This week, the 250-year-old UK department store Debenhams finally announced it would close all of its 178 outlets after nine months of struggle with the restrictions brought about by the COVID-19 pandemic. In the US, the 118-year-old US department store J.C. Penney filed for bankruptcy in May 2020, just 2-months after the pandemic began. Business Insider reports that approximately 12,000 retail stores went out of business in 2020, in the US alone. Through fear of infection in public indoor environments and restrictions that explicitly prevent stores opening, it would be safe to say that few industries have suffered more from the pandemic than brick-and-mortar retail.
On the flip side, the online shopping industry is seen as one of the big winners of the pandemic. Consumer spending on Amazon between May and July 2020 was up 60% from the same period in 2019, according to the financial data firm Facteus. Amazon has gained half a trillion dollars in market value in the first half of 2020 and as the pandemic continued through the year, and now persists into 2021, the dominance of Amazon and online shopping as a whole has been clear for all to see. Online shopping had already gradually been taking over the retail industry and threatening to bury brick-and-mortar retail before the pandemic began, but the past 10-months has now sparked talk of an all-out retail apocalypse.
“The arrival of the so-called “retail apocalypse” in the wake of the phenomenal growth of e-commerce may be approaching quicker than anticipated as countless brick-and-mortar stores shutter due to the global pandemic,” says Liran Bar VP of Business Development at Hailo. “And with many consumers wary of returning to physical storefronts anytime soon — preferring to make their purchases in the safety of their homes — more and more brick-and-mortar retailers worry that their apocalyptic moment has already arrived.”
While the impact of COVID-19 on brick-and-mortar retail cannot be understated, “apocalypse” may be a little dramatic. Both Debenhams and J.C. Penney were struggling long before the pandemic after failing to keep up with an evolving retail landscape, COVID-19 was just the last nail in the coffin for their antiquated business models. As lockdowns eased in the summer months of 2020, long lines were reported outside IKEA stores around Europe, partly due to the rise in home improvement but also because IKEA has designed a shopping experience that cannot be easily recreated online. Just as brick-and-mortar retailers had to adapt to survive the rise of online shopping, these businesses will need to adapt to overcome the existential threat posed by the pandemic.
As long as there are lockdowns and restrictions that prevent physical stores opening or shoppers shopping, the only survival strategies brick-and-mortar retailers have been to cut the cost of being closed and to focus on online sales. However, any retail company that did not already have a strong online presence would have been fighting an uphill battle regardless of the pandemic. The only real weapon brick-and-mortar retail has against online shopping is the physical shopping experience of touching, feeling, and seeing the products before they buy, as well as entertaining and catering for shoppers during their visit.
Visiting in IKEA, for example, is an experience in itself. Led around the home improvement store by carefully designed walkways that take shoppers from one room to another, depicting beautiful scenes of homes that compel shoppers to buy their products. Then there’s the ample parking to offer convenience and, of course, IKEAs famous meatballs in the well-renowned restaurant at every store. IKEA and other stores that create a physical shopping experience that cannot be recreated online have succeeded in maintaining in-store sales against the rise of online shopping and the same strategies will help them thrive again in the post-pandemic era.
However, even after lockdowns are lifted, certain restrictions will be kept in place for many months, maybe years, until vaccines can be sufficiently rolled out to mark a true end to this pandemic. While stores will be allowed to open, restrictions will be in place to maintain social distancing, limit occupancy, ensure mask-wearing, and provide safety to visitors in-line with public health regulations. Now brick-and-mortar retailers are turning to smart buildings technology to track, monitor, and provide the visibility required to increase safety and reduce liability.
“Smart stores make it possible to minimize human contact, but for these stores to work as intended, they must be equipped with smarter, more powerful cameras that can process data locally, in real-time, and securely,” says Bar, in an article for Total Retail. “These stores will require a multitude of cameras able to detect the smallest of objects from far distances. Such smart cameras can enable stores to go cashier-less and checkout-free, as well as continuously monitor product inventory and foot traffic.”
The technology already exists. In fact, it is almost four years since Amazon launched its cashierless retail program with the opening of its first Amazon Go convenience store where shoppers can move around the store putting products in their baskets, and just walk out when they are finished. Using a combination of computer vision, sensor fusion, and deep learning, the store monitors which products are picked up by which customer, it can even track when a shopper take something out of their basket and returns it to the shelf. The customer is then charged automatically for the cost of the products they leave with.
Robots may also soon play a role in the future of physical retail. Lowe’s home stores have already introduced their LoweBot, for customer service and real-time inventory monitoring. Portuguese retailer Auchan also utilises inventory-monitoring robots, which scan shelves up to three times per day for up-to-date inventory data, thereby reducing the number of human staff. While Walmart’s Auto-C autonomous floor cleaners, reduce human staff and provide all-important cleaning services. ABI Research now forecasts that there will be more than 150,000 robots in brick-and-mortar retail stores by 2025, presenting a high-tech vision of physical retail’s future.
“COVID-19 has certainly reshaped the retail terrain, heightening the need for solutions that will provide safer, cleaner, more seamless and more enticing in-store shopping journeys if brick-and-mortar is to compete,” concludes Bar. “In the ever-changing reality, brick-and-mortar retailers no longer have the luxury of putting off smart retail strategies. Now is the time to adapt operations to suit the world’s new normal.”