21 Apr COVID-19: Turning to History
Retailers across the globe are being heavily impacted by the ongoing COVID-19 crisis. The rapid spread of the virus has led most governments to enact quarantine measures that are unprecedented in their scale. Half of the global population is in some version of a government-mandated lockdown with no clear end date in sight.
The retail economy has been particularly hard hit by the crisis. The freeze on public movement has led to store closures, rapidly rising unemployment, and severely impacted supply chains. Sales figures for March were predictably some of the lowest in recorded history.
In a time when everything feels new it can be helpful to turn to history. No two pandemics are exactly alike but looking to past examples can highlight important trends for retailers to consider:
Brace for waves of impact
Many governments are beginning to discuss, and in some cases are already implementing, an easement of quarantine measures reflecting the decreasing rate of infections across Asia and Europe. Any easement, however, is likely to result in further waves of infections (at least until a reliable vaccine is found). The Spanish Flu of 1918-20, for example, occurred over three waves that led to massive fluctuations in economic activity. Early data from China and South Korea suggest the current crisis may develop along a similar path.
Subsequent waves of infection will require further flexibility from retailers. Dynamic and reliable communication across entire store teams and portfolios will be crucial as businesses adapt and brace for impact.
Expect changes to consumer behaviour
Behaviours adopted during a crisis are often far more durable than the crisis itself. The 2002-03 SARS outbreak, for instance, is credited by many in aiding the rise of e-commerce giant Alibaba throughout China as consumers grew increasingly comfortable with at-home purchasing.
COVID-19 is likely to act as a catalyst for changes that were already underway long before the crisis began. The pivot to online shopping is likely to be exacerbated and sustained, to some degree, after the crisis has ended as consumers become increasingly reliant on retail giants like Amazon. The decline of shopping malls, furthermore, is likely to be hastened by a weary and timid return of consumers to crowded public spaces.
Declining footfall has plagued high-street retailers for years. The Office for National Statistics reported that sales for February, before the crisis began in the United Kingdom, were already considerably low. The current crisis has accelerated this decline.
The strongest retailers in the post-pandemic world will be those who are able to provide the best in-store brand experience for customers in order to incentivise their return to the high-street. This will require brand integrity, strict compliance, and an awareness of changing consumer behaviours.
Plan for eventual economic recovery
It may be difficult to believe, but the current crisis does have an expiration date. The Harvard Business Review recently analysed data from pandemics of the last century and concluded that each represented a temporary shock to the economic system resulting in disrupted supply chains and sizeable declines in economic activity. No decline, however, outlasted the crisis itself and most losses were subsequently absorbed by stabilising growth rates.
The study concluded that the current outbreak would likely be no different in its long-term trajectory, but that the road to recovery may be longer and more taxing on small consumer-facing business. While retailers act to mitigate the worst impacts of the crisis, it is important to keep one eye on economic recovery and to plan for the post-pandemic world.
COVID-19 is undoubtedly an existential threat for many retailers. Yet, it also provides an opportunity for growth and adaptation to meet the emerging economic realities. Dynamic and reliable communication, brand integrity and compliance, and an ultimate focus on in-store experiences will be the keys to the successful re-engagement of post-pandemic customers.
If you would like to discuss how we can help with your preparations for store re-openings or continued team communication and engagement, then please get in touch – we’ll be happy to help!