How Retailers are preparing for the post-coronavirus recovery
Survey findings suggest that retail executives expect a delayed rebound of traffic once stores reopen, a persistent increase in e-commerce penetration, and changes to store operating models and procedures.
As the coronavirus pandemic disrupts the lives and livelihood of millions, retailers are working to understand what changes will be needed once the outbreak subsides and stores can reopen. A new survey of 98 US-based retail executives in a variety of subsectors1 finds that most executives expect store traffic to return to pre-crisis levels, but not for at least several months after stores reopen. The findings also suggest that retailers are preparing for short-term changes to ensure public safety as well as long-term strategic decisions about their store networks.
Despite the pandemic’s sobering effect thus far, executives expect traffic to rebound several months after stores reopen
More than 80 percent of respondents say their companies have closed at least some of their locations, and 44 percent of all respondents say they have shut down in-store operations entirely.2 Looking ahead to when stores are able to reopen, most surveyed executives expect a recovery of store traffic to take at least several months, with 36 percent estimating six months or more for traffic to rebound. As they emerge from the crisis and reopen stores, retailers expect e-commerce to remain stronger than before the COVID-19 outbreak. The surveyed executives predict a 6 to 13 percentage-point increase in online penetration compared with pre-pandemic levels.
Retailers are planning precautionary measures and operating-model changes as stores reopen
While most executives say they do not yet have specific criteria for reopening stores, they are tracking a wide range of indicators to use as signals for when to reopen. In addition to regulations and infection rates, respondents say workforce availability, store performance prior to the coronavirus outbreak, and competitors’ actions are top considerations for determining which stores to reopen and when.
Once stores reopen, executives plan to institute precautionary measures such as increasing store cleanings and encouraging safe distancing among customers in stores to promote employee and customer safety. Similarly, responses suggest that apparel and beauty retailers will extend deadlines for returns and change returns-handling policies. In addition to making safety-related changes, most retailers are also considering short-term adjustments to store operating models. For example, more than half of respondents indicate they will temporarily reduce operating hours and staffing levels when stores reopen. Those who plan to reduce staffing levels expect to reopen with an average of 22 percent fewer store employees.
The pandemic is causing some retailers to reassess their footprint and future format
Looking at the long-term changes that retailers expect to make, many executives say they are reevaluating their footprints. Approximately one-third of respondents’ report that they are considering not reopening underperforming stores, and a similar share say that they might pause plans to open new stores. While the surveyed retail executives in most segments do not foresee long-term changes to store formats, about three-quarters of apparel executives say they plan to improve online integration at their stores.
Credit: Praveen Adhi, Andrew Davis, Jai Jayakumar, and Sarah Touse of McKinsey & Company
Connect With PrincetonOne
Whether you are seeking critical talent, unique recruitment solutions, or access to greater opportunities, our consultants are prepared to elevate your success.