Impact of COVID-19 on Retail Business

After the Coronavirus outbreak, the whole world is in shock at this moment. This outbreak forced Chinese designers, buyers to cancel Milan’s Fashion Week in late February. Not only in China but at this right moment Australia is also fighting with Coronavirus. When China was at the beginning of the Corona Cloud, the Italian fashion industry launched a campaign to accompany with Chinese Corona outbreak with the slogan “China, we are with you.” But god, that slogan came back to them by spreading the Virus and facing the same outbreak of its own! So, after all these catastrophic outbreaks, Australia has also moved forward to lock themselves to stop spreading the virus any further.

The daily life of all Australians has changed when the Prime Minister of Australia Scott Morrison went for a tough call. The new rule includes locking down the doors of pubs and clubs, casinos and cinemas, gyms and churches. While Cafe and Restaurant are forced to lock their doors for takeaway instead of home delivery only. But the rule didn’t include retailers. Although it’ll close down soon! But for the time begins, it is open for the moment. But since the virus hit this country, some retailers have already taken that matter into their hands and closed their retail shop. Worldwide retail store like Michael Hill has closed their all 300 shops around the globe including Australia and New Zealand. So, there are thousands of other Small to Mid-level Fashion and Jewelry stores. Should they also close their store? Obviously, they should and will.

Leading independent economist Saul Eslake told that,

Discretionary spending has been under pressure for a long time – even before the bushfires and coronavirus hit, consumers were clearly cutting back their spending on discretionary items like clothing, electronics, motor vehicles and household goods,

He also said, 

Now lots of people have no income or substantially reduced income, discretionary consumer spending will probably fall almost to zero.

For some retailers who specialise in those items, if what the government is offering isn’t enough, they will probably do what Michael Hill has done and what we’ve seen a few other businesses do, and that’s shutter doors.

For the time being, all the Supershops and clothing/fashion retail shops are OK. Even in other countries all the Superstores and Fashion store are in the lockdown process. Only food and medicine stores will remain open, because human needs food and medicine to live. He also quoted that, 

But the only ones who will be OK at the moment are supermarkets, food stores and pharmacies – department stores no, clothing stores no, hardware stores no, music stores no, newsagents no, book stores no – maybe tobacco and booze stores will be OK. But I’m struggling to think of any other area of retail that won’t see a humungous drop in revenue.

Despite the Government’s green light we are seeing that more and more retail stores are closing their store due to limit the spread of coronavirus. Queensland University of Technology retail expert Dr Gary Mortimer said that,

We’re starting to see some retailers jump the gun and take a proactive approach to closing their operations – I walked through a centre today and found half a dozen stores like jewellery stores, small fashion retailers and mobile phone repairers that have made the decision not to open, and that’s just in one centre,” he said.

If the Government was to put further bans on people congregating, sectors that would be most exposed would be things like hairdressers and barbers, beauticians, massage clinics and physio.

I don’t think we’ll see the impact in medical services like pharmacies, we won’t see it for GPs or dentists, because those necessary services will have to continue.

The Big Threat?

There is no doubt the impact of Coronavirus on the retail industry has already been shown. Now there are many issues depending on the virus-related pandemic. No one knows how much a country will suffer and how the retail industry will pay the cost. Small to Mid tire retail business will suffer the biggest impact of this pandemic.

According to Charlie Youakim, CEO of Sezzle,

It’s the supply chain. The main impact from Covid-19, at this stage, is on the supply chain. This disruption could impact the timeliness of customer deliveries which, unless handled carefully, could lead to customer dissatisfaction. Keeping consumers informed and up to date is the key to mitigating that. Most people are understanding and will be lenient if they are fully aware of the circumstances.

Dr Gary Mortimer also said that,

Shopping centres will be almost empty and we’ll only have dress shops and supermarkets operating. At that stage, most smaller retail chains will take the proactive step of temporarily closing and standing down staff until they have the ability to reopen,” he said, adding that at the moment, retailers were handling the crisis in one of two ways – fight or flight.

Retailers who take the flight approach are closing doors, standing down staff and hoping to weather the storm and reopen in four or five months’ time, but others appear to be taking the fight approach and adapting the way they now do business.

eople often say need is the mother of invention and we’ve only given lip service to that over the past 10 years or so, but retailers need to adapt, innovate and be more agile in a constantly changing market.

Will E-Commerce Boom as a Result?

COVID-19 has already infected more than 2000 Australians. In this situation, those who are infected and those who aren’t being told to stay inside their home. Especially those who are infected are must quarantine themselves until they’re free from the COVID-19 virus. As a result, frightened people have left the toilet paper and pasta shelves empty in supermarkets. In the long run, what does this mean for retailers? Should they prepare for a massive drop in foot traffic? Will the online retail boom as a result?

It’s only natural that those avoiding human contact would rather shop online than visit a store and so we absolutely do think that e-commerce platforms will see a boost because of COVID-19. With the potential of government-imposed quarantines, we see this trend extending for some time.

explains Youakim.

Even the adverse side effects fo this virus have their sunny sides, says Shuey Shujab, CEO of Whitehat Agency.

“The negative impact on e-commerce is actually on the supply side. Due to a lot of factories being shut in China, many e-commerce businesses are finding it hard to replace their stocks. E-commerce businesses that have products made are Australia are booming right now because of increased demand and no disruptions in local supply chain.”

Working & living remotely is in increasing demands

Due to the strict limits on group size and the imposition of social quarantine, businesses are shifting to remote work. This has seen a large increase in people searching for video conferencing solutions.

Google Trends data from March 2020 highlights the increase in people searching for video conferencing solutions.

According to office supplies became a sudden breakout industry. Searches for office supplies increased by 90%. Whilst paid search ad clicks increased 35%, and search conversion rates increased 41%

As people abandoned traditional retail for its online counterpart, searchers continued to highlight that transition. Packing and shipping supplies more than doubled their search ad conversions (up 123%) and search ad conversion rate was up by 107%

Opportunities for eCommerce during Coronavirus Pandemic

  • Consumers will shift towards online purchasing, to avoid public places. Services such as home delivery and brands like Amazon will flourish. And the online divisions of major retailers will become major beneficiaries.
  • Consumers who purchased online during the holiday season were observed to repeat this buying pattern post-holiday. This highlights that consumers may return to the same purchasing process again, and may do so after the Coronavirus pandemic.
  • As observed in some parts of China, there’s less competition for advertisers still committed to running campaigns. However, currently, these advertisers are running outdated advertisements that aren’t relative to the situation. If the campaigns are altered to the current social environment, they could be more fruitful.

Final thoughts

While the entire world is really reeling from the effects of the Covid-19 or Coronavirus pandemic, user behaviour is being forced to change and shoppers are increasingly moving online. Ecommerce sites are in a position to be able to capitalise on this, but only if they are able to be found by customers in the first place.

While tactics may need to be adapted to the new environment we find ourselves in, businesses should consider retaining investment in their analytics, website development, mobile app development, online marketing and online content so that they can remain competitive and meet the needs of shoppers.

In these uncertain times, there are still opportunities; it just takes a slightly different mindset and approach, and a positive attitude. Supreme Supports is always here to continue giving you full support in this pandemic. We are always ready to provide you with the best custom website solution.