Coronavirus, unrest and recession: merchants’ bumpy path out of lockdown

Even though a portion of retailers could rely on e-commerce to keep active during coronavirus shutdowns, reopening brick-and-mortar shops may be even harder amid new safety concerns

There was some good news for retailers this week in the form of a record 17.7% jump in U.S. retail sales, which was larger than analysts’ expectations though still off of a month in which much of the economy was shut down.

The increase in digital payments that accompanied the initial shutdown will also play a role in reopening — since shopping habits have already changed and the perception of safety has accelerated rather than waned.

Of course, the coronavirus remains a risk — cases and hospitalizations are spiking in some states; unemployment remains high and some communities are recovering from incidents of vandalism that occurred alongside the largely peaceful protests after the murder of George Floyd.

The impact of the social unrest on new digital payment trends is a bit of a wildcard — though there will be an added push to remote shopping and payments in at least the short-term.

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“Many people have been concerned about inadvertently getting involved in protest demonstrations and have opted to remain at home,” said Jack Baldwin, CEO and chairman of BHMI, an Omaha, Neb.-based financial software company. “Consequently, online digital purchases are further motivated.”

But as demonstrations diminish and become more predictably peaceful, individuals will become more willing to venture forth and interact on a person-to-person basis – a process encouraged by months of social lockdowns, Baldwin said.

The civil unrest coupled with the pandemic puts challenges in front of business owners who may not be prepared to face them, said Lil Roberts, CEO and founder of Xendoo, a Fort Lauderdale, Fla.-based small business technology company. In an earlier interview Roberts discussed small business’ lack of preparation to produce the documentation needed to apply for Paycheck Protection Program loans that are designed to help businesses during the shutdowns.

This week Roberts said the new challenges are more based on general uncertainty amid the multiple crisis.

“Even though stores are slowly opening, many patrons are choosing to hold out,” Roberts said. “In time people will return to stores to purchase goods but they will use traditional methods of payments much less.”

Stores that reopen face other safety measures that will add overhead. Apple’s store reopenings, for example, include temperature checks and screening for specific symptoms, such as a cough. Retailers also face restrictions on how many people can be in a store at a given time.

"As the world navigates phased re-openings, financial institutions need to focus on the health and safety of their employees and customers,” said Joy Henry, general manager of financial and business services at Sterling, a New York-based firm that offers background checks and ID services.

These steps include employee screening programs, such as temperature checks and COVID-19 clinical testing with active virus or antibodies. Henry suggested background screening for staff may include risk profiles to vet staff who are qualified to perform safety checks for a store or other business.

These measures are necessary to protect public health, but aren’t free for merchants. And reopening restrictions both directly reduce in-store traffic and indirectly discourage people from visiting stores in person.

That suggests a deeper move into digital commerce, even as stores and malls reopen. “Although early foot traffic suggests lots of pent-up demand in some areas of the country, many shoppers remain cautious and concerned about infection,” said Greg Sterling, vice president of insights at Berlin-based search marketing company Uberall, who added shopping trips will thus be less about entertainment and more about targeted objectives, get in and get out. “And some number of people won't want to go into the store at all; they've been trained now to shop online. Thus getting people into stores may be more challenging for many retailers.”

The firms that successfully reopen will be the ones that will offer a range of omnichannel options: e-commerce, buy online and pickup in store, and curbside pickup and so on, Sterling said, adding Best Buy, Walmart and Target are good examples of companies that have built the infrastructure and are now able to benefit from it.

“Those that can also display real-time inventory for stores and can deliver confidence that products are available will have an advantage in terms of online visibility and sales,” Sterling said, adding online exposure through services such as Google My Business, Google Maps, Facebook, Instagram and related social tools will be mainstream.

Retailers started mixing in-store and e-commerce experiences before the pandemic hit, partly as a long range play to stay relevant and as a near-term tactic to counter Amazon. Those concerns have accelerated and are compressing that evolution into a few months. That means integrating technology better with the in-store experience in a way that deemphasizes contact such as automated price checks, kiosks and mobile payments.

The nature of the physical retail store will change, as stores support e-commerce more in the future. That will pressure stores to improve how digital integrates into the broader shopping experience. Before the pandemic, retailers were already adding consumer-driven price checks, digital kiosks, mobile payments. These features will be considered ways to avoid crowding more than a convenience, and thus more necessary.

“Indoor location and mapping was a big deal a number of years ago, but lost momentum because of poor executions, and could see a resurgence in some retail contexts,” Sterling said. “The internet will now be consulted almost every time before consumers make a trip to physical stores. And that means Amazon is always lurking, ready to claim the sale.”