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One Year In, How COVID-19 Has Permanently Changed Retail

What’s in a year?

For millions of people across the world, 2020 has amounted to a defining 12 months — marked by the rapid spread of a potentially life-threatening virus and the many ripple effects.

For retail, the global health crisis dubbed COVID-19 has mostly served to accelerate shifts — such as the rise of digital and comfort trends — that were already happening. But in doing so, the pandemic has created permanent and dramatic changes to the retail landscape.

Bankrupt boldface names like JCPenney and Neiman Marcus — which notably exited its sprawling space in New York’s once-promising Hudson Yards development — have drastically altered their store footprint. And malls, with once-prominent anchor stores abandoning their leases, have forced to get creative about filling Macy’s and JCP-sized holes.

Indeed, these trends aren’t altogether new — but COVID’s role in forcing retail to frantically evolve is undeniably a significant part of the pandemic’s legacy.

In fact, study after study has already shown most consumers don’t intend to abandon their pandemic-induced habits.

“Changes in behavior sparked by the COVID-19 outbreak and social distancing have change in lasting ways the very fabric of retail,” explained Stacy DeBroff is the CEO of Influence Central, a digital and social media marketing firm. “We’ve already seen a dramatic increase in reliance on online services, social media activity and e-commerce purchases. Psychologists have found that it takes 66 days for a habit to become ingrained, and the changes in shopper behavior during COVID have been etched into a new norm.”

Baptism By Fire

When the health crisis started taking hold in the United States last March and government mandates forced the closures of non-essential retail, scores of fashion firms entered crisis mode.

A year in, what many are now casting as a rapid shift to digital, was actually preceded by a sudden realization on the part of many retailers that they hadn’t been effectively communicating with their customers for years.

“The big challenge that most of these companies had when COVID first kicked in is that they realized they didn’t they don’t actually know who their consumers were,” explained James Thomson, a former Amazon executive and partner at marketing agency Buy Box Experts. “Some of them had a loyalty program, but they didn’t necessarily manage it actively. Some of them didn’t even have email lists or contact information for their customers. If you go all the way down to your local one-location shop owners, they probably didn’t have any way of contacting their customers because they didn’t who their customers were.”

The result, said Thomson, was many brands and retailers were “shut out” from being able to contact their customers. So as retailers worked to figure out ways to serve consumers who quite literally couldn’t come into a physical store, they were also scrambling to communicate those new plans and services.

In the meantime, a dearth of cash flow stemming from the temporary closures of their brick-and-mortar spaces and a time lag in moving resources to digital pushed a number of teetering department stores (and other brands and retailers) off the Chapter 11 cliff — JCPenney, Neiman Marcus, J.Crew and New York & Co parent RTW Retailwinds among them.

Elsewhere, social media — where cabin-fever plagued consumers turned at rate that easily eclipsed pre-pandemic screen time —  was naturally becoming a critical tool for retailers looking to get ahead.

According to DeBroff, the pandemic has yielded a surge in direct social media shopping that has persisted into 2021, with Facebook and Instagram leading the way.

54% of consumers in 2020 purchased products directly within the shopping features of a social medium platform,” she explained. “Expect to see these numbers soar in 2021.”

In fact, in a recent Influence Central consumer survey of over 700 consumers, 69% of consumers said they currently purchase directly via Facebook posts; 34% indicated they are shopping via Instagram shoppable links; and 33% use swipe-up links to buy.

Convenience on Demand

Three to five years ago, retailers that offered services like buy online pickup in store (think: retail service pioneer Nordstrom), were not only considered ahead of the curb — they were believed to delivering a premium offering that set them apart from the competition.

One year into COVID-19 and BNPL, contactless payment, curbside pickup and flex-pay options are table stakes.

“I call it ‘retail my way,’” said Beth Goldstein, executive director and industry analyst for accessories and footwear at The NPD Group. “That’s [how I describe] these changing expectations [among consumers of] who are now able to basically get anything they want, however they want.”

In the beginning, noted Goldstein, it was tough on both sides. Retailers scrambled to up the ante on digital and convenience and consumers were hamstrung in their ability to acquire basic items like toilet paper — much less a pair of running shoes.

“But once retailers got the kinks worked out, these [services] have become the [norm]: You want to go into a store and pick your order up or grab it curbside? You want to order online and have it delivered the next day? You can have any and all of those things,” added Goldstein.

But even as consumers’ needs rapidly evolve — perhaps a moving target of sorts for retailers — experts say the pandemic has also created fertile ground for new innovations to pop.

“Businesses that were quick to adapt to new consumer expectations for digital commerce and safe in-store experiences are the key beneficiaries of the pandemic,” said Kim DeCarlis, CMO of PerimeterX, a provider of application security programs. “They leveraged the situation to push forward new approaches that might have stayed on the shelf for years — whether that was an integrated omnichannel approach to reach more customers, or new store design with touchless interfaces that serve the consumer in a safe way.”

Consumers, meanwhile, have benefited from the increase in convenience that “digitally accessible channels have afforded them,” she added.

What’s more, shoppers — especially those who were hard hit by the economic fallout of the virus — have become the beneficiaries of fashion firms’ rush to adopt flexible payment services such as those offered by Klarna and AfterPay. (Consumers may want to remain cautious of the ability to acquire debt by using such services though.)

In fact, companies like these, noted Goldstein, have seen so much momentum that they’re starting to operate like retailers themselves — launching full-scale shopping apps where consumers can purchase products from their brand partners.

Meanwhile, as effective and creative communication of new products and services becomes key, Goldstein predicts tools like livestreaming will become a long-term staple in retail’s arsenal.

Similarly, Kristen Gall, president of Japan-based electronic commerce and online retailing company Rakuten, said the pressure is heightened for brick-and-mortar players to get crafty about tapping into technological tools to create a new kind of experiential offering.

“Personalization will be more important now more than ever: Artificial Intelligence, machine learning and algorithmically-based content generation, and product merchandising will be the new surprise-and-delight for stores,” she said. “It’s critical that retailers fine-tune this quickly to create a truly personalized experience for their customers since they no longer have the benefit of human interaction to sell goods.”

New Frontiers

“Times today are not about adapting — rather [they’re] about starting with a new slate and re-imagining what serving customers mean,” explained Sharon Whiteley, CEO of sustainable shoe brand Harmony783. “People are more particular [about] what they are spending on and why. They are drawn to brands that resonate with them beyond the physical appeal or fashion worthiness of a product.”

Indeed, the fact that the global health crisis — which has disproportionately impacted minorities physically, emotionally and economically — was juxtaposed with a national reckoning over racial injustice is no coincidence. Corporate social responsibility and issues such as sustainability and diversity and inclusion have rightfully been pushed to the forefront.

Brands and retailers have had to become more transparent about their efforts in driving meaningful change both inside and outside of their corporations.

In other words: “Hype is out, authenticity is in,” as Whiteley put it.

It will likely take some time for consumers to gauge how much of corporate giving and messaging are performative and to what extent those efforts amount to a true desire to support and uplift underrepresented groups.

But, suffice it to say, a pandemic legacy is undoubtedly an uptick in corporate social responsibility and accountability. Retailers will be expected to continue to revise corporate policies related how they treat working parents and minorities and will need to push outward-facing messages that show where they stand on key issues as already seen in the bevy of Black History Month projects from companies that were previously silent on social issues. (Forever 21 and Neiman Marcus are among the retailers this year to launch their first ever large-scale BHM campaigns.)

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