As we continue to face a global pandemic, analysts around the globe are trying to understand how COVID-19 might permanently affect the retail sector. Such predictions can be used to help small and large businesses meet evolving consumer demand. Although we cannot be certain about what the future holds, we can offer some advice about the trends that are predicted to impact people in a post-COVID environment.
Customers Revisit Brick-and-Mortar Stores
Digital Commerce 360 estimates that "the pandemic [has] pushed even more U.S. consumers online, contributing an additional $105 billion in U.S. online revenue in 2020 and accelerating e-commerce by two years." And according to RIS News, brick-and-mortar sales powered by curbside pickup and buy-online pickup-in-store (BOPIS), generated sales of over $18.5 trillion in 2020. These trends are a direct result of consumers seeking out safe shopping methods during the lockdown.
Now, as we enter a post-pandemic world, consumers are expected to practice revenge shopping and re-engage with brick-and-mortar stores. In fact, the National Retail Federation (NRF) predicts that retail sales will grow between 6.5% and 8.2% in 2021, which would be the fastest growth rate since 2004.
In June 2021, total retail sales in the United States grew approximately 18% compared to the same period in 2020. Many industries, including gasoline stations, clothing stores, and electronics and appliance outlets, have experienced considerable growth in terms of sales compared to one year ago. Unfortunately, due to the Delta variant, retail sales in July dropped by 1.1% seasonally, adjusted from the previous month, according to NRF.
NRF President and Chief Executive Officer (CEO) Matthew Shay says, "July retail sales showed a slight deceleration in spending but nothing to derail our outlook for a record year." He continues, "We remain optimistic that the strength of the American consumer and ingenuity of the retail industry will produce continued growth heading into the fall."
Increased Demand for Experiential Shopping
As consumers re-enter the retail world, the demand for experiential shopping will continue to rise – a trend that is reflected in the concept of the "experience economy."
The experience economy, a term first coined by B. Joseph Pine II and James H. Gilmore in 1998, "describes the emphasis on novel experiences – as opposed to just goods or standard services – ... businesses offer when serving their customers." Such experiences provide consumers the ability to participate and connect with a particular brand.
Larger retailers have already begun to incorporate this concept into their business models. In 2018, H&M introduced the Ombori Selfie Mirror. Developed by Microsoft, Visual Art, and Ombori Grid, this technology combines voice and facial recognition to communicate with customers. It allows them to either take selfies that are virtually integrated with the H&M catalog or browse the store's current collection.
As we move through 2021, more companies are beginning to recognize the demand for change and are implementing new experiential shopping concepts. For example, Dick's Sporting Goods recently revealed a prototype store that is outfitted with an athletic field and a rock-climbing wall. Target has created miniature shops-within-a-shop to highlight goods in partnership with Apple and Disney, and Sephora now offers appointments with beauty advisors for personal makeup workshops.
Aurelian Lis, CEO of Dermalogica, predicts that retailers who emphasize experiential shopping for their customers will win in the end, as they have to justify their continued existence. She shares, "Larger stores that strip human connection and touch will falter as consumers realize that it is not worth the hassle of going shopping if it is going to be as drab as airport security."
Reliance on BOPIS and BOPAC
Throughout the pandemic, we have also witnessed increased popularity in BOPIS and BOPAC. BOPIS refers to the act of "buying online and picking up in-store," while BOPAC refers to the act of "buying online and picking up at curbside." Retailers have come to rely heavily on these services during the pandemic to assist customers in maintaining safe social distancing. As use has increased, the benefits of BOPIS and BOPAC have become more critical for businesses. For example, Ombori Order Pickup:
- provides an alternative shopping method that does not include shipping costs;
- ensures quick service for customers by permitting them to order online and notifying them when their order is ready for pickup;
- allows customers to know whether specific items are available ahead of their shopping experience, which reduces the number of customers in stores while increasing conversion rates;
- offers quick returns and exchanges at local stores; and
- increases retail store traffic both on-site and online.
