How COVID is Changing Retail and What Shoppers Need to Know

The “New” normal seems like it is everywhere these days as mask ordinances, social distancing, temperature checks, and tests have become a way of life in the face of the global pandemic. COVID is changing retail.

While the current “New” is likely to change as our definition of normal is expected to change as advances in treatment or a vaccine is introduced, many observers believe that changes we are seeing in retailers are here for good. This includes the acceleration towards online shopping, and with it, Amazon and Walmart tightening their grip in the sector, as well as advances in delivery, customer verification, and payment.

With that in mind, here is a rundown of some of the ways COVID is changing retail. This includes insights on some of the most evident changes as well as some of the behind-the-scenes changes with are having a massive impact on how we shop – even if we do not know it.

Here’s what every shopper needs to know about how COVID is changing retail.

Shopping Local Becomes Political

Over the past 25 years, consumers have become addicted to shopping online. After all, you can sit in the comfort of your own home and have almost anything delivered to you. However, this has come with a cost a local retailer across the country has struggled to keep up with the perceived convenience of buying from online giants such as Amazon and Walmart.

While many retailers were barely hanging on before the pandemic, lockdowns and other rules put in place to try and slow the spread of the virus have raised the stakes significantly. While the list of national retailers who have filed for bankruptcy in 2020 gets a lot of attention, there are thousands of local retailers who have been forced to close for good.

This wave of closures impacts local economies in multiple ways and is changing retail. First, there is the impact on the tax base as sales and property taxes are the main ways that local governments finance their operations. This can mean governments will be forced to raise property taxes on other landowners to make up for the shortfall in taxes from rental properties. These higher tax rates could force some homeowners to move, which could further depress a community.

Also, the closures will lead to job losses. Again, this creates a vicious cycle as the lack of opportunity in local communities could lead to other issues. Finally, the closures leave local shoppers with fewer choices, and this could mean that they end up spending their money online or at nearby national retailers.

Given how this could impact local communities, there is a high likelihood that shopping locally could become political. Movements such as Small Business Saturday predate the pandemic, and the movement could gain steam in the coming months as consumers and local governments alike come to grips with what the retail apocalypse means for their communities.

There is an App for That

Another way retailers are trying to combat the Amazon-Walmart duopoly is to go online themselves. Since the pandemic, one retail sector which has seen a tremendous shift towards online shopping is grocery, with CivicScience reporting that nearly half of all shoppers went online to fill their pantries.

While most industry observers believe the shift towards online grocery shopping is temporary, retailers are not wasting the crisis. Several supermarket chains have been busy rolling out updated apps to improve the shopping experience.

Some of these improvements allow for pre-ordering and then picking up groceries at an appointed time, or for delivery. In both cases, retailers have focused on making the customer experience as seamless as possible, and in doing so, they are seeking to gain new ways to build customer loyalty.

However, this shift toward online or app-based grocery shopping has not been without its challenges. In particular, is the need to conduct identity verification for goods such as beer and cigarettes – both of which are import categories for supermarkets. As such, many retailers are turning to third-party services to aid in verification while ensuring that the privacy of the buyer and limiting the liability of the seller.

BOPIS or Delivery?

As mentioned, one of the critical choices in a customer’s online shopping journey is whether they want to choose to buy online, pick up in stores (BOPIS), or have their purchase delivered to them. Both choices have benefits, and both have their pitfalls.

In terms of in-store pick-up, this allows retailers to upsell their customers – primarily through in-store promotions – and it also helps to justify the retailer’s investment in their physical space.

As for deliveries, getting this right can dramatically reshape how a retailer’s value chain operates. Not only can they use their distribution centers to fulfill customers directly, they can also rely on their existing retail network. However, there are challenges as most retailers lack the pick and pack capabilities needed to shift towards an online ecosystem.

As such, it is expected that the tug-of-war between BOPIS and delivery will continue for the foreseeable future. Both have solutions that have their benefits, and the answer might ultimately depend on how a retailer can better meet the needs of its customers.

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