The retail industry – where we are and where we are headed

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retail industry

For the retail industry, the past couple of years has been extremely challenging. Across the world, many retail stores and physical service providers like beauticians, have experienced long periods of forced closure.

Even when they re-opened, the number of customers they could serve was initially severely restricted. A situation that led to some retailers going bankrupt, including several national chains. The pandemic has severely shaken up the retail industry. Exactly how much remains to be seen, but studies and sales data from countries that have not experienced any lockdowns for months indicate that some of the changes are quite radical.

Here we review the current state of retail and provide an insight into what we can expect to see happen in the near future. Mandoe Media’s retail survey makes for interesting reading and includes some surprising results. Recently, they interviewed 850 consumers from Australia, the UK, and the USA, and uncovered some interesting trends.

But before we dig into the results we need to first look at the way the pandemic changed the way people shop. This sets the scene.

Online shopping became the norm during the pandemic

Unsurprisingly, many consumers began shopping more online. During lockdowns, it was the only way to get many products. In most countries, stores that sold what were considered to be non-essential items were forced to close completely, sometimes for months. In the USA, online sales increased by 32.4% during 2020 when compared to pre-pandemic figures. During Q1 of 2021, 39% of all purchases in the USA were done via the internet.

Even those stores that were open saw far fewer people coming through their doors. People avoided going out wherever possible. As a result, many food stores and supermarkets saw sales from their online stores take off, while those generated by their physical outlets dropped off. In the USA, before the pandemic, the online groceries market was worth about $6 billion. By November 2021 sales had reached $8.6 billion.

The current state of retail

Naturally, many physical retailers were worried by this change in the way people shopped. Especially business owners that are not able to sell their products and services online. They were not sure that people would return to shopping with them once the pandemic was over.

Shoppers are becoming more confident

Fortunately, to some extent, their fears are proving to be unfounded. When Mandoe Media asked people if they were planning to return to shopping in physical stores, the answer, in many cases, was, yes. Fifty-eight percent of them said that they felt confident about visiting retail stores again.

Many of them were planning to shop as much in-store as they did pre-Covid. In fact, 54% of them stated that. Before the pandemic, they had enjoyed the in-store shopping experience, so were keen to start going to the mall or shopping on their High Streets again.

In some markets, that is already starting to happen. People in the UK are slowly beginning to go to the supermarket more often. In 2020, households visited the supermarket 15.3 times a month. The latest figures show that they are now doing it 15.7 times per month.

Home deliveries are here to stay

Something that is a bit of a relief to the major brands, because they have found it hard to make the same level of profit from home deliveries. This is partly because many retailers were forced to open new facilities in locations that were not suitable. That and having to pay higher wages to attract workers added to their running costs.

Now that things have calmed down, supermarkets can regroup, learn the lessons, and tweak their home delivery business. Therefore, they will be able to make that part of their business far more profitable than it was during the pandemic.

But the “last mile” issue, which has always been the problem for the retail industry, still needs to be solved. Transporting a small amount of goods to addresses that are sometimes miles apart is time-consuming and expensive. The obvious answer is for consumers to pay more for delivery, but retailers know that if they put their charges up they will lose customers.

Consumers want more from physical retailers

The Mandoe Media survey has revealed that the pandemic has resulted in consumers being more discerning than they used to be. They expect more from the retailers they shop with. They said:

  •   100% of respondents were respondents said that diversity, inclusivity, and sustainability were important to them
  •   75% of the Australians surveys said that they were drawn to those stores that actively demonstrated that they were concerned for their well-being
  •   66% of Australian respondents said that customer service is an important element of their in-store experience

Consumers are ready to support their local retailers once again

Mandoe Media´s survey showed that during the pandemic, consumers put their well-being and health ahead of supporting local retailers. Now things are calming down and getting back to normal, consumers are once again willing to support them. But only those that trade in a socially responsible way have something extra to offer.

Fear of inflation is changing people´s spending habits

Now that the pandemic appears to be ending the impact it is having on the retail industry is bound to wane. Moving forwards, it is inflation that is going to change things the most. The cost of raw materials, services, power, fuel, and probably labour too are all going to go up at an even faster rate than they have over the past few years. At some point, and soon, manufacturers are going to have no choice but to pass much of that cost onto their customers, store owners. They in turn are bound to put their prices up. There is no doubt, this will change where people shop and how they shop.

It will take a few months before we see how things pan out. But there is little doubt that the retail industry will change and do so at a much faster rate than it did before the pandemic.

 

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