These findings support the likelihood that BOPIS and BOPAC will continue to exist in a post-pandemic world. However, these services will no longer be used strictly for safety purposes. Instead, they will provide customers with the option to shop quickly and conveniently at local retailers.
Bhava Kompala, Global Business Head of Retail at LatentView Analytics, reports, “I expect that consumer preference for BOPIS will continue and be driven by a mix of a desire for convenience and lingering concerns about safety. BOPIS will be dominated by contactless curbside pickup for many retailers with ~19% of consumers preferring contactless pickup when frequenting a business and nearly 35% preferring contactless checkout in general.”
Dependence on an Omnichannel Approach
The future of shopping is not black and white. Consumers are going to rely on an integrated experience to conduct their shopping. They are going to leverage multiple digital interfaces as well as brick-and-mortar stores to fulfill their consumer needs. As a result, retailers will need to support this omnichannel approach in a post-pandemic world.
In response to this new demand, major retailers have adopted new technologies, such as Ombori Endless Aisle. Ombori Endless Aisle is an in-store digital sign that offers consumers the option to purchase items not available in-store. By linking to an e-commerce platform, customers can shop beyond current inventory and ship their purchases directly to their homes.
Endless Aisle represents a blend of virtual technology and in-store shopping designed to deliver an enhanced customer experience. The key benefit of an endless aisle strategy is that customers can enjoy a more comprehensive product selection and faster service without requiring the assistance of a sales associate. This is especially beneficial during peak business hours.
Omnichannel solutions help retailers overcome infrastructure and inventory challenges. They connect mobile, online, and store channels to aggregate orders from various supply chains and provide a single source of information across retail channels. By implementing an endless aisle concept, retailers can meet customer needs faster and more efficiently.
Ongoing Use for e-Commerce
Similarly, e-commerce has been gaining in popularity during the pandemic due to social distancing. Indeed, consumers have come to rely on e-commerce to meet their evolving needs. Analysts predict that consumers will expect e-commerce capabilities to continue in a post-pandemic world.
Michael Anderson, Marketing Specialist at GeJang Maps, shares, “While it’s true that the pandemic is winding down, I think that in the last year many people have realized the true convenience of shopping online instead of traveling to a physical location. With this recent experience in mind, many shoppers are likely to continue purchasing products online as long as businesses continue to improve their online shopping experience.”
Analysis from GlobalData shows that 9 out of the top 10 global e-commerce companies (by revenue) experienced double-digit growth in 2020 as new consumer habits swayed in their favor – and this trend is expected to continue into the future.
A Post-Covid World
According to 451 Research, almost half of all consumers said they would immediately begin shopping at retail stores once most of the dangers surrounding COVID-19 were minimized, while only 16.8% said it would take longer than three months after restrictions were lifted. With an optimistic outlook of a post-COVID world ahead, retailers have been advised to adopt new technologies to help them meet the new demands of consumers. This means combining e-commerce with experiential shopping.
Indeed, experiential shopping will become an even more significant factor in determining retail winners and losers in 2021 and beyond. With this tool, retailers can turn a simple shopping trip into an unforgettable experience filled with live entertainment and high-touch interactivity.
Likewise, omnichannel solutions will aid businesses in bridging the gap between e-commerce and in-store shopping. Omnichannel marketing allows businesses to meet customers where they are by delivering a unified experience that acknowledges previous touchpoints along the customers' journey.
Preparing for 2022
While digital sales may decline as society continues to reopen, the digital investment made by retailers during the pandemic will continue to pay off. Still, the "new normal" is starting to kick in. Unfortunately, the Delta variant – and others – is likely to have some surprises to come. However, it is clear for retailers that there is a pent-up consumer desire to return to stores and browse the aisles. With that in mind, businesses would be wise to emphasize integrating physical and digital retail to adapt to the post-pandemic environment.
Rui is COO of Ombori Grid. Before joining Ombori in 2017, he worked in Beijing, Tokyo, Silicon Valley and Zagreb before ending up in Stockholm. He previously spent nine years in R&D at Ericsson as Operative Product Owner, and is a highly skilled leader in IT and communications with a successful track record of working closely with both stakeholders and management.
