Case assignment retail mgmt
Tj_smith
COVID19ImpactonRetailing.pptxCOVID 19 Impact on Retailing
Mary Anne Doty
MKT / MGT 445 Retail Management
Fall 2020
COVID 19 Impact on Retailing
Part I: COVID Impact on Consumers and Retail Consumer Behavior (CH 4 and 5)
Part 2: COVID Impact on Retail Operations (CH 9, 15, 16)
Part 3: COVID Impact on Retail Merchandise – both supply and demand issues (CH 11, 12)
Research Early in the Pandemic Anticipated Changes in Buying Behavior
“Growth Opportunities for Brands During the COVID-19 Crisis” by Knowles, Ettenson, Lynch and Dollens, MIT Sloan Management Review (May 5, 2020) reports on purchasing two weeks after stay-at-home directives.
1,233 US adults were surveyed to report on shopping activities in the US.
Research examined store choices, timing of shopping, purchase of new brands and reasons.
Research findings
Reduced shopping frequency and increase in amount bought
Stocking up on nonperishables and hard-to-find items
Willingness to try online and delivery modes of purchase
Loss of interest in status-driven purchases
Interest in how companies are treating their employees
Willingness to try new brands and new retailers
Three Factors Influencing Retail Shoppers
Economic Influences
Shortages in Availability
Lifestyle Changes from Lockdown
Factor 1: Economic Influences
High unemployment rates still undercount the impact on self-employed and part-time workers not eligible for unemployment benefits.
Seven months after initial pandemic news, unemployment remains at highest levels in decades, near 8% in September from 14% in April.
Millions at the bottom of the income scale cannot afford food or housing
Economic Pain is Not Spread Evenly Across the Population in the US
Little/No Income Reduced Income No Change
Self-employed Receiving Unemployment Retired
Non-essential One spouse still working Work from
industries Home
Undocumented Business owners with reduced Selected
workers sales industries
Industries Most Effected – Most Layoffs
Airlines, hotels, conventions, rental cars
Hospitality – bars and restaurants
Grooming – hair, nails, massage, dog grooming
Wedding industry – photographers, caterers, florists, venues
Attractions – theatres, movies, concerts, sports
Day care providers
Retail stores – non grocery
K-Shaped Recovery
The economic recovery from the pandemic is causing uneven outcomes between workers at the top and those at the bottom
Lower-wage jobs are slower to recover than higher-wage jobs
Some employment in face-to-face services will not come back
Factor 2: Shortages
Lean supply chains, hoarding, and reliance on imports have resulted in shortages in merchandise for both bricks-and-mortar stores as well as eCommerce
Some shortages have evened out over the past 7 months, while other items remain on back order.
The result is that retailers can’t sell what they don’t have in stock, even when customers are willing and able to buy.
Shortages
Toilet paper, paper towels, hand sanitizer
Health care equipment, such as thermometers, blood pressure cuffs,
Office equipment and supplies for working from home (headphones, laptops)
Bicycles, workout clothes
Meat (temporary), flour, non-perishables
Canning supplies
Factor 3: Lifestyle Changes
Sprint (initial stay-at-home) mentality has become a longer-term marathon mindset as society settles in for a long change.
Travel sharply reduced, including business, vacations, family visits
Closure of bars, restaurants, health clubs, entertainment to slow the spread of the virus
Children learning at home due to school closures – women are especially impacted and employment opportunities lag without childcare
Offices closed indefinitely – using technology to work from home
Long term social distancing
2020 What’s Out?
Going to bars
Eating inside restaurants
Crowded sports and entertainment venues
Participation in gyms and indoor/contact sports
Movies or arts events
F2F shopping for entertainment
Dressing up
Professional work clothes
Commuting and buying gasoline
Cruises, airline travel, hotels
Haircuts, nail salons, massages
Big weddings, funerals, family reunions
2020 What’s In?
Consuming alcohol at home
Backyard social distancing with a small number of people
Baking at home
Walking / riding a bike and other safe types of exercise
Zoom for work, church, school
Livestreaming concerts and events
Puzzles, crafts, games
Facemasks and handwashing
Take out food – including fine dining
Comfort clothes
Home improvement – furnishings, yards, gardening, remodeling projects
Grocery delivery or pickup instead of in-store shopping
eCommerce
Interactive Effect on Retailing
Substitutions
Substituting categories of budget items for other priorities (shift priorities)
No new clothing to afford food/rent, new floors instead of vacation travel, etc.
Substituting new brands for preferred items out of stock (response to shortages)
Discovering new products, generic, etc. (ie buy whatever toilet paper is available)
Substituting other retailers for preferred retailers (closed / condensing trips)
Buy everything at Kroger instead of multiple stores; Buy hand sanitizers and cleaning products at office supply store because grocers are sold out
Bottom line – brand loyalty and store loyalty may suffer
Where do Retailers Go From Here?
Recognize that the longer the social distancing lasts, the more likely these changes in behavior will be permanent
Change your merchandise mix to meet new/evolving needs
Less reliance on sales forecasting assumptions from the past
Evolve in what and how you deliver value to customers
Re-segment and target the market based on changes in income, lifestyle and needs.
