While retailers are used to being responsive to changing customer preferences and trends, the coronavirus has added extra twists that no analyst could have predicted.
Many stores were forced to close in mid-March due to the threat of COVID-19. Those that remained open, such as Minneapolis-based Target, had to dramatically adjust their cleaning protocols, return policies and layouts.
Even with some stores beginning to reopen, experts said the retail landscape won’t be the same and that it is difficult to tell how many retailers will fare until after the year is over, though e-commerce will likely play a large role in the retail recovery.
“The pandemic is going to have a long-term impact on shopping,” said Bruce Nustad, president of the Minnesota Retailers Association.
Both Target and Richfield-based Best Buy entered the year after one of the strongest holiday seasons in the decade.
Yet when COVID-19 took hold in the U.S., both had to pivot quickly to meet immediate needs, and Target CEO Brian Cornell said that kind of adapting will be happening for the rest of the year.
During the early months when the threat of the coronavirus gripped the United States, food and home goods were hot retail items, Nustad said. E-commerce had become the new normal and will likely continue to have a bigger effect on the retail sector.
“I do think in some ways e-commerce was previously more generational,” Nustad said. “I think we have seen the teardown of some of those differences.”
Cornell and Best Buy CEO Corie Barry have both recently said on earnings calls that e-commerce has become more important, and both saw online sales more than double. Chains such as Christopher & Banks viewed e-commerce as a lifeline during the stay-at-home orders.
Last week, Christopher & Banks reported its net sales had decreased nearly 52% in the first fiscal quarter that ended May 2, compared with the same period last year. E-commerce sales, though, had accelerated 50%, CEO Keri Jones said.
SPS Commerce — which supports e-commerce by connecting suppliers, retailers, distributors and logistics — has seen its stock climb 31% year-to-date as the online engines have become more important.
Before the pandemic, e-commerce had been growing at a rate of about 16 to 19% a year, but COVID-19 could permanently shift a larger amount of retail sales online and push retailers to further scale their ability to fulfill those sales, said Scott Berg, a Twin Cities-based analyst with Needham & Co. LLC.
“I’m a big believer that e-commerce will continue to evolve,” he said.
Another trend that likely will stay around is more stores offering curbside pickup, Nustad said. While the in-person shopping experience is here to stay, “there are many other way to conveniently shop.”