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Retailers on Edge as Delta Variant Spreads

School supplies and backpacks should be flying off the shelves right now, but growing concerns over the Covid-19 Delta variant are prompting more families to hold off on back-to-school shopping and make essential purchases online.

Just as the virus seemed to be on the wane, and retailers were beginning to transition back to their pre-pandemic marketing strategies, fresh fears have taken hold. Changes in guidance from the Centers for Disease Control and Prevention have already begun to affect retailers. Although the National Retail Federation predicts that consumers with children will spend more than $37 billion this year—the greatest amount since the group started running its annual survey nearly two decades ago—industry observers like Udayan Bose, founder and CEO of the digital retail marketing agency NetElixir, say localized lockdowns and changes to school reopenings will have a major impact.

“It is difficult to predict the impact of the Delta surge due to several reasons — there is likelihood that less vaccinated areas will feel significantly stronger impacts; also, localized decisions on lockdowns will have an impact, as would any changes in the future regarding the reopening of schools,” Bose says. “Unlike the previous waves that happened pre-vaccination, the impact of this wave will be a lot harder to predict.”

This summer’s rise in Covid-19 cases isn’t just upending back-to-school shopping. With companies delaying plans to bring workers back to the office, and large gatherings like the New York International Auto Show being put on hold, retail categories like fashion and apparel could see a drop in sales as well.

“From the learnings of 2020, it is safe to say that regions more impacted by the variant will see a rise in online grocery sales, a decline in travel and retail, and possibly in fashion or apparel,” Bose says.

Sales data showed tepid back-to-school online sales until July 20, when sales picked up. Surveys show that shoppers finished about half of their back-to-school shopping (51%) as of early August, but that may not be enough to make up for the precipitous drop in in-store foot traffic that’s occurring now. Bose says online sales of back-to-school products never picked up to the extent that had been anticipated, and now the surge in the Delta variant is leading to even more uncertainty among retailers.

“Questions such as ‘will in-person classes resume as planned or will we go hybrid once again’ are popping up more and more,” Bose says. “Retailers need to keep a close tab on online sales data as well as shopper behavior insights. Times of uncertainty, while difficult to navigate, often present a window of exceptional business opportunity. It is a small window, and nimble retailers can realize huge gains by anticipating and acting on these quickly.”

With the surging Delta variant, Bose says it is likely online sales will experience a lift in several categories, including grocery, pet supplies, and home improvements. Retailers in these categories can increase brand awareness through more aggressive and creative ad spending. The same strategy could also pay off well for retailers during the upcoming holiday season.

“Retailers need to balance their long-term and short-term goals and aspirations. During times of uncertainty such as these, only relying on the standard set of KPIs, like ROI or CPA, can be limiting and sometimes misleading,” Bose says.

Instead of tracking the percentage of new customers they’ve gained, Bose suggests that retailers track engagement as a KPI. As we head further into the second half of 2021, every retailer should have at least two game plans — Plan A and Plan B. If 2020 taught us anything, Bose believes it’s that shifts in consumer behavior, supply chain management, and inventory management can all get flipped on a dime.

“Last year, the retailers that continued to invest aggressively in marketing and brand building emerged as winners in e-commerce,” he says. “Potential future closures may lead to the reactivation of some of these new-to-online shoppers that had gone dormant over the past few months and also add brand new to online shoppers.”

Stephanie Miles is a senior editor at Street Fight.

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