After years of uncertainty, brick-and-mortar retail stores seem to have been pushed to the brink by COVID-19 — but the truth might not actually be so simple. According to marketing firm Hawke Media, retail sales are down by more than 6% year on year, but they’ve recently begun to rebound rapidly.
With big names like Macy’s and J.C. Penney closing stores at unprecedented rates, it might seem easy to declare retail officially dead once and for all. As states begin to lift their lockdowns, however, lots of people are eager to get out of the house and engage in activities within their community. Buying products online may be cheaper or more efficient, but retail stores still have a bit of magic left in them for the average consumer.
As new cases of COVID-19 begin to emerge at alarming rates, the future of in-store retail is once again thrown into uncertainty. Retail is certainly changing, though it’s difficult to say exactly how. Here are a few trends worth watching out for:
The End of Malls
Malls, once a staple of the American shopping experience, have quickly fallen out of fashion. Research from the Yale School of Management shows that in the period from 2007 to 2009 alone, 400 of the country’s 2000 largest malls were shuttered permanently. This trend was only intensified by the recent lockdowns and social distancing requirements, with consumers wary of crowded indoor locations.
Despite the doom and gloom, the story isn’t one of decline alone. In their report of the future of malls, Credit Suisse noted that outdoor shopping streets, depending on their layout and location, have the potential to thrive in a post-mall world. Because of the unbeatable affordability of online shopping, brick-and-mortar stores need to switch to a nontraditional model that focuses on advertising and new products in order to stay competitive — department stores can no longer thrive, but marketing-focused flagship locations just might.
As traditional malls falter, outdoor shopping centers continue to grow in popularity. According to data from FactSet, outdoor strip malls saw their share prices rise by 7.7% last year, a stark contrast to the 20.2% fall seen by enclosed malls. Strip malls’ lack of large indoor spaces also makes them a better alternative for those hoping to shop while keeping the risk of exposure to COVID-19 as low as possible. While the classic American mall might be no more, with its fall comes the potential for several other shopping models to take its place.
Buying in Bulk
If buying in bulk wasn’t the norm before, it is now. The specter of a potential outbreak or lockdown at any moment has inspired consumers across the country to start buying essential items in large quantities, maintaining a large stockpile for whatever might come next. While it’s entirely possible to put in all of your bulk orders online, a visit to a nearby warehouse store will likely be faster and more cost-effective for most.
The share price of Costco nearly doubled in the period between August 2015 and August 2019, and Sam’s Club has shown impressive signs of growth as of late, following years of decline. It’s entirely possible that stores such as these will now be the new normal for many shoppers: The stores’ steady incomes from membership fees makes it easier to procure large quantities of certain goods in advance of demand, lowering the possibility of burdensome shortages for their customers.
The risk of contracting COVID-19 has made casual shopping a thing of the past for now — consumers are now more focused than ever when they grab their shopping cart. Stores that allow people to buy bulk quantities for cheap are ensuring patronage for themselves well into the future.
Now more than ever, shoppers are looking for ways to spend their dollar responsibly. Social media firm Brandwatch looked at how people were talking online about shopping and found that the conversation around buying sustainably, locally, and ethically was up 362% compared to just a few months prior. After seeing the ways that COVID-19 has ravaged their community economically, people want to buy in a way that gives back.
Buying local may soon become more than just a trendy habit. COVID-19 continues to threaten the strength of the food supply chain across the world, with the number of people at risk of going hungry nearly double what it was this time last year. If the pandemic continues to run amok, many chain stores and online distributors may no longer have access to the goods they regularly sell, forcing their customers to gravitate toward more local options.
Stores that both draw from and give back to their community are some of the best poised to survive the decline of retail. A store that’s well-integrated into its neighborhood is one with a built-in customer base that can help them weather any storm ahead.
When every product someone could ever want is available online, stores need to make a special effort to get customers through their doors. Kantar ShopperScape found that more than two-thirds of consumers make a special point to shop at places that provide high-quality customer experiences, meaning businesses can no longer expect people to shop with them just for their goods. The most successful example of this model is the Apple store: an aesthetically pleasing environment that’s not just for buying new products, but also for repairing and upgrading older ones, as well as getting advice on how best to use them.
The more a potential in-store experience has to offer, the more likely customers are to brave leaving the house and go shopping. If people can buy a business’s products online, that business’s brick-and-mortar store needs to offer some kind of service or experience that can only be obtained in person in order to incentivize retail visits.
Reports of the death of retail may be exaggerated, but there’s still some truth to them. Physical stores are against the ropes, and businesses need to be thinking of new ways to put the consumer first in order to last.