Expect a Brand New Retail Experience Post-COVID-19

It seems that the retail sector can’t catch a break. It was just a few years ago that people—otherwise in the know—were predicting the fall of brick-and-mortar at the hands (or should I say fingers?) of internet shopping.

Now, as we at last begin to emerge from the stay-at-home orders, the rumors seem to be flying again. This time the negative buzz points to the reluctance of anyone to shop in confined spaces.

In fact, as we all know by now, the retailers that trafficked in essential goods, such as the pharmacies and the home-goods stores, held their own throughout the depths of the crisis. Speaking in the broadest of terms, it was the non-essential purveyors, the “Want” stores, as opposed to the “Need” stores, that felt the pinch the most, often to the point of closing their doors.

As McKinsey reported recently: “Store closures and sharp declines in discretionary consumer spending have crippled nonessential retail (other non-food, apparel, fashion and luxury products). Many retailers have already had to make tough choices, including temporarily or permanently closing doors, furloughing employees and more.”

That said, the reality is that the beleaguered brick-and-mortar retail market is still not about to go away. Much like the other food groups, especially office, but industrial and hospitality as well, retail will have to reconfigure its physical approach to adjust to what is tiringly referred to as the new normal.

The most successful retailers redefined themselves and adapted a new term in the wake of their last internet challenge, and “experience” became the key to brick-and-mortar retail, something web stores couldn’t match. To be successful once again in this post-COVID environment, they will once again have to revisit the concept of experience.

I totally agree with Peter Maxwell, a retail guru writing recently in Frameweb.com:

“If retailers are to bounce back after the lockdown lifts, it will only be through establishing their premises not solely as experiential playgrounds, but also as trusted and transparent safe havens. This is important not only to inspire confidence in what are likely to now be hyper-hygiene-conscious consumers, but also to ensure operations will be able to continue as close to the new normal as possible should another such event (or relapse) occur.”

So it is likely—and not at all surprising—that you can expect to continue to see distancing tape markers on retail floors, store associates greeting you with smiles hidden behind masks and the aroma of Purell wafting through the store for the foreseeable future. Retailers in tighter spaces will likely be limiting the number of customers they can comfortably accommodate at one time. Maxwell even points to the help of technology as in Amazon’s just-walk-out concept, wherein shoppers touch only those items that they intend to carry out. He reports that the mega-retailer is also planning to white-label that technology for others.

Beyond that, no one truly knows. How retail, and for the matter, the other above-mentioned product types, adapt to health and safety concerns six or 12 months down the road is impossible to say. It will be measured in what are now unknowables such as consumer confidence, local, state and federal mandate and, most important, the vague threat of a relapse into COVID.

McKinsey did bring up one tantalizing possibility for investors. Mergers and acquisitions are a behind-the-scenes possibility for many stores that have trouble taking off after the virus is gone.

“Despite this challenging environment, analyses of past crises have shown that there is still potential for value creation through M&A across industries,” the authors state. Depending on conditions, this strategy could include the outright purchase of a competitor or of a brand that expands the buyer’s product offerings.

Yes, retail is changing, both in terms of its look and its operations. But change, rather than tolling the death knell for the sector, is exactly what will keep retail alive and vibrant.

There is an old saying about asking five economic experts their opinions and getting six different answers. Such guesswork aside, my money is on the brick-and-mortar retail sector.