The world is a different place than it was 6 months ago. As companies try to maintain their business and stay afloat, many are wondering about the long-term impact of coronavirus on the retail and ecommerce industry.
With this major shift in retail, traffic to stores has almost completely evaporated. While online credit-card transactions have greatly soared.
Before the pandemic, a big part of shopping was the hands-on experience: Eating samples at the grocery store. Spending an afternoon in the fitting room. Trying lipstick at the beauty counter. Swiping a credit card on a long-desired purchase.
Adjusting Marketing Strategies
That’s all changed and marketers have had to adjust their marketing campaigns to adapt. Retail and ecommerce may be in for more permanent changes as the aftereffects of coronavirus are sure to be felt long after it’s gone. It’ll change how consumers shop, interact and prioritize their lifestyle choices.
Though consumer spending has picked up since many cities and states began lifting lockdown restrictions and allowing stores to reopen in May, only some sectors have regained lost ground.
Sales, profits and hiring at many grocers and home-improvement retailers are up. Many apparel sellers have slashed staff and closed stores for good.
Online Transactions Up 88%
The pandemic pushed many of the last online-shopping holdouts over the e-commerce hump. Online transactions with credit and debit cards have increased an average of 88% each month since the beginning of April, according to weekly transactions collected by financial-data firm Facteus.
Home Depot Inc. said online sales doubled in the second quarter, while Dick’s Sporting Goods Inc. said the retailer’s online sales nearly tripled in the same period.
Big retailers such as J.C. Penney Co. , Neiman Marcus Group Inc., GNC Holdings Inc. and Brooks Brothers Inc. filed for bankruptcy protection, and collectively they have closed hundreds of stores.
Since last April, some 5,000 stores in the U.S. have shut their doors for good. However, in the same period only about 680 new stores opened. In the month of August 2020 alone, almost 2,200 retail stores closed while only 14 opened.
Retail Sales are Climbing
U.S. retail sales have been climbing steadily since late May, though several categories are still struggling.
The non-store retailer category, which includes online merchants, maintained the highest growth rate since the beginning of the pandemic, with an average increase of 22.6% between March and August compared with the same period in 2019.
Grocery stores had a 31% sales uptick in March compared with a year ago, but growth has slowed since then.
Commercial Real Estate: The Shop Local Campaign is Successful
Meanwhile, there’s been a growing trend to shop local as millions have been unemployed, many from local businesses including retail shops. Keeping dollars in the local community and supporting small businesses post-pandemic will become more important than ever.
Don’t be surprised to see local restaurants and other small businesses pop up across the country. Communities have a way of coming together after catastrophes, New Orleans being an example after Hurricane Katrina.
Local businesses should invest in growing their online presence and staying in touch with their customers via email and through social media. Consistent marketing efforts will help businesses to stabilize faster when things get back to normal.
With 2020 in our rearview mirror and 2021 in focus, we know that consumer-shopping habits are ever changing and retailers need to adapt in concert while remaining financially viable.
With adversity comes opportunity. For retailers, focusing on customer needs and building loyalty may never be as important as it is right now.
The Role of the Vaccine
According to an article published by Deloitte & Touche due to the availability of a vaccine they are optimistic on recovery.
“While the impact of COVID-19 on consumer spending is likely to continue for the next two quarters at least, widespread vaccine deployment next year is expected to trigger a revival.”
The presence of a vaccine has definitely boosted consumer optimism as well as made a positive impact on the stock market.
The Stock Market
A number of strategists have so far offered their outlooks about where they think the S&P 500 is heading in 2021 – and each one is expecting it to go up.
The New Year is anticipated to usher in the distribution of a COVID-19 vaccine and a new presidential administration with a split Congress, alongside an extension of this year’s improving economic activity and low interest rates. Many analysts have cited this medley of events as fuel for another rise in equities.
Piper Sandler strategist Craig Johnson sees the S&P 500 jumping well above 4,000 next year, the path forward is likely to be bumpier than it was this year, when stocks took off on a meteoric rally off of their March lows.
With a vaccine on the way, Johnson said he ultimately believes that “hope will prevail,” sending the S&P 500 up another 14% by year-end 2021 from its recent record closing high from December 8.
Johnson added that he expects rates to increase next year, as additional monetary stimulus revs up the Treasury supply and stokes growth and inflation expectations.