After what has often felt like a very dark and turbulent year, are the storm clouds finally lifting for retailers?
As the holiday season approaches, the U.S. is still in the grip of the 2020 pandemic. Many families have lost loved-ones, and there is no escaping the fact that the death toll will escalate into the winter.
But now, with news that Pfizer and BioNTech’s 90%-effective vaccine could start being rolled-out within weeks, spirits and stock markets have soared.
And in the retail sector, where stores have been struggling hard to adapt – or simply just survive – there’s suddenly hope that things could soon look brighter. It couldn’t have come at a better moment as families start to stock up and plan for Thanksgiving and get ready to grab bargains on Black Friday and Cyber Monday that kick off Christmas gift buying.
Yes, all the pre-existing challenges remain, but there’s no doubt that rising optimism will translate into increased spending, right now. For stores, consumer confidence is always important – it’s doubly so ahead of the holiday season, especially this year’s.
Rising Confidence Among Wealthier Consumers
Deloitte has been predicting that a number of scenarios could play out in the U.S. retail sector.
In one scenario, holiday sales could remain flat, rising no more than 1%, if consumers, especially lower-wage earners, remain nervous about their financial security.
In a second scenario, growth of up to 3.5% could be achieved if wealthier consumers begin to feel more confident. The reason? Money that hasn’t been spent on vacations and experiences such as theatre trips or dining out will instead be spent on holiday gifts, with a greater urge than usual to be generous, or to splurge on feel-good spending and self-indulgence. And why not? It’s been a tough year.
Factors that could trigger positive sentiment in this group include shrinking unemployment, additional government stimulus and – yes - an effective vaccine.
So, the Pfizer-BioNTech announcement, which is being hailed by the WHO as a triumph for international scientific collaboration, couldn’t have come at a more welcome time. It doesn’t stop there either: ten other candidate vaccines are also in phase-three trials, and similar positive results can be realistically expected from at least some of them.
So how can retailers make the most of this respite to propel themselves into 2021?
Managing Online Sales More Efficiently
The pandemic has substantially accelerated the pace and shift to online shopping. Many consumers will still try to avoid crowded public places, so e-commerce will continue to grow. Deloitte expects the increase will be between 25% and 35%. According to Refinitiv IFR, e-commerce sales grew to 16.1% as a percentage of U.S. retail sales in Q2, and are expected to grow further to 16.4% in Q4.
The stores set to benefit from this surge – i.e., those that successfully combine online and physical offerings - are now finding that they must handle a significant rise in online orders. This could put pressure on their back-room operations and justify further investment in smarter systems.
The rise in e-commerce is not going to be reversed, this world is here to stay, so there’s a real benefit for retailers in streamlining operations to make sure they can compete as we go into the post-pandemic environment.
The case remains strong for investing in technologies that help manage retailers’ increasingly busy logistics, distribution, and warehouse operations, however well-developed they currently are. Video solutions can help retailers manage their order-processing teams, and ensure they handle stock more efficiently and securely. Operations can be improved, and losses cut, with video tech that does a range of jobs, from ensuring traceability of stock, to eliminating theft and bogus accident claims.
Mitigating Infection in Brick-and-Mortar Stores
Meanwhile, in physical store settings retailers are having to mitigate the infection risks that come with store over-crowding. As early as the summer, big names like Walmart, Dick’s Sporting Goods, Target and Best Buy announced that they would not open on Thanksgiving Day.
Those that do stay open may have to work harder to encourage social distancing, and this highlights the value of technologies that take pressure off shop-floor staff.
Video systems powered by deep learning analytics can now be affordably used for a range of infection risk reduction tasks, including accurate counting of the number of people coming in and out of stores such as retail outlets, banks, and pharmacies, which can provide staff with oversight and control of occupancy in real-time. The same technology can be applied to alert staff and trigger verbal advice and warnings to customers should they fail to adhere to social distancing or when bottlenecks occur in pre-selected zones. For customers waiting in line, dashboard displays positioned at store entrances now offer simple three-step traffic light systems to automate admission and flow in and out, giving customers not only wait times, but the confidence that when they enter they can shop in a COVID-secure environment. Similar functionality can be used for face mask detection, with automated reminder announcements.
It’s this automated approach that will not only remind customers to be careful, but crucially removes the need to hire additional security officers. It also eliminates the stress often put on retail staff, and can keep them from having to be involved in potential conflict situations for which most are not trained.
These technologies will continue to play a vital role after the COVID-era, as it’s these same AI-driven technologies that turn video data into actionable insight based customer behavior that will help retailers convert browsing into sales. Return on Experience (ROX) is now a key performance indicator for most major retailers. Video tech has a vital role to play in helping revitalize malls and Main Street through improved promotions and store layouts, reduced waiting times at checkouts, changing rooms, and customer returns and pickups desks, as well as helping to better direct and utilize retail staff to offer a more personalized service and enhanced customer experience.
Challenges Ahead – But Also Hope
Yes, the situation is still challenging. By mid-October, the number of bankruptcy filings in the U.S. retail industry was higher this year than in any other since 2010, according to tracking by S&P Global, and more retailers are expected to file for bankruptcy after the holiday season. But the number that do may now be reduced, and those that filed for Chapter 11 bankruptcy (as opposed to Chapter 4) have the opportunity to restructure and re-emerge. Several of them already have.
Clearly, big questions also remain about what lies ahead for the U.S. economy. If more ‘normal’ times return in 2021, does the U.S. really need the $3 trillion to $4 trillion stimulus package the government is considering? And what will happen to inflation and interest rates if there’s a rapid recovery?
Many uncertainties lie ahead, but those can wait.
For this holiday season at least, it feels as if there’s been a welcome break in the dark skies of 2020 that can be supported by increasingly affordable technology.
Andrew Myung is President of IDIS America