By: Dr. M. Ray Perryman
Published in syndication December 02, 2020
Like most industries, retailers are struggling to deal with the pandemic. While it may be a decent year for spending, it looks quite different - with a holiday shopping season the likes of which we have never seen.
Black Friday mall crowds were only about half of the usual levels, and store visits will be down significantly for the season. Curbside and in-store pickup options have taken on new importance, offering greater safety than crowded aisles and check-out lines.
Not surprisingly, online purchasing was up substantially over the Black Friday weekend and surged to a daily record on Cyber Monday. When a longer period of time is considered, spending patterns are even more promising.
It remains to be seen, however, how the totals for the season ultimately unfold. There are signs that shoppers have been buying earlier, partially in response to warnings that deliveries could be delayed near Christmas. Moreover, despite the cyber surge, overall sales for the traditional beginning of the season are well below prior years.
From a retailer's perspective, online purchases can involve additional costs. Shoppers often expect free shipping and can easily compare offers. Handling and packaging expenses also eat into profits.
Much of what is occurring represents an escalation of trends that were already ongoing. For example, the proportion of online sales has been growing for years, but safety concerns accelerated the pace. Brick-and-mortar stores remain important, but many have long been shifting focus toward online. Major investments in both the functionality and aesthetics of remote experiences have enhanced consumer perceptions and, hence, purchases.
Consumers are also becoming more cognizant of the social and environmental character of retail organizations. Corporate responses to COVID-19 were carefully watched for their effects on suppliers, shippers, and workers. Those whose approaches were viewed favorably were more likely to be supported by customers.
Some of the changes necessitated by the pandemic will no doubt remain. Supply chain management and ensuring availability will be emphasized. Inventory practices will be revamped. More and better curbside and contactless delivery and payment systems are likely part of the new normal. Conversely, many shoppers want to see, feel, and touch their purchases and talk face-to-face with purveyors. Retailers will also need to innovate to support such preferences once the pandemic abates.
As with most businesses, retailers have made major adjustments in 2020. If the positive signals regarding imminent availability of vaccines and therapeutics come to fruition, there could well be a surge of purchasing as pent-up demand is released. Simultaneously, the lack of a stimulus package is causing some households to become increasingly financially distressed. The bottom line for retailers is yet to be determined, as is the face of future shopping. Stay safe!