10 ways retail will never be the same after COVID-19
The current state of the world represents an unprecedented time in modern human history—unlike anything we have ever experienced (and hopefully, ever will again). And though we remain hunkered down, sequestered from our regular existences, by all indications the light at the end of the tunnel is out there, if barely visible, and we will start to emerge from this suspended state sometime this summer.
For those who make their living in the business of home furnishings retail, by that time things will have fundamentally changed, and being ready for those changes is crucial for rebounding as well as possible. It's critical to understand how the retail landscape is likely to have transformed when we return to the new normal.
Here are 10 key ways business will change due to the coronavirus pandemic.
1. E-commerce soars: If there's one thing every forecast shares, it's that the market share for e-commerce will expand dramatically, perhaps even doubling. With more people doing more of their shopping online—and others, forced to try it for the first time, finding they like it—digital sales might account for upwards of 20 percent of the home furnishings market once things settle down. Any business that does not have its e-com act together is going to pay a harsh penalty.
2. Cash is king: Businesses with the best balance sheets will ride out this crisis best. Companies with too much debt will not make it out of the pandemic, a painful lesson in natural selection—one that should not be lost on any retailer. Expect executives to look at their cash positions much more closely going forward.
3. Less competition: The attrition rate from the pandemic is going to be unlike anything we've ever seen, with heavy casualties on both the retail and supplier sides of the food chain. In the case of the former, that means fewer retailers to compete with, at least for the short-term. But when it comes to getting goods, many retailers will need to find new suppliers, as their former partners may no longer be in business.
4. Inventory overload: With most major retailers canceling new orders even if they were in process and refusing to accept incoming shipments, the supply chain will be overloaded with merchandise this summer and into the back half of the year. It will be a buyer's market to be sure—but that won't mean margins will hold up. No matter how strongly the consumer returns to the market, Holiday 2020 is going to be cutthroat.
5. Comfort products: This may manifest in many ways, but after being cooped up in their homes for what could be months, people will want new things for those homes that make them feel better, more comforted and at ease. That could mean overstuffed sofas, traditional designs and a major upgrade of kitchens and cooking products.
Save the date! Rock House Farm CEO Alex Shuford III and Ray Hallare, president of Dowel Furniture discuss navigating manufacturing disruptions on the next BOH Community Discussion this Friday, April 24. BOH editor in chief Kaitlin Petersen hosts a new Q&A session every Monday and Friday at 1:00 p.m EST on Zoom, exclusively for BOH Insiders. See the full schedule here. Not an Insider yet? Learn more here.
6. More working from home: This trend was already underway, but it will accelerate as more workers operate out of their homes on a regular basis. That's bad for WeWork and landlords, but it could be good for sellers of products like home office tech, task lighting and desk chairs—even if the desk is the dining room table.
7. Sincere messaging: So much of what brands have sent out via email and on social media during the pandemic has been tone-deaf, clichéd and self-serving. Consumers see through these disingenuous gestures. As we start to come out of this, the need for more genuine, meaningful communications between businesses and their customers will never be more important.
8. Supply chain change: Between the coronavirus and tariffs, the American home furnishings industry has learned the hard way that its supply chain management leaves much to be desired. That said, moving sources of supply from one nation to another—much less from Asia back to the U.S.—is not an easy task. Expect retailers to look for a better balance of where their merchandise comes from. It won't be perfect, much less foolproof, but it will be better than before.
9. Better employee relations (maybe): Right now, some companies are tripping over themselves to praise their workers—even upping their pay and giving bonuses—while others are being forced to furlough hundreds of thousands. What comes of this remains to be seen. Certainly many companies have learned the value of loyal employees, but expecting to see a wholesale change in the classic adversarial relationship between employers and employees may be asking too much. Some companies will have found better harmony. Sadly, most won't.
10. Not what you think: Finally, those looking for a seismic shift in American society may want to temper their expectations. After the 9/11 attacks, pundits predicted a fundamental change in the country's psyche. We would be less frivolous, less caught up in petty issues and more conscientious in our consumption. Well, we know how that turned out: The decade that followed was marked by rampant spending, superficial values and an insatiable race to consume and acquire. The pandemic aftermath likely will not represent the kind of wholesale national revision that some expect.
So yes, when we do come out of this, things will have changed tremendously…but not everything.
source: Business of home
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