Boss is expecting to do well once they reopen include Five Below and Ollies, because the discounts they offer are more affordable than shopping at big box stores.
- Discount stores such as TJ Maxx, Ross, Marshalls, etc. are expected to become more popular after the COVID-19 pandemic, as they offer valuable options at low prices, in addition to providing a "rewarding" feeling for consumers in the shopping process.
In working to identify how discount stores specifically would be impact and forced to change as a result of the current COVID-19 pandemic, it was determined that information that was publicly and readily available was minimal for this sector. Most reports focused on retail in general, and as it is still unknown when the U.S. economy is going to fully reopen, many experts are unsure what the state of in-person business will be by the time things "go back to normal." As a result, some creative tactics were required to find information. For example, a look into the roll that secondhand and resale apparel stores play in struggling economies provided some insights on how discount stores might need to alter their methodologies. Additionally, insights on how to reduce consumer fears once reopened appeared to be uniform across all stores, regardless of type, and thus were included above. Finally, ways in which small businesses can effectively reach out to consumers during this time to stay afloat proved to provide useful information that could easily be applied to discount stores. All of this information combined was used to build an understanding of how low-cost, discount retailers, including secondhand/resale clothing stores, specifically brick-and-mortar ones, may have to change their operating procedures after the COVID-19 pandemic.