Because of COVID-19, in-person shopping will never be the same

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AUGUST 27, 2020 — COVID-19 represents a sea change for retail services that will alter the customer experience for years—perhaps decades—to come. What at first appeared to be a temporary aberration is taking on a measure of permanence. Some have even resorted to reframing the popular aphorism as the “new abnormal.”

Key to the impending transformation is the concept of space and its relationship to traditional business models. Developers, for example, will opt for more open areas and install antibacterial ventilation ductwork within buildings, among other things—all of which will push up their costs. It’s very possible that prices will rise or profit margins shrink—probably both, and on a secular basis faster than increases in productivity.

Rate-of-return expectations by investors may temper when greater space requirements and wages for frontline workers—long overdue—increase. Since the 1970s most of the benefit of rising productivity went to investors and senior management, while employees got short shrift. Growing unrest appears primed to boost compensation for workers most at risk.

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“What at first appeared to be a temporary aberration is taking on a measure of permanence.”

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With so many emerging trends, it’s hard to know where to begin. Restaurant and public space design will become more, well, spacious. Take-out, drive-throughs and drive-in movies will win big. In some ways, 1950s lifestyles will make a comeback.

Large venues and modes of transport will no longer pack patrons in like sardines to maximize revenue. Drive-up appeal will factor more prominently as a way to draw customers to the curb, while parking lots convert to pickup points. Guests will insist on more sanitary hotel rooms and Airbnb properties. Additional bankruptcies await retailers than cannot adapt.

The reworking of the retail industry is taking place in earnest as stores convert to warehouses and logistics networks morph to accommodate residential delivery. If brick-and-mortar locations cannot shift to an online-only presence, they will close or convert to stockroom and shipping hubs.

Wholesale purveyors of commodities such as milk, toilet paper, institutional food services and other items designed around bulky or high-volume distribution to restaurants or office buildings, will adjust to accommodate household and individual-purchase quantities, or else they’ll significantly reduce their scale of operations. Supply chains will become more local to avoid disruption and decrease vulnerability of viral spreads from this and future pandemics.

Supply chain theory taught in business schools and practiced by consulting firms will shift its emphasis from near obsessive focus on cost and efficiency—no matter how geographically far-flung—to resilience and reliability. They will advise organizations to retain larger quantities of buffer stock, particularly essential dry goods, nonperishable food, hand sanitizer and surgical masks. For more expensive items where the private sector has little incentive to maintain substantial inventories, such as ventilators, the government will step in.

Welcoming concierges will instruct and direct at store entrances, subjecting visitors to scans or sterilization. Motion and voice-activated sensors will provide guidance and dispense information from product shelves. Smartphones will further integrate with the retail experience. Acrylic shields will abound, and sanitary supervisors will make regular rounds. Fewer displays will reduce clutter on showroom floors.

Hard-hit venues will continue to struggle, such as nail and beauty salons, bars and other close-quarter businesses. As socializing and exchange of gossip in the 21st century moves from the physical to virtual realms, things may never be the same again. Avoidance of close contact by nonfamily members will establish new social norms, new etiquette.

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⇒ Explore the research of the Institute for Economic Development at UTSA.

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Crowded locales of humans in proximity with animals sparked previous pandemics, and the threat of more in the future seems destined to alter buyer behavior for the long haul. If the joy of the retail experience diminishes, more circumspect behavior by consumers will result, implying a completely different meaning for the shop-till-you-drop culture.

Physical distancing—once thought of as the refuge of the aloof, detached or unsociable—is now positively fashionable. Every economic upheaval leaves its mark. In this instance COVID-19 will overhaul supply chains and buying patterns—and even the nature of human interaction—much further into the future than anyone ever imagined.

— Thomas Tunstall

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