While most businesses affected by COVID-19 are combating forces to save their company at the moment, developing a long term strategy is vital to successfully operate the retail industry over the next several years. A variety of factors are affecting the world of retail right now. Retail companies that are revolving around increasing and fluctuating consumer demands have to constantly acquired new practices, technology and trends to stay relevant. For many, the current pandemic crisis can become a turning point in a customers’ perception of your business.
How is consumer behavior in the U.S. is shifting?
There are already a few visible changes in the way U.S. consumers shop and spend. While some industries experience a decline in sales, others see positive shifts. Here are a few key outtakes:
- Apparel and beauty retailers are seeing a decline in sales, while sports footwear companies see an increased demand
- Small appliances, mostly linked to increased at-home cooking and cleaning, are in higher demand
- Consumer electronics and toys retailers are seeing an increase in sales
- Disinfecting wipes, sanitizer, and other cleaning tools are clearly viral products among consumers
What trends will drive retail success in the upcoming years?
Brand responsibility
Brand image and company initiatives had been a trend for a while now. This mainly includes environmental impact, social responsibility, etc. How you treat your employees, how you use your resources for the greater good, and how you handle difficult situations are all growing concerns amongst the public. How businesses react to our current situation will determine how customers will assess them later.
Omnichannel reality
Although this phrase has lost some relevance in recent years, many retailers still associate it with the future of the industry. Consumers no longer distinguish between online and offline shopping, so they may shop in one channel and check out in either. 73% of shoppers have researched and purchased products using multiple channels in the last few years. This is something that retailers have capitalized on by coming up with agile solutions for both online and physical retail. consequently, consumers are no longer satisfied with products that are only aesthetically pleasing.
2019 and beyond will demand more as the rapidly maturing technologies of AR and VR can be used to augment the shopping experience in a given store. You’ll miss out on sales opportunities or cause your brand damage if you don’t meet customer needs on the platform they are on. To start, you should take an omnichannel approach and offer consistency in the way you sell.
Entertainment
Today, bad news is the last thing your customers want to hear about. It’s everywhere, but good entertainment and support that provides relief is much harder to find. Everyone is confused now, and people in quarantine need a shoulder to lean on. Make sure to develop a creative strategy, or just provide a supportive note that implies trust in the future for your company and your customers.
Going digital
While this trend is already well implemented in society, it is expected that more and more customers will be going digital. Current conditions force people to adjust to the use of digital services, whether or not they have never used them before. Retailers have to react quickly and acclimate to their new roles with the tools, platforms, and services their customers are now actively using. Ultimately, customer habits will vary whether it be in the short-term and long-term, and becoming a resilient and flexible business is crucial to staying in the race.
Rise in private labels
A CB Insights study shows that private labels sell more than branded products within the retail industry, with brands predicted to reconsider their strategy in the coming years. This is true in Europe, where 40% of groceries sell in private label form. America still has some work to do, but it’s on the right track—have you heard of Trader Joe’s, after all?
One of the reasons big retailers move to manufacturing in-house in recent years is because they realize that it earns them an average of 25% more on average than what they would normally get from any given grocery item. Compare this to the typical 1.3% gross profit from a typical grocery item and it becomes apparent why in-house manufacturing has become more common. Hence, this flexibility allows retailers to more freely set competitive prices. And millennials are fueling this expansion (Frozen & Refrigerated Buyer). One quarter of an average shopping cart consists of a private label product, whereas a millennial’s would consist of thirty-two percent. This indicates that if you want to get to the heart of the millennial market, you will need to start creating private label products. I’m guessing that, for the time being, they’re staying put.
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