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Walmart’s US president John Furner said in an interview to WSJ that he expects shopping to change permanently in a post COVID-19 world. In particular, he was referring to the changes expected in shopping behavior of customers and the way they will consume omnichannel services in the future. But is this a problem for Walmart? After all, they have one of the largest physical-store space among all North American retailers. They were already using a few of their stores as fulfillment centers and now they have started using an additional 2400 outlets to ship out customer orders. Its online business has skyrocketed, but so has it for other retailers. Walmart may be particularly encouraged by one statistic, its fastest-growing group of ‘click and collect’ shoppers are customers over the age of 50.1

Nielsen is tracking the impact of COVID-19 on online shopping behavior, particularly in the grocery segment. 10 million new online shoppers have been added since the lockdown restrictions began in the US. The overall growth of online grocery purchases stands at 52% since the start of COVID-19. Also, the overall growth is 66% more when compared to last year’s May results. ‘Click and Collect’ has skyrocketed - increasing by 94%, and home deliveries have jumped up by 42%.1 The most significant outcome for retailers is that customers have now crossed the initial barrier of online shopping. They have tasted the convenience of either home delivery or collecting provisions from the comfort of their cars. Customers are also utilizing apps that assist in basket preparations, apply coupons automatically, and overall make the entire purchase journey much more efficient. Walmart’s app was averaging daily downloads of 50K by mid of March, Instacart subscriptions rose to 40K per day3.

As per a recent survey, one-quarter of US adult shoppers will not feel comfortable shopping in malls or stores until a vaccine is made available.4 So is this the new normal? McKinsey makes a case for it in their paper published on 19th May5. According to them, the 3 major areas that would see maximum investment by retail executives in the coming 12 to 18 months are E-commerce and omnichannel, data and analytics, and making supply chains flexible. Retailers will get better at utilizing their networks and physical assets, in combination with existing and new digital capabilities to provide a seamless omnichannel experience to their customers.

Physical stores will be an important element in this omnichannel juggernaut. These were already being transformed to offer more services to customers rather than carrying all the products in all its variants6, and now the push for this will be even more in the post-COVID-19 era. Some store closures are inevitable and for good reason, but if the shift is truly towards becoming digital, then why maintain an asset with such high overheads? Retailers will have to rationalize the number of stores they have and do away with the ones that are less profitable, expensive to maintain, or don’t have the potential to drive customers to it for service consumption.

Few other stores will be converted completely into fulfillment centers, which will assist retailers in making their supply chains flexible towards last-mile delivery. All stores would increase their fulfillment capacity, most likely dedicating a larger percentage of the store space for this and reducing the display aisles. Backroom store size will increase and aisles would reduce. Endless aisles will be brought in stores aided by self-help kiosks, from which orders can be fulfilled from the backroom to the customer in the storefront in the same shopping trip, while the customer enjoys one of the services on offer.

Services will become a differentiator in the times ahead. Grocery retailers would test newer concepts, most likely after the end of the pandemic. It may be store in a store, experience-driven marketing of products, food or home themed workshops, barbecue cookouts, or even expanding their F&B offerings to include sports coverage, etc. Whole Foods already offers wine tasting in its stores. Michael’s has been doing craft workshops on weekends, wherein customers can buy art kits from the store and take it to a dedicated room to build their project - kids love it! Grocery stores would dedicate spaces to do something similar, perhaps cooking classes or self-grooming sessions. They would also leverage digital and social media capabilities to augment the experience for their customers.

Store associates would be assigned more to services than checkout counters. Sam’s Club has already started ‘Scan and Go’ service through its mobile app. Customers can scan and place their items in the cart, pay with their card, and walk out. The effort will also be saved in replenishing aisles as the products kept on display or even carried in the store gets rationalized.

It will be interesting to see how the market forces play out in the next 12 to 18 months, how the customers would change and evolve, how the retailers would transform to keep themselves relevant, and which ones will survive or fall7.







7. By the end of May 2020, few prominent retailers have filed for bankruptcy. Some of these are JC Penney, Neiman Marcus, J Crew.


About the Author

Kushagra Mithal
Program Director – Retail group

Kushagra is the director of Retail sub-industry group at Mindtree. He has around 16 years of experience as a functional consultant and solution lead with specialist knowledge around eCommerce (B2C and B2B), Sales and Supply Chain Analytics, Trade Promotions, and Logistics. He is currently focusing on aligning omnichannel solutions for Retail customers through systematic innovation using commerce platforms and analytics.

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