Retail is back. At least, that’s what industry insiders are saying.
As stay-at-home restrictions begin to lift across the country, consumers are finally starting to see the light at the end of the tunnel. People have begun hitting bars, theme parks, and shopping malls with abandon, enjoying the opportunity to get back to business as usual.
The National Retail Federation recently advised their 2021 growth forecast from 6.5% to 18-23%, recognizing that consumer optimism is much greater than initially predicted.
So, are we about to see reincarnation of the Roaring Twenties? Or has the idea of a post-pandemic consumer frenzy been overblown?
But more importantly, what should you be doing as a retailer to prepare for a return to brick and mortar?
That’s exactly what we’re going to cover in this post.
Revenge shopping is not itself a new term. It’s been used to refer to everything from shopping sprees after a breakup to kids having fun with their parent’s credit cards.
But in light of the pandemic, revenge shopping has taken on a different meaning; the idea of making up for lost time.
Experiential activities like travel and dining out have been off-limits over the past year. This combined with ongoing stimulus checks means that many households are boasting healthy savings accounts. According to McKinsey, household savings in the U.S. are currently double what they were back in 2019 at $3 trillion.
And with vaccinations now rolling out and stay-at-home orders finally coming to an end, there’s a new sense of optimism in the air. Industry commentators are predicting that consumers are ready to spend big on all the activities they’ve missed – starting with in-store shopping.
It’s not surprising that luxury items, from fashion and beauty to jewelry, were some of the biggest casualties during the pandemic. With people working from home in unprecedented numbers, buying behaviors underwent a sudden and dramatic shift. Hermes handbags were out, while sweatpants from Target were in.
But there are signs that this so-called ‘comfort culture’ is beginning to lose its grip. With bars and restaurants open, consumers are now embracing the opportunity to get dressed up and start going out again. And with many workplaces now phasing their staff back into offices, the demand for high-end clothing and apparel is set to increase.
In fact, the very term ‘revenge shopping’ has a language counterpart in China to describe how Chinese consumers flocked to luxury stores in major cities after the end of national lockdowns in mid-2020. Tiffany saw a 90% increase in sales in the month of May 2020 alone, while brands including Burberry and Louis Vuitton also reported strong demand. Industry heavyweights have strong hopes that this points towards a similar boom:
“The economy and consumer spending have proven to be much more resilient than initially forecasted.” Said NRF President and CEO Matthew Shay. “The combination of vaccine distribution, fiscal stimulus, and private-sector ingenuity has put millions of Americans back to work. While there are downside risks related to worker shortages, an overheating economy, tax increases, and over-regulation, overall households are healthier, and consumers are demonstrating their ability and willingness to spend.”
It’s safe to say that most consumers haven’t had much use for in-store shopping in the past year. Between stay-at-home orders and concerns about social distancing, people have turned to ecommerce both out of preference and necessity.
A report from eMarketer forecasts that ecommerce sales will increase by 13.7% to $908.73 billion in 2021. This is less than the 2020’s 18% growth but exceeds pre-pandemic estimates of 12.8%.
Yet while the pandemic has made consumers at large more aware of the convenience of shopping online, it’s also drawn attention to its shortcomings.
We’ve all taken the risk of buying something online without trying it first. But with almost all of our purchases taking place this way over the past year, it’s revealed the difficulties of relying solely on digital shopping channels. Moreover, even the fastest delivery speed cannot compete with the thrill of instant gratification that comes from taking a shopping bag home.
But most of all, ecommerce is often lacking in its sense of tangibility and brand immersion. It’s difficult to replicate the truly spontaneous product discovery that comes from a well-curated retail store; on the web, every purchase has to start with a search term. But when every interaction is mediated by technology, it’s easy for retail to become cold and impersonal.
It’s hardly surprising that consumers are showing a massive desire for experience-led retail encounters. After a year of scrolling through the web, people want to be delighted by fresh and innovative shopping experiences – and brands are only too happy to deliver.
The humble suburban shopping mall has been dying a slow death in the face of competition from digitally native retailers. But it’s taken advantage of a unique opportunity to refresh its value proposition – by bringing those very brands into now-empty storefronts.
Eyewear brand Warby Parker is set to increase its nationwide footprint by 35 new stores in 2021, even as its ecommerce sales skyrocketed during the pandemic. Co-founder Neil Blumenthal explained to Wall Street Journal that the pandemic has led to more frequent cross-channel shopping behavior, with consumers wanting to utilize both online and offline when making purchases:
“If you were to measure it by where the transaction takes place, they’re pretty evenly split. But, roughly 75% of our customers that transact in stores have shopped with us online. They’re not just going to our website or our app to look up a store address or hours of operation, they’re actually shopping and choosing which frames they want to look at when they visit the store in person or when they go to the store for an eye exam.”
While the current outlook is positive, we shouldn’t expect revenge shopping to provide a panacea for a year’s worth of financial strife. While we’ll certainly see a bounce in sales as a result of restrictions being lifted, this doesn’t signal a complete return to business as usual. According to the Brookings Institute, consumption in the U.S. isn’t set to hit 2019 levels until at least 2023.
So, what should retailers be thinking about as this shaky recovery gets underway?
Over the past year, consumers have had to adjust to entirely new shopping routines – and there’s no doubt that some of this is going to stick. Whether it’s the growing popularity of BOPIS or the greater demand for personalized shopping experiences, it’s important that you understand your customer’s pain points during the shopping journey and what they’d like to see more of. Make an effort to engage with your customers on social media and invest in surveys to find out what your customers are really looking for.
Whoever came up with the phrase “if you build it, they’ll come” clearly didn’t spend much time in retail. Businesses who made this mistake include the likes of Sears and J.C Penney – massive store networks now sitting in the graveyard of legacy retailers who failed to adapt to the rise of ecommerce.
The problem is what big-box retailers and department stores have been battling for a long time; they’re just not pleasant environments to shop in. Poor product presentation, unpacked stock blocking aisles, and empty shelves have driven consumers to use digital storefronts, causing retailers to indirectly cannibalize their in-store sales.
To turn the new-found novelty of brick and mortar into long-term store traffic, you need to give customers a reason to shop in-person that goes beyond testing/trying products. Recent examples include Selfridges and Harrods in London, who’ve both invested in a suite of new offerings from in-store partnerships with SoulCycle to El Fresco dining.
As we come out the other side of the pandemic, retailers need to take note that consumers’ appetite for chaotic and disorganized retail experiences is likely to be even lower than before. While there’s a lot of pent-up demand for in-store shopping, consumers will have little desire to shop at retailers whose stores are an inferior cut-out of their online catalog.
Online-to-offline (O2O) retail was gradually picking up steam before the pandemic, but it quickly became a necessity as in-store retail was forced to adapt to COVID-19 restrictions. Offerings such as curbside pick-up and in-store returns have rapidly gained popularity as consumers embraced more flexible omnichannel shopping options – and they’ll expect these to stay after the pandemic.
Many retailers have debuted O2O offerings in the past year. However, it hasn’t always been smooth sailing. A recent survey found that 35% of respondents reported their curbside pick-up experiences as being ‘a little rocky’. Common pain points include difficulty finding parking, time spent waiting for staff to retrieve items, and a lack of social distancing protocols.
Consumers have generally been forgiving of less-than-optimum experiences during the pandemic. But as omnichannel retail becomes the norm, consumers are going to expect more refined approaches to curbside pick-up and associated services.
So, now is the time to take a closer look at your O2O offerings and identify areas that could benefit from being streamlined, such as adding a dedicated location for curbside pick-up or investing in ‘check in’ functionality via email or your mobile app for smoother fulfillment. This means higher levels of customer satisfaction and gives your business a stronger competitive edge.
If you’re a retailer who looks set to benefit from the revenge shopping trend, it’s important to remember that the path to retail recovery is still uncertain. Consumer confidence is by no means completely restored, and the K-shaped recovery means that many consumers are still struggling to regain economic security.
Partnering with a flexible and responsive fulfillment provider enables your business to capitalize on key growth phases as the sector recovers, but to avoid possible downturns that could result in situations like SKU proliferation or over-staffing. By being able to scale up and down in response to fluctuating consumer demand, you’ll be much better placed to weather the uncertainty (and opportunity) of post-pandemic retail.
Retail is a dynamic and constantly evolving landscape that’s difficult to forecast, especially at such a pivotal time for the sector. Whether you’re an established or an emerging retailer, partnering with a flexible fulfillment provider like Whiplash is the best way to future-proof your business against the ebbs and flows of the post-pandemic retail recovery. With 6.5 million square feet of omnichannel distribution space across the U.S. Whiplash is uniquely positioned to scale your fulfillment activities so that you can grow your business without worrying about your ability to deliver.