When customers quit coming to physical stores as the COVID-19 pandemic swept in, some brick-and-mortar retailers found ways to stay in business. But rather than skirting stay-at-home orders and flouting federal health advisories, they modified their models.

A new report from Reonomy examines different tacks physical retailers took when they went into crisis mode.

Some repurposed and adapted their spaces, according to Reonomy. Restaurants, for example, began selling groceries in addition to fulfilling takeout and delivery orders. Panera Bread continued selling signature items but also added dairy products. Just Salad went a step further and started offering toilet paper with delivery orders.

Big-box retailers, with their vast spaces in prime locations, kept the lights on but the doors locked while becoming e-commerce fulfillment centers instead of welcoming shoppers, according to Reonomy. Bed, Bath, and Beyond closed many of its stores temporarily and converted about 25% of its locations, including buybuy Baby shops, into regional fulfillment centers.

"When non-essential space, which otherwise would be closed, is able to be repurposed and serve as surge capacity to help fulfill essential needs and help combat this pandemic, it is beneficial for all within that community and is an effective use of the space," the Reonomy report said.

Considering uncertainties still at play during the pandemic, Reonomy also turned its view to the future. Many retailers will remain in crisis mode as they try to adapt, and some will die. But one point from Reonomy was clear: "Many retailers are not going to make it through this crisis, but Americans will continue to consume."

Things will change "dramatically" for retailers, Reonomy said. But what will remain from the pandemic remains to be seen. One facet likely to stick around, Reonomy said, is more online ordering for pickup and delivery from retailers. Another part with potential staying power is "flexible" retail spaces, where proprietors can reach their customers through a range of capabilities.

"This period might just end up looking like a retail reset—the changing of power from the established big retailers of the past (department stores, for example), to some newer, more diversified sales channels."

Instant Insights /

Not Deserted But Different: Retailers Adapt Their Physical Spaces in a Sign of What's to Come

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