It’s not over yet.
In March, retailers were forced to temporarily shutter their doors due to COVID-19. Five months later, companies are continuing to deal with the fallout from the virus — and as cases continue to ramp up, more store closures may be on the horizon in some states.
In fact, California made the decision to pull back on its reopening plan earlier this month, requiring shops located in indoor shopping centers to once again shut their doors. And tech behemoth Apple temporarily shut more than 30 stores across five Southern states in response to spiking cases.
With a “second wave” of COVID-19 forecasted to occur as temperatures cool in the fall, retailers across the country could once again find themselves having to close up shop. Moreover, a second wave could cause a dent in consumer confidence, causing sales to take a hit.
While much uncertainty continues to loom, retailers can make a number of moves to help fortify their balance sheets in the even of another surge in COVID-19 cases. Below, five things companies can do now to put themselves on solid footing.
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Get rid of unnecessary inventory
Inventory management requires a delicate balance of buying, selling and distribution — and it’s become a more difficult task than ever amