- Traditional retail outlets struggled prior to the pandemic as consumers enjoyed the convenience of online shopping.
- The pandemic amplified this trend and technology companies have enjoyed record profits during the health crisis.
- In-store shopping must evolve and innovate to survive, and big changes are being implemented.
The world of retail is currently experiencing labor shortages and high consumer demand, simultaneously. While it is unclear how the industry plans to cope with these matters in the short-term, in the long-term, we can expect big changes that are already being implemented.
The way retail shopping and work is managed is going to change after the pandemic.
But in what ways? Will we regain the pre-pandemic model of the retail industry? Or will things shift completely to online shopping?
The shift began before the pandemic
The pandemic has transferred the general world of work over to the internet.
Remote work is at an all time high, and this is projected to only increase as time goes on. The retail industry – with respect to working and consuming — is no exception in this respect. However, the pandemic didn’t cause this shift to occur: it simply amplified a shift that was already in motion.
Prior to the pandemic, consumers already began to shift from going into stores to shop, to simply shopping online. The pandemic simply made it so –at least initially– online shopping was the only option.
The United Nations’ division on trade and development, UNCTAD, reported “the e-commerce sector saw a ‘dramatic’ rise in its share of all retail sales, from 16 percent to 19 percent in 2020,” boosting global e-commerce to $26.7 trillion because of Covid-19.
Changes in what consumers buy online
The pandemic has changed the types of things people buy online. For instance, shopping for groceries online pre-pandemic was quite uncommon. Now, by contrast, 61 percent more consumers shop online for groceries.
Working in retail during the pandemic initially entailed not working at all. Retail workers –at least in the U.S.– were not considered essential workers, and thus were out of work.
Now that things are beginning to re-open –and in some states, like New York, where things have been virtually back to normal for months– retail workers aren’t necessarily coming back.
In September alone, 685,000 retail workers quit their jobs, according to the U.S. Bureau of Labor Statistics.
Retail workers are leaving their jobs in droves because of the poor conditions and low pay. Nominal pay raises and improved benefits by retailers have failed to entice workers back to the cash registers, stock rooms, and restaurant kitchens.
What new developments are here to stay post-pandemic?
Online shopping will continue to increase
Online shopping is here to stay and comes with benefits.
However, we should not get our hopes up that online shopping will totally replace in-store shopping. 91 percent of shoppers report that they miss being able to shop in-stores. The demand is there, and thus the retail industry will supply.
Nonetheless, in-person shopping will become subordinated to online shopping. According to the U.S. Centre for Retail Research, “rapid online growth will continue for at least another eight to ten years … between one-in-ten and one-in five stores will no longer be needed.”
While we will not be saying goodbye to retail stores completely, it seems inevitable that we will see fewer of them.
Challenges with supply-chains
The current labor shortage in the retail sector is one reason –among others, such as a literal lack of space in dock yards for offloading– there are currently issues with the supply chain. According to Johns Hopkins University, labor shortages and supply chain problems reinforce one another.
When prices change, demand does as well, and when demand increases while the amount of laborers decreases, it makes conditions for existing retail laborers even more challenging. This, combined with the increased use of online shopping may drive even more workers to quit their retail jobs in the coming year.
Indeed, “the full impact of supply chain issues is yet to be felt.” The future for retail consumers will be less variety and higher prices. And the future for retail workers might either entail long-term negotiations for better working conditions or simply less available jobs.
The potential rise of experiential retail
As stated earlier, online shopping is going to make in-store shopping a subsidiary form of retail consumption. However, this isn’t necessarily a bad thing for in-store shopping. In fact, it might even enhance in-store shopping.
While in-store shops will reduce their numbers, quality might overtake quantity with the advent of “experiential retail” shops. These sorts of stores have actually been around for quite some time. I personally have fond memories of the Toys R Us in Times Square, which was far more than a store –it was essentially a store embedded within an amusement park!
Experiential retail stores are designed for more than shopping: as the name suggests, they’re designed to give customers a memorable experience. 72 percent of millennials, for instance, report that they’re more willing to spend money on memorable experiences than they are on merely shopping.
Expect more experiential in-store environments
If in-store shopping will become the minority of retail experiences, retail companies must create incentives to entice consumers.
The shift over to experiential retail shops has already begun. Malls throughout the U.S., for instance, have already spent billions of dollars on creating experiential malls with theme parks in them. Unfortunately, many of these malls were created before Covid, so the bills are now piling up –creating even more of an incentive for retailers to get people into stores and malls to have these memorable experiences.
The retail industry’s post-pandemic vision looks quite different from its pre-pandemic model. Online shopping will largely take precedence, and in-store shopping will likely become less about shopping, and more about experiences. The hope for retailers in the long-term is that retail workers are accommodated as these changes take place, and that such accommodation can help to reduce supply chain issues.
