Retail Sales Performance 2020: Opportunities in E-Commerce
Retailers were in for an uphill climb this year as the pandemic hampered retail sales performance and is projected to bring profits down 90% by the end of 2020. Physical retail was the hardest hit sector as stores were forced to shut down at the height of Covid-19. With new rounds of lockdowns imposed as cases rose in many countries, recovery has been slow and erratic. Already on a slippery slope pre-pandemic, stores may never regain their previous position, changing the retail landscape as we know it.
However, there is a silver lining. The e-commerce boom brought around by consumers’ increasing reliance on online shopping has opened up an opportunity for retailers to reclaim market share and expand globally at lower costs. Going online will give businesses respite amid the sales slump crippling physical retail.
YoY Sales Performance Growth
When the coronavirus pandemic reached a global scale, supply chain disruptions heavily impacted sales. At the same time, economic recessions and the difficulty in purchasing necessary items shifted consumer priorities. Consumers limited spending and turned their focus on essential items only. The situation remains even as lockdowns lifted.
Food and beverage as well as building and garden stores had a 12% and 11% increase in sales performance respectively. Building and garden items were in high demand as consumers became self-sufficient. Consumers started growing their own food to prepare for another wave of panic buys and supply shortage.
Meanwhile, other retail stores that did not fulfil consumers’ new priorities faltered. Furniture and electronics saw an 11% and 17% decrease in sales performance respectively but clothing stores took the bear of the brunt, dropping by a whopping 35%. Permanent store closures by major retailers like Zara, Gap and Victoria’s Secret added to the decline of fashion stores.
Key players pulling back from physical retail sent shockwaves through the industry but was necessary to optimise online efforts and minimise losses. Digital demand has never been stronger, e-commerce sales grew by 24%. To succeed in a lucrative but highly competitive market, retailers are pouring all resources into growing their online presence.
Consumer Behaviour in the New Normal
The ebb and flow of Covid-19 made sales performance unpredictable as consumer behaviour can quickly shift when the virus gets worse in any region. Volatile trade is expected to remain until a vaccine is successfully implemented. In the meantime, retailers have to stay alert and quick to respond to demand shifts.
The digital realm is now the most effective platform to reach consumers who have taken comfort in the stability of online shopping over physical retail. However, it’s not enough to join a marketplace or start an e-commerce website.
Retailers must align with consumer expectations in assortment offering, pricing and discounting. Consumers now seek value in every purchase, which means tighter collections with quality pieces and relevant trends will drive profit. Focusing on volume and mass discounting is no longer feasible in economic recessions.
Additionally, consumers are more likely to connect with brands that resonate with their own personal values during perilous times. Sustainability and diversity are some of the social themes gaining prominence among consumers and influence their purchasing decisions as well as brand loyalty.
Opportunities in the East
While most markets have been slow to recover from the economical impact of Covid-19, the Asia Pacific region has shown tremendous resilience. Minimal impact from fewer lockdowns and stable economy pre-pandemic accelerated the region’s recovery. The luxury segment has already pivoted its focus to Asia, opening up stores in China and Japan while pulling investments in the US and Europe.
Asia Pacific emerged as a robust market in size and growth as many countries avoided lockdowns by keeping the Covid-19 outbreak under control with minimal cases. E-commerce trade is also strong in the region due to a huge amount of digitally-inclined consumers. For this reason, markets in Asia Pacific offer a less challenging landscape than its western counterparts with plenty of opportunities to jump on.
How Data & Analytics Play a Part
McKinsey and The Business of Fashion’s 2021 report predicted that “Data and analytics will play a crucial part in improving decision-making by helping businesses monitor demand shifts across geographies, categories, channels and value segments”.
In a volatile and highly competitive retail landscape, real-time data provides retailers with the speed and agility they need to get ahead of the competition. As the pandemic continues to disrupt trade going into 2021, gaining access to data and analytics should be top of mind for businesses in order to capitalise on fleeting opportunities before the rest of the market.
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