The Not-So Stable Industry: Retailing During a Pandemic
Quick to adapt, governments understood the necessity to act immediately, as hesitation towards a world crisis could cost lives. Starting January 25th, 2020, Canada confirmed its first case of COVID-19 in Ontario’s capital, Toronto.
By March 15th, Canada would not be the same. The NHL and MLB discussed suspending seasons or postponement of events, schools closed, and retail giants such as Nike and Starbucks close their doors worldwide in the safety of their workers.
In just one more day, Canada issued a public health emergency, urging families and individuals to do their part and stay inside to protect their neighbours.
However, where it is the government’s responsibility to look after the health of its citizens, many businesses have been left to their own devices to remodel their strategies for success – if not survival.
Before 2020 started, there was gradual hope for household expenditure within Canada. Experts estimated a modest increase in retail sales of about 5% – and with record-high employment, wages were fueled to rise twice that of inflation.
Alas, no one could have predicted the real changes that 2020 has brought Canada, and here we are to look at where retail stands as we nearly reach the Santa Rally that merchandisers depend on so much.
It is no wonder that demand has become somewhat of a mystery during these past 8 months. With practically every retailer having to close their doors, aside from grocery stores and pharmacies, the shift back from “necessities” to “luxuries” is slow to recover.
However, if you’re lucky enough to have your business outside of retail outlets and malls, you may be experiencing the harsh realities of restricted supply chains and unprecedented demand. Grocery store retailers, in particular, have been seeing stockouts in a variety of sections, from flour to toilet paper.
The Online Boom
If your primary mode of interacting with your customers was through online sales, you were probably in luck. Canadians spent almost $4 billion on online retailers – and that was just May’s numbers. Figures, such as these are always exciting to watch but don’t cap out your hopes just yet. 52% of Canadians say they’re more likely to buy online, and this number continues to grow as our society adapts to our secluded lifestyles.
While small businesses are enabled by their online capabilities, the unfortunate reality of e-commerce is accessibility. Those with the largest supply chains before the pandemic were able to hold on to their reign, with online giants such as Shopify reporting a 62% increase in new stores created from March 13th to April 24th, 2020.
As well, the popular online retailer, Amazon, has seen its praise, with 13% of Canadians looking to use their service more in upcoming weeks. But this doesn’t make Amazon untouchable. The US-based company has come under inspection with a Canadian Watchdog bureau looking into whether or not the site may be engaging in anti-competitive practices. However, there has been no current indication of wrongdoing at this time.
For most, their stock has been slowly moving nowhere. Retailers outside of the necessary have had their doors shut for months as mandated by the government, resulting in a decline of sales from -15.1% for general merchandise stores to -16.1% for personal care retailers.
Compare this to food and beverage outlets and essential services that have seen a surge of 38% revenues, and it paints a picture of sluggish lead-times, packed warehousing, and sinking cash flows for any business that couldn’t keep their doors open.
It is imperative for these businesses to remain in contact with their key suppliers as the economy re-opens and inventory can begin to be cycled. Importance should be placed on flexible partners that are willing to work with your business towards mutual goals that are realistically achievable.
It is impossible to tell what social, economic, and health impacts COVID-19 will have in the years to come, but retailers are aware of the changing environment around them.
Planning accordingly and developing scenarios based on your data will be the best course of action for businesses shook by this year’s events.
Sadly, if you are waiting for some form of normalcy, it may be years away. Make the changes you need to now and start adapting before it is too late.