HEY, SHOPS ARE OPEN AGAIN! LET´S STORM THE CITIES AND BUY!!
Said absolutely no-one. Yes, there is a first exit step out of the Corona lockdown. But it is a very conditional one: only for smaller shops, masks recommended or compulsory, with limits for number of customers and/or length of stay. And all the time having in mind that you are taking a risk, and not only for yourself, and is it really worth it? The old “shop till you drop” now has a new meaning. It´s not a joke – it is a threat.
Just because you “open up” the economy, it doesn’t mean that people will follow. Sweden has already made that experience. The only country in Europe that left all its stores open during the pandemic turmoil saw a 57% decline in apparel sales in the second half of March. For cinemas, the reduction in revenue is more like 90%. So, let’s face it:
Shopping doesn't mean fun any more.
And this may be true until a Corona vaccine is found. And even then, there may be a little less purchasing power around, and/or customers may stick to some of the new ways of buying they have used in the meantime and/or some of the retail brands that populated shopping malls and city centers last season may not be around the next time you come along.
Sure: The more the sellers can reduce the transmission risk, the more convenient for the buyer to return (we talked about it eg. here, here and here). But it may – and will – be even more convenient to buy at home.
Also sure: City centers won’t die. They have been around for some hundreds or thousand years, they have lived through more than one disaster, and they always found ways to reinvent themselves. They will find one way again. But we would not bet our house on shopping centers defending the central spot in the cities they took over about one century ago.
If people won't go shopping, then shopping will go.
First of all: mostly online. And it will stay there. So the whole e-commerce logistics will have to work as if it´s Christmas season everyday. This won’t mean: more of the same. The change in quantity has to translate into a change in quality. On the last mile in any case, but for the other parts of the distribution chain as well.
And second: to the manufacturer. With less need for retail outlets on the streets, there is also less need for the middleman. Corona means a big opportunity for manufacturers (with or without strong brand) to get in direct relationship with customers. So they should be the ones to invest in new retail logistics and distribution technology.
And third: to subscription. The business model of producing stuff first and selling it last, while meanwhile shipping it around the world and distributing to thousands of outlets in hundreds of cities only makes sense as long as these outlets exist and attract buyers. If that stops, it makes more sense to sell first and produce afterwards. This would change the way of production: eg. smaller lot sizes. And it would change the way of distribution: eg. less containers, more pallets.
So, yes, there will emerge a New Normal of Shopping. But it will be a very disruptive one, even after the virus.