Following the COVID-19 pandemic, the retail industry will follow new technologies in organizing the sales process and change the role of physical stores. In the future, the winners are those companies that successfully combine the online shopping experience with the capabilities of physical stores.
Analytical companies around the world are counting the number of physical retailers that have had to close or are on the verge of bankruptcy due to the coronavirus pandemic.
According to S&P Global, there have been more than three dozen retail bankruptcies this year, the highest in 11 years. Retailers have announced more than 8,400 store closings, according to Coresight Research.
Many large shopping malls have experienced severe loss of visitor traffic, which indicates a crisis in the industry and upcoming changes.
The CBRE Group, America’s largest commercial real estate and investment services firm, released a report on Thursday highlighting new sales technologies that will enable retailers to successfully combine online and offline trading.
According to CBRE experts, e-commerce will not completely replace physical stores, and success in 2021 awaits those who follow the changing needs of customers and are flexible.
According to Melin Cordero, Head of Retail Capital Markets at CBRE, “e-commerce is affecting and transforming the store, not replacing it.”
Offline stores of the future will become distribution centers
A new trend, to be followed by leading retailers, will be the addition of online stocking to physical stores.
Warehouses of offline stores should be transformed into intelligently planned distribution centers. Thus, the company will save on delivery, since the goods will be more close to consumers, who can pick up online orders through self-pickup. Delivery from large warehouses, which are usually located far outside the city, is more expensive for sellers.
Companies such as Gap, Macy’s, Best Buy (BBY) and Kohl’s are increasingly using their warehouses to store additional inventory for digital purchases, not just to replenish store shelves.
During the last quarter ended Oct. 31, Retail Chain Target (TGT) said more than 95% of third-quarter sales, including digital, were in-store, helping the company beat analysts’ estimates.
In the last quarter of Bed Bath & Beyond, ending August 29, stores completed 36% of online orders, including purchases via pickup (customers pick up an online order by driving) and in-store pickup for more than $ 120 million
“The store is becoming an extended part of the supply chain to enable in-store delivery,” said John Morris, head of industry, logistics and retail at CBRE. “I think the first thing you’ll see is an increase in inventory in stores.”
Retailers will need smarter inventory tracking technology, similar to that used in standard distribution centers, to ensure that the right items are always in place, CBRE said.
Creation of departments to handle product returns
The impact of the growth in online orders also features a significant increase in the number of returns. CBRE predicts $ 70.5 billion of holiday purchases will be returned this year.
That being said, sellers will benefit from a strategy of encouraging online shoppers to return goods to the store rather than mail them out.
More Pickup Points Appear
Experts predict that the practice of self-pickup of online orders, beloved during the pandemic, will continue to demonstrate high demand for pickup services even after it ends.
Between November 1 and December 9, according to Adobe Analytics, the number of online pick-up orders picked up by the curb rose 88% year-on-year. In addition, according to statistics, companies that offer pickup service have a 33% higher conversion rate than those that do not.
Companies such as Bed Bath & Beyond and Dick’s Sporting Goods have launched contactless trading this year. Shopping center owners Kimco Realty and Simon Property Group have also allocated parking spaces for this customer service.
Chains like Home Depot (HD), which have crates for picking up small online orders, have also reported a jump in their usage.
Among other changes in trends, CBRE experts cite a change in the role of employees who, thanks to automation, will receive less routine work, but who will require knowledge in both merchandising and customer service and order fulfillment. In the past, these tasks were traditionally assigned to different people.
“Flexible employees who can fill both roles interchangeably will have incredible value.”
CBRE predicts that these trends will lead to changes in how prices for commercial real estate rent will be formed.
“A new and more sophisticated pricing mechanism is needed to determine store values and retail rents, especially for retailers who have more online channels,” CBRE said.
Thus, in the coming years, consumers will find more and more convenient new ways of making purchases, while retailers will observe the increased demands of their customers and the demand for new “formats” of sales.
Retailers looking to survive and thrive in this new era of retail must rethink their store layouts and make features like curb pickup permanent to meet the changing needs of shoppers.