Strolling around a store just a few months ago, few could have even begun to imagine what was coming.
Today, as COVID-19 continues to sweep around the globe, retail finds itself in a watershed moment. Retail businesses need to flex to accommodate an increasingly digital world – one in which the in-store experience has changed forever.
But, recreating certain aspects of the in-store experience has traditionally been impossible to do online.
That is, until now.
Source: Business Insider
According to Coresight Research, by the time April 2019 rolled around, U.S. merchants had already announced the closure of nearly 6,000 physical retail locations for the year. To put that into context, that’s more than in the entirety of 2018.
Considering the longer-term outlook, things don’t get any rosier. Forbes quotes a study from Investment firm UBS, estimating 75,000 brick-and-mortar store closures by 2026. This has led to talk of a ‘retail apocalypse’.
Yet despite all the doom and gloom, 88.6 percent of retail sales were still made in brick-and-mortar stores as of the last quarter in 2019.
This goes some way to explaining why COVID-19 has caused such unprecedented disruption. Had we already moved to a predominantly digital model, people could simply have continued shopping as normal. Instead, 92 percent of shoppers say their shopping habits have been impacted.
Make no mistake though, the move away from in-store and towards online is happening. COVID-19 may not have started the process, but it did give it a giant helping hand.
As soon as widespread stay-at-home measures were introduced, it became clear in-store retail would be badly affected.
Businesses have been hit hard, with Forrester predicting that global retail losses will likely reach a staggering $2.1 trillion in 2020 – taking four years to overtake pre-pandemic growth levels. And it’s not the e-commerce industry bearing the brunt of this.
Though there will be regional variations, non-grocery offline sales are predicted to see a 20 percent decline in overall growth. E-commerce growth, on the other hand, will remain mostly neutral.
Even where stores have been able to stay open, customers are often greeted by enormous lines snaking out onto the streets. And when they finally do get inside, they encounter strict measures to prevent the spread of disease.
Customers are kept a safe distance apart with face coverings/masks for both customers and staff. There are limits on the number of customers allowed into stores at any one time – and they may have to follow a one-way system once inside. Some stores have even erected temporary paneling as protection against airborne particles.
All in all, this adds up to a wholly disconcerting experience – and certainly not one that is sustainable in the long-term.
The impact of COVID-19 will take a lasting psychological toll on customers. Without effective treatment options or vaccines in place, customers – if not lawmakers – will demand stores do everything possible to stop the spread of disease. The results of this can already be seen, with 87 percent of shoppers saying they would prefer to shop in stores with touchless or robust self-checkout options.
Although some kind of distancing between staff and customers is likely to stay in place beyond the pandemic, employee and customer interaction is surely likely to continue. After all, the loss of human connection has been one of the aspects of the pandemic that pains people most. Where this is not possible or desirable, technology looks set to step into the breach.
The reality is that consumers want an in-store experience. One study reports that 35 percent of consumers say an enjoyable in-store experience would make them more likely to shop with a retailer, and 30 percent say it would make them more likely to purchase more. Over a third also noted they would be more likely to shop with a brand or retailer that is associated with fun experiences.
So, despite all the changes, there will continue to be a role for in-store experiences.
Getting customers back through the door, however, is going to require some effort.
The fear of infection is not likely to go away any time soon. That means stores must go out of their way to protect their customers.
But ensuring a safe environment might involve a fundamental shift in how we shop – and in particular complete transactions.
Even pre COVID-19, Amazon had opened the Amazon Go Grocery – allowing customers to simply browse, grab the items they want, and leave. The cost is automatically taken from their Amazon account. However, there is still no way of knowing how many other customers have touched the same product.
Touch-free shopping seems to be the way to go. RFID and Bluetooth can provide content to a customer’s mobile phones without any direct contact. QR codes and barcodes can also be scanned, giving customers the opportunity to complete transactions on their mobile devices and ship directly to their homes.
Retailers who can create true touchless automation – lowering risk to consumers and employees alike – look set to enjoy a competitive advantage in future.
The reduction in physical contact looks set to boost the evolution of omnichannel shopping experiences. Omnichannel fulfillment options such as click-and-collect will likely grow in popularity, and some locations may even be converted to “dark stores” that deal exclusively in fulfillment.
When society eventually moves on from the immediate impact of coronavirus, existing stores could position themselves as experience hubs – offering services and encouraging customers to buy over multiple channels. Nike’s store in New York’s SoHo district may be a sign of things to come. Customers can try on shoes in a variety of simulated sporting environments – including a basketball court, soccer field, and running track – offering customers a new way to choose products.
In-store can even take a leaf out of online’s book, using AI to generate recommendations at the point of sale, drawing on historical product recommendations – as popularized by Amazon. The store assistant simply passes on the suggestion to customers. With the power of machine-learning, the process gets more and more accurate over time.
Whilst the brick-and-mortar in-store experience will undoubtedly live on in some form, the opportunity is there to push shopping experiences into a new era – creating viable in-store alternatives available digitally. This will involve not only mirroring what has traditionally been so unique about in-store, but adding to it to create truly novel online experiences.
Face-to-face interaction has always been absolutely fundamental to the in-store experience – an advantage it’s had over its younger online sibling. Online shoppers, on the other hand, have been left isolated. Yet, they want help and advice, too – 2 in 5 (39%) have left a business’ website and purchased elsewhere because they felt overwhelmed by options.
Live chat features allow online retailers to replicate in-store service. A customer service rep is always on hand to deal with any customer queries, providing the support they need and significantly reducing the chances of them abandoning their cart.
These digital assistants can even be computer driven – analyzing the shopper’s needs by asking the type of questions you get from a store assistant, then applying algorithms to identify and suggest suitable products in real-time. For example, Mizuno uses a digital assistant to pair customers with the perfect running shoes.
Although augmented and virtual reality are often viewed as technologies of the future, the reality is, according to one report, 61 percent of the 1,000 U.S adults surveyed said augmented reality has influenced where they shop.
This trend will increase as brands find even more ways to use AR and VR to bring products to life and create touch-free ways to ‘try before you buy’ – all without customers leaving the comfort of their own home. In the automotive industry, used-car dealerships such as Vroom are already adopting VR technology to help showcase their range.
But these technologies can turn the focus inwards to our own homes as well. With the spatial awareness augmented reality provides, furniture retailers can help customers find the right furniture based on the space they have. The user can plot how the furniture will look, changing color and style as they go. The likes of Ikea and Amazon already offer these options, with other retailers hot on their heels.
Video has found a new lease of life in recent months, helping connect people while they are kept apart. It has played an important role in furniture retailer Dufresne’s strategy by providing a way to conduct product walkthroughs remotely.
Conducting live product walkthroughs has the advantage of being conversational. Rather than simply seeing what is there, shoppers can interact with sales reps to ask questions and find out information that may make the difference between buying or not.
Even when stores finally do reopen, the brick-and-mortar landscape is going to be fundamentally different. And there will no doubt be many more closures as underperforming stores bite the dust.
Customers will also have changed – growing accustomed to remote, digital, and low-touch options – even in traditionally less tech-savvy populations. Retailers need to get ready to adapt and fast. Although we are moving into uncharted territory, one thing is for certain – there’s change in store for the retail industry.
Benedict Clark is a psychologist and writer, having previously spent 8 years in the digital marketing industry. With a master's degree in Business and Occupational Psychology from Kingston University, he writes about the interplay between customer experience and psychology for Acquire.