Brick-and-Mortar in a Post-Covid World

The end of the pandemic isn’t quite in sight, but retail strategists are already preparing for what comes next. After months of shopping primarily online, and taking advantage of services like same-day deliveries and curbside pickups, can shoppers be persuaded to come back into physical stores?

Personalization

Retail services that support social distancing became hugely popular in 2020. E-commerce shopping soared, as did delivery apps and other mobile-first shopping experiences. According to PwC’s Global Consumer Insight Survey, 45% of consumers have increased their mobile shopping habits since Covid-19 began. Bringing those consumers back inside brick-and-mortar stores will require more than just a lifting of regional stay-at-home orders.

Not only do shoppers need to feel safe, but they also need to be incentivized. Personalized experiences, like the kind Apple has pioneered in its Genius Bars, are likely to become hugely popular in 2021, predicts Raj De Datta, CEO of Bloomreach, a firm that helps companies grow online revenue by creating and scaling commerce experiences.

“There may not be quite as many retail associates, but the ones who are there will be asked ‘where can I find XYZ products right now,’” says De Datta. “Buyers may ask an in-store retail associate what they can’t figure out online.”

Reallocating space

Another change that could potentially reshape the brick-and-mortar retail industry would be a shift in the way retailers use space. De Datta is already seeing retailers re-allocate spaces in less pricey locations that used to be showrooms to inventory. With limitations on how many customers can be inside at one time, this makes sense during a pandemic. But De Datta believes retailers will continue to rethink how they use what was previously showroom space after the pandemic has passed.

Retailers could turn showrooms in pricier locations, including city centers, into entertainment spaces or marketing venues. With shoppers able to easily purchase products online, and get those products shipped from anywhere, retailers in 2021 will have to adapt how they meet the needs of their customers in-store. It’s likely that brands will eventually offer more immersive entertainment experiences. For example, a housewares brand might convert a portion of its retail space into an area for hosting product demonstrations or cooking lessons.

Lululemon started down this path even before the pandemic took hold. Back in 2019, the company announced plans to convert space in its mega-sized retail stores into yoga studios, meditation rooms, and juice bars. By 2023, the company was anticipating that at least 10% of its total bricks-and-mortar fleet would be considered “experiential.”

“Whether it’s more entertainment-oriented or supply chain-oriented, the space will reflect those choices,” De Datta says. “Whatever choices the retailer makes to compete will determine how the space will look.”

Other retailers that De Datta predicts will find success as they pivot to launch more entertainment, brand, and end-to-end purchasing experiences include IKEA, Sephora, and Ulta.

The Covid effect

The shift in how retailers use physical space started before the pandemic, but social distancing requirements and lockdown orders have accelerated the move. In his role at Bloomreach, De Datta says he has seen businesses that were 25% online grow to become 75% online, due in large part to the growth in consumer preference to spend online.

“We need to think about a retail location with a very different mindset. Yes, retail stores will continue to exist, but they will serve a combination of purposes,” he says. “Historically, retail stores were built so that customers could walk in the door and buy products then and there. Going forward, businesses won’t care whether somebody actually buys the product in-store. What will matter most is if the business is promoting its brand well.”

Counter to what many people think of when they consider the changing retail environment, De Datta says it’s entirely possible that we will see online businesses setting up more physical stores in 2021. Commercial leases are getting shorter and rents are dropping in cities around the U.S. Whether they are launching pop-up shops or marketing venues, e-commerce players that have come out on top during the pandemic can afford to expand, with experiences that make trying out products as fun and exciting as possible.

“It’s fun to try stuff if you can have an experience,” De Datta says. “There’s a reason to go there. And, if you can go get something quickly because your retail locations can fulfill demand from a local market vs. some distant warehouse, then that’s an advantage for businesses to get products to people faster.”

Stephanie Miles is a senior editor at Street Fight.