COVID-19 Impact on American Retail
To determine the major challenges and threats that the current pandemic poses to American retail, particularly dry goods retailers, in order to inform the client's new business pitch.
According to Forbes, many of the short-term challenges facing American retailers relate to health and safety concerns, labor force, supply chain, consumer demand, cash flow and marketing. U.S. retailers are experiencing a massive decline in sales due to both store closures/social distancing and the new financial reality for laid-off workers. Although online shopping has increased during the pandemic, a whopping 88.6% of U.S. retail sales still took place at brick-and-mortar stores as of the end of 2019. Because the pandemic has significantly accelerated the transition to digital shopping, retailers will need to find new ways to promote traditional in-store experiences online, including new product trials and impulses purchases. Retailers can also expect the post-pandemic shopper to continue to be more concerned about germs than ever before, forcing a shift towards "no-touch customer experiences with an emphasis on hygiene." A post-pandemic recession is also expected, with American gross domestic product expected to drop by an annual rate of 30.1% in coming months and unemployment at an all-time high. This would drastically curtail consumer spending as a more financially conservative and/or debt-ridden consumer emerges. Industries hit hardest in recent months include furniture, fashion and electronics, as consumers abandon such discretionary spending in favor of purchasing household goods and food items. Reduced spending is expected on new store openings/remodels in favor of spending on digital transformation efforts, such as self-serve technologies, supply chain automation, cloud-based hiring and contactless payments.
PROPRIETARY RESEARCH AVAILABLE
Department Stores - 2020 U.S. Market Research Report with COVID-19 Forecasts (Kentley Insights, $295)
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