In early 2020, the retail industry was off to a very strong start. Through February US retail sales grew 7.5 percent. Then March came in as a pandemic lion with a substantial part of the world hitting the pause button. We all very quickly learned the difference between essential and non-essential retailers. The financial pain for the global retail industry for all of 2020 will total over $1.6 trillion.
The good news is that key major retail markets such as China and the United States have already overall recovered to pre-pandemic levels. Here are three predictions for the new retail year.
Safety Concerns Will Be with Us into 2022
An April 2020 consumer survey by First Insight found that consumers felt safest in grocery stores, followed by drug stores and big box retailers. Malls ranked lowest with only 33% of respondents saying they would feel safe shopping in these locations. Sixty-five percent of women did not feel safe trying clothes in dressing rooms, 78% felt unsafe testing beauty products, and 66% had similar concerns working with sales associates.
August KPMG retail research elevated safety to a top 3 purchase driver for consumers. “Personal safety is a new consumer expectation that is perceived to be a basic need alongside value for money and ease of buying. These basic needs must be met before consumers are able to consider psychological needs such as a great customer experience or the needs of others.”
A December 2020 podcast featuring a leading coronavirus research scientist from the University of North Carolina provided clear analysis that even if we make great progress in the first half of 2021 to vaccinate the 70-plus percent needed for herd immunity from COVID-19, there will still be a large part of the world, especially in emerging economies, that will need to catch up. This means that the virus will be with us throughout 2021, along with potential mutations impacting the rest of world. Safety as a concern is not going away any time soon.
Higher Speed Digital Transformation
Recent McKinsey research reminded us that the pandemic has reset the gameboard. This retail focused report explained that in a matter of 90 days, we have vaulted forward 10 years in consumer and business digital adoption. COVID-19 has become a disruptive accelerator of digital transformation trends that were already underway.
The same research highlighted the following technologies taking the lead.
For retail, companies that were investing in creating harmonious shopping channels with digitally enhanced immersive consumer experiences, coupled with strong branding will emerge stronger out of the current health crisis.
More Time-Saving Retail Services Please
In 2019, the Wall Street Journal reminded us that Americans were spending 1.2 billion hours each week driving to the mall, finding a parking space, wandering around the aisles, checking out, and driving home. This sounds like a lot of wasted time.
COVID-19 will accelerate the focus on time saving services. An analysis by Bain & Company from the just completed holiday season confirms consumers are appreciative.
The reasons for satisfaction are beyond concerns with safety. Consumers point to short wait times; lower cost than delivery; reliable, speedier fulfillment than delivery; and COVID-19 precautions. Greater time-saving efficiency in how consumers engage with retailers will be part of the new normal in 2021.
The first 3 to 6 months will be challenging in 2021, but then life should dramatically improve for developed economies. However, it will take more than this entire New Year for 70 percent of the world’s 8 billion people to reach herd immunity through the new vaccines. The world COVID-19 leaves behind will include continued concerns with safety, dramatically higher levels of digital transformation, and increased utilization of time-saving consumer services.
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