How Covid-19 Impacts Retail Industry
Retail sales, a measure of purchases at stores, at restaurants and online, increased a seasonally adjusted 17.7% in May from a month earlier and is the largest monthly surge on record, the Commerce Department said Tuesday. Still, retail spending remained below pre-pandemic levels in May, totalling $485.5 billion compared with $527.3 billion in February.
Even before the outbreak of Covid-19, many retailers were grappling with changing shopper preferences and habits as well as with cruel competition. The Covid-19 crisis has only magnified the pressure, with headlines suggesting a “survival of the fittest?environment. Many retailers including Macy’s, Neiman Marcus and Nordstrom have announced permanent store closings or intentions to file for bankruptcy during the past weeks.
And even when stores start to reopen, the pandemic will have left an indelible footprint on how consumer-facing businesses operate. Covid-19 has acted as an accelerant to shifting consumer preferences and business models. People are using social media even more, shopping online in unprecedented numbers and seeking out purpose in their purchases. Retailers are responding with alternative delivery methods and more digital touchpoints across the shopping experience.
The behavioural changes are already in motion and will completely change the retailing landscape and commerce overall for years to come. Many retailers are considering to adjusting the marketing tactic. For example, Inditex, the parent company of fashion brand Zara, announced plans to close up to 1,200 smaller-sized stores, as the fashion giant unveils a proprietary digital platform and pivots to accelerate its digital transformation. Inditex will be scaling back on its retail locations for its brands, but it will also invest $3 billion into its online shopping platforms over the next three years.
For retailers, it is a time to look at areas of the business that need improvement ?marketing strategies, supply chain diversification and planning for the moment stores do reopen. No one knows what a post-COVID future looks like. Though there are hopes that we will slowly get back to “normal,?it is evident that retail industry will take a long time to recover from Covid-19.
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