The COVID-19 crisis created a new reality for retailers and other consumer-facing businesses. Since the pandemic first hit, the entire industry has had to constantly pivot to changing restrictions and demands, while still maintaining a focus on daily operations and trying to plan for the future.
Even our lives and our livelihoods gradually recover, and things move into a new state of normalcy, the future of retail is uncertain. As a retailer, it's crucial to get proactive about planning for the post-COVID-19 world.
But what will this retail world look like? Will it return to a pre-pandemic state? Will there be a boom in sales due to depressed demand or a significant reduction in spending due to consumer uncertainty? Will there be an increased pace in the paradigm shift from physical to digital retail?
Potential characteristics of a post-crisis retail world
There is still much uncertainty, but our best guess is that the financial, operational, regulatory, and psychological effects of the coronavirus pandemic will linger well past the social distancing and isolation phases to define a new normal for retail. Some potential characteristics post-COVID-19 include:
What to do next?
The retail world must prepare for a new normal. Benjamin Franklin said “By failing to prepare, you are preparing to fail.” Part of preparing for retail businesses is to form a strategy around the main elements of their business success - their customers, their workers, their merchandise, and their finances.
A familiar shopping experience can put your customers' very real fears of a pandemic at ease. Retailers will need to create or re-create shopping environments that emphasize cleanliness, and support a more distanced way of shopping. Actions can include:
- enhanced e-commerce and pick-up-in-store options
- re-organized physical store structures to accommodate more pick-up orders, additional self check-outs, and reduced clutter in the aisles
- increased physical protection of fresh foods while aiming to preserve an efficient and enjoyable shopping experience
- increased presence of hand-washing and sanitizer stations
- increased availability of protective equipment for employees and customers
In spite of the spike in lay-offs prompted by temporary business closures, Canada is and will still be a dominantly service-based economy post-COVID-19, and workers will be needed to deliver goods and services. Human capital planning and assessment will be critical. Retailers will need to re-align their teams after the current and expected reductions in their workforces, and will need to pivot in order to retain good employees. Expect to see:
- an increase in wages
- more flexibility on shifts
- more granting of sick leaves
- a greater availability of top performers at all levels to help retailers grow their businesses
Consumers have continued to buy during the pandemic, and will keep doing so afterwards—however, their choices of goods and services will be influenced by the changes in their financial and living situations, their near-term aspirations, and over-buying of some goods. Expect to see increases in the following categories:
- value brands for staple products and services
- health, wellness, and personal safety products and services
- home delivery of goods and food, including growth in the direct-to-consumer (DTC) channel
- subscription-based services that reduce shopping trips and interactions
- electronics and other devices that support home-based transactions and experiences
- personalized and/or private service delivery, including those willing to pay a premium for them
Undeniably, the pressure on retailers is immense and there will be changes resulting from COVID-19, but change doesn't have to be negative—it just needs to be strategic.
It starts with deciding if you are a buyer, seller, or survivor. Are you in a position to buy more assets – be it product, technology, or even additional companies to grow your business? If so, then you need to carefully plan for these transactions. Does it make more sense for you to start the process of selling your business, if your projections show you running out of cash and options? If so, you need to plan on how to maximize your value and minimize the disruption to all stakeholders. Or, are you somewhere in between and able to make the necessary adaptions to survive the crisis and come out the other end? If so, then you need to think about how this post-pandemic version of your business compares to the pre-pandemic shopping experience that your customers expect.
Either way, being proactive in managing your business in these challenging times is critical. Doing nothing is not an option.
How can BDO help?
In these challenging times where implementing new strategies quickly is critical, an experienced BDO advisor can offer guidance and support. We understand that adapting your business can be overwhelming and we are here to help you navigate these changes.
Explore our retail service bundles, designed specifically to help your retail business in a post-COVID world, to get the conversation started.