Across diverse sectors, online retail activity is causing a major restructuring of brick and mortar commerce. Some businesses are rethinking the best use of their physical locations, converting them into marketing centers to promote online operations. Thousands have closed their physical locations due to online competition, and at a National Retail Federation conference in 2018 predictions were made that e-commerce will overtake physical sales by 2024. That was long before COVID-19 hyper-accelerated that predictable shift to online shopping.
Temporary Measures Inspire Permanent Habits
The results of a new survey of more than 2,000 consumers revealed that more than one third do retail shopping online, and more than 40 percent cited COVID-19 concerns as a consideration when making digital payments. There is also widespread evidence that consumer behavior has changed during the pandemic, and that those behaviors are likely to become permanent. Although younger people are less impacted by COVID-19, 62 percent of millennials said they were very concerned by the virus. Prior to COVID-19 that age group spent approximately $1.4 trillion and accounted for 60 percent of online commerce.
Touch-Free Brick and Mortar
Consumer expectations have been elevated by online retail leaders like Amazon, too, forcing physical stores to compete by adding features like increased product availability, home delivery, and speedier transactions. That has resulted in greater integration of the online and offline retail experience. COVID-19 circumstances have added momentum to that transition, as retailers rush to fulfill customer demands for touch-free transactions and curbside pickup. For example, Starbucks and McDonald’s are experimenting with such features in large cities. But countless mom and pop retailers in both major metropolitan and small town locations are implementing such features, to adapt and survive during challenging times. Mobile self-checkout options are proliferating, and contactless payments are gaining popularity. Those are the kinds of offerings that will likely become permanent, even beyond the pandemic, because they reduce business time and labor while enhancing customer satisfaction.
The most radical manifestations of the integration of traditional and tech-driven retail can be found at Amazon Go. Customers download a special app before entering this experimental store, and then shop without any conventional checkout or payment procedure. That’s thanks to Amazon’s experimental “Just Walk Out” technology, which is powered by a network of sensors, computer surveillance, and artificial intelligence. Products removed from shelves are automatically detected and placed into a virtual shopping cart, similar to those found on e-commerce sites. After shopping the customer leaves with their items, which are automatically charged to their Amazon account and confirmed with an electronic receipt.
Integrating Online and Offline Retail
Walmart is exploring a similar tech-heavy store concept called Intelligent Retail Lab. Walmart technology can predict what customers want based on their buying habits, monitor product shelf life and inventory, and automatically manage inventory reordering. Employees can focus less on those tasks and more on customer service. The future of retail will likely lie somewhere between that kind of super-automated physical store and a completely online e-commerce business model. But even brick and mortar stores will increasingly rely on online sales, marketing, and consumer engagement for their success and sustainability in this new era of online retail popularity.