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Online Shopping Adapts As Pandemic Upends Retail Trends

Online shopping has seen a 32 percent increase as a result of COVID-19 crisis.
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H&M Hammersmith (Image: H&M)

The coronavirus has forced lockdowns, and shelter-in-place orders have been enforced in almost all parts of the world. With people restricted to home territory and scared even to go out and get essentials, online shopping is the route people are taking to meet their everyday needs.

According to a Nielsen study, before the official lockdown, nearly half (47.2%) of US internet users were avoiding shopping centers and malls. Now, with the pandemic spreading and the number of cases going up roughly three-quarters (74.6%) is likely steering clear from shopping centers altogether.

Online shopping, as a result, has seen a surge with and almost 32 percent increase in the US. What this crisis has shown is that retailers who already had a digital and online shopping presence are doing better than only physical stores. The retail sector was already facing a downturn for the past few years. The pandemic has nearly wiped out big retail chain stores. The crisis has shown that for a good health outcome, stores need to integrate with shipping technology.

The coronavirus pandemic scare led to a rush of people at Targets and Walmart trying to stock up on essentials, and surprisingly these stores did better than the commerce sites, which saw a supply issue and delays due to a rush of orders. Keeping in mind the social distancing aspect and avoidance of any line-up, the big retail stores started offering drive-in pickups through their apps.

Also, stores are keeping much of their commerce inventory itself in the stores so as not to face any shortages. “Because we’re using stores as local fulfillment hubs, we’ve been able to handle sustained, holiday-like online volumes,” Target chief operating officer John Mulligan tells Fortune.

This in retail parlance is called a dark store. Dark stores are traditional retail stores that have turned into fulfillment centers. Many brands have resorted to this to meet the stay at home social distancing norms. Whole Foods has converted stores in Los Angeles to dark stores, Kruger and Giant Eagle are doing the same. Most grocery stores are the ones that are transitioning to dark stores, but other retailers are following suit. Bed Bath &Beyond announced that it will be turning 25% of its retail outlets into fulfillment centers.

This ensures faster delivery for online orders in the surrounding areas and reduces the strain on the central warehouses of the stores.

“The retailers that were already doing it successfully are the ones that are going to recover much more quickly,” says Kimberly Becker, senior research director with Gartner.

However, there are some concerns that these shorter benefits of online retail may reverse after the pandemic. Consumer behavior might not remain stable and revert back to the old ways. Some sectors are seeing a sharp rise in online commerce. Electronics, grocery, and gift items are showing a nearly 32 percent jump on average.

The pandemic has brought with it recession, which will see consumers spending come down. The retailers will need to strategize long term to keep their present advantage going.

Online retailing needs to sort out its supply chain bottlenecks. Running out or delays in delivery will not be tolerated. Retailers will have to create convenient and innovative ways for people to shop with pick-up, drive-up, and same-day delivery.

The companies will have to automate and streamline the processes of order fulfillment. Radio frequency identification tags can determine the exact location of every item on the inventory and help in tracking stock and fulfilling orders.

The pandemic has turned the way people will be shopping in the future. Self-checkouts, digital payments, and better location services are some of the improvements that will be incorporated to keep the consumer happy and safe.

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