US
A number of US retail companies, including Brooks Brothers, Lord & Taylor, Pier One, Stein Mart, Sur La Table, Guitar Center and Neiman Marcus, filed for bankruptcy amid the pandemic. In the meantime, consumers have significantly increased their dependence on e-commerce/online shopping, as evidenced by the rising share prices of e-commerce giants. Amazon (NASDAQ:AMZN)'s share price increased to USD3,200 in August 2021 from USD1,900 in March 2020.
Consumer spending on items such as household supplies and groceries has increased while spending on jewellery, apparel and meals at restaurants has dropped significantly. Many have adopted different shopping behaviours and patterns. For instance, around 40% of consumers surveyed in the US have tried a different brand or shopping method. During the first few months of the pandemic, US consumers had spent far less than usual on items such as jewellery, apparel, out-of-home entertainment and accessories. They expected to increase spending on groceries and household supplies by 17% and 4%, respectively, according to a study in February 2021, and cut spending on apparel by 32%, home décor and furniture by 32% and consumer electronics by 30%. This behaviour is likely to continue even after the pandemic.
Europe
Europeans, too, have changed their shopping behaviours significantly. Online businesses are flourishing and have prevented the worst slump in history by maintaining high levels of retail sales. For instance, online and mail order sales in Europe increased by around 34% y/y in 2020, according to the Federal Statistics Office. Average retail trade fell only by 0.8% in the European Union (EU) in 2020 while GDP growth slumped to 6.2%, according to Eurostat. Online product sales saw positive growth last year, ranging from 5-10% in Poland to 60-75% in Finland, according to a survey conducted in 19 European countries by E-commerce Europe (an association representing 100,000 online retailers in Europe). Although many e-commerce businesses have seen significant growth, travel and online ticket sales in Europe decreased by 40-70%.
In the fashion sector, demand for home wear has been improving while demand for shoes and other types of attire remains low. These trends indicate that despite being hit by the pandemic, the retail sector should see sales growth in both the US and Europe in 2022, mostly from the e-commerce sector.
Post-pandemic trends in retail innovation
E-commerce/online shopping: This trend is likely to gain ground with most consumers having realised the convenience and fewer health concerns associated with it. The World Economic Forum expects department store sales to decline by around 60% and e-commerce sales to grow by 20% this year. Retail giants such as Target (NYSE:TGT), Kohl's and Walmart (NYSE:WMT) have focused on their omni-channel fulfilment strategies to quickly adapt to this shift while other companies are focusing on increasing or planning their e-commerce presence/strategy.
Inventory management: Almost every retailer in the world faced challenges such as a lack of essential supplies or stockpiles of non-essential goods amid the pandemic. Many have now digitised inventory management and are using stores that were previously closed to stock inventory or as fulfilment centres for delivery, to ensure they maintain the function of the supply chain.
Touchless experience: The buy online, pick up in-store (BOPIS) trend is emerging along with touchless payments, curbside pickup and scheduling appointments for pickup. Also gaining popularity is the use of augmented reality (AR)/virtual reality (VR), for example, in product visualisation, virtual try-on and virtual malls, helping customers engage with a product before buying it.
Opportunities to accelerate business
The following are some of the disruptions in the space that retailers should focus on:
BOPIS and curbside pickup: BOPIS is an emerging trend in the retail sector, preferred by consumers in Europe and the US. This provides flexibility in terms of avoiding long delivery time, extra shipping costs and the hassle of shipping back returns. Curbside pickup enables consumers to either pick up items from a location convenient to them or have a sales representative place items directly in a vehicle, making it a contactless experience.
Contactless payment: Consumers could use QR codes or near-field communication (NFC) technology to pay via mobile phone. These methods are safer, faster, more efficient and seamless.
In-store digitisation: If the right digital tools are used, store staff could spend more time serving customers and enhance the customer experience. This could include answering customer queries relating to prices and stock. A new trend of voice-commerce capabilities is also emerging, where customers can search for and buy products via voice command. Innovations such as Amazon Alexa and Google (NASDAQ:GOOGL) Assistant help consumers make shopping lists, purchase products and check the status of an order