Analysis

‘Accelerating the high street’s demise’: Retail weighs the long-term impact of coronavirus

The coronavirus (COVID-19) pandemic is already leading to changes in the way people shop, ranging from the minor to the fundamental. Within the industry, companies are already expecting these changes to long outlast the crisis.

As citizens are encouraged increasingly to stay in their homes, many are opting for online deliveries of essential goods such as groceries. For example, the UK’s online-only grocer Ocado has had to shut down its app and prevent customers from making further orders as it attempts to work through the backlog that it already has. As eDelivery covered earlier this week, there has been a shift in the way that couriers drop off goods, with the requirements for customers to sign for packages being waived in the case of Royal Mail.

The shift to online is being felt in other sectors too. Richard Davies, MD of Hattons Model Railways, tells eDelivery that the number of people buying products is up. He adds that there is also a rise in the number of product support questions, which he believes has been brought on by people getting round to opening products that they may have bought months earlier.

“I think coronavirus is going to help people adjust their attitude to work-life balance,” Davies says.

David Jinks, consumer research head at international parcel delivery company ParcelHero, tells eDelivery that consumers are being presented with a “fast learning curve” as circumstances push them to adopt technology which has been able to support home-based shopping for a while.

“Established habits have meant people haven’t explored the capabilities.”

He cautions that with capacity at major grocery retailers, these new customers “may not be having the greatest experience as their first experience, but the habit will stick once it begins to settle down and they see how easy it is.”

In addition, it is changing consumer attitudes to deliveries: people are being encouraged to look at new places to drop off parcels, Jinks says.

It is not just consumers who are being presented with a change. Hattons Model Railways has had to adapt its own behaviour to cope with the new conditions. The company bought a new, more powerful firewall to facilitate remote working.

The retailer has also changed its shift patterns at its warehouse. It has shifted from a five to six-day operation, with two teams now working longer hours for three days a week. This has proved popular, with Davies considering making the changes permanent.

Some of the changes are coming from a government level. The government has relaxed restrictions on the maximum hours that drivers can work in the grocery sector, as well as allowing deliveries to be brought during the night.

Tom Enright, VP Analyst at Gartner, tells eDelivery that grocers are also showing an increased willingness to collaborate on delivery routes. This includes sharing inventory data, warehouse space and vehicles.

Another interesting shift at Hattons is how it is making use of its now closed store. It has set up cameras in the store and is allowing people to book appointments and talk by video to staff. It is also running more live broadcasts via YouTube, where customers can watch and ask questions.

Andre Hordagoda, co-founder of software company Go Instore, which supplies virtual store technology, says demand is surging for the company’s service. Staff use smartphone cameras while moving around the store, allowing customers to gain additional confidence before they buy a product.

These changes are coming in as a result of necessity, but it is likely that those that have positive impacts for either the consumers or retailers will remain in place to some extent. Those that try online shopping for the first time may see little point in heading out to shops when they reopen.

In the broadest sense, consumer habits are set to become more online.

As Davies of Hattons Model Railways puts it: “Coronavirus, whether we like it or not, is going to fast forward some of the digital disruption we’ve seen in the last 10 to 15 years.”

“It may accelerate the demise of the high street,” says Jinks of ParcelHero. “This has hastened the processes of retailers needing to balance online and physical sales to get a good omnichannel experience.”

Hordagoda thinks that adoption of virtual store technology will fall after the crisis, but not back to the level it was pre-crisis.

“What is happening now for better or worse will have a lasting effect on behaviour, probably all around the world,” he says. “As long as it’s a good service, once they’re aware of it they’re going to continue using it.

“At times of crisis it does tend to push useful technology into people’s mindsets.”

On the industry side, Christopher Snelling, FTA’s Head of UK Policy, believes that night-time deliveries to grocery stores, being used as a result of the crisis to meet surging demand, may continue.

Enright of Gartner expects the increased collaboration between grocers to continue after the worst of the crisis has subsided. The opportunity to increase margins overnight by sharing delivery assets, as well as consumers embracing the convenience of having their groceries all delivered in one shipment from one van.

The most disruptive phase of the COVID-19 crisis will eventually come to an end. The changes it imposes on retail may be permanent.

Image credit: Shutterstock

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