The retail landscape is changing because of COVID-19. The future has arrived sooner than scheduled. As businesses move forward, there are going to be opportunities and challenges to finding the right business model. The fundamental truth is that things have changed in the last six months. The hope of returning to “the way things used to be” is not going to happen.
Understanding what is happening and where the shifts are occurring are the first steps to help position your business for success. Here are six things that will be impacting businesses in the next 12-18 months.
- Spending. As jobs are lost and unemployment grows (McAllen’s unemployment is 10.4% for June), discretionary spending is going to be reduced. With economic uncertainty, people tend to hang on to their money longer. The impulse purchases that happened last year will be fewer. For businesses, there is an opportunity to begin analyzing what sells and what sits on the shelf. Reducing inventory and keeping high volume and high-profit products is the first step.
- E–Commerce. There has already been a shift to online sales by local retail stores in the McAllen MSA. During this pandemic, local stores that had an e-commerce site saw sales increase by 18% during the last six months. The McAllen COVID-19 Small Business Grant saw several businesses using the money to create an online presence. It is a smart strategy for business to have several business models that allow them to make money. The pandemic has sped the conversion to and creation of e-commerce sites for local businesses.
- Home Centric Value. With voluntary and mandated shelter-in-place orders, more and more purchases are going to be centered on the home. The purchasing filter is going to center around “essential” and “value.” The value does not necessarily mean the cheapest. Value can focus on quality, the experience, and longevity of a product. Value products for the home will win during the next 12-18 months.
- New Customers. People during this pandemic are more than willing to switch to a new brand, store, or product. Loyalty is out the door. This moment is a two-edged sword. It means there is an opportunity to gain new customers because they are willing to try something new and different. It is also a time when a business can lose a customer because the customer is eager to try something new.
- The Right Size. As e-commerce has emerged as a viable business model, finding the right physical footprint for brick and mortar stores is the new challenge. Brick and mortar retail stores are going to survive. They are just going to be a smaller footprint. The experts predict that e-commerce will eventually be 30% of retail purchases, which means 70% will be purchased in-person.
- Safety. Businesses will have to absorb more costs for cleaning and personal protection equipment and provide more frequent and in-depth cleaning to keep consumer confidence. If your business is not deemed safe/cleaned/sanitized to shop or walk into, your business is going to lose customers by the droves.
Strong, Better, Together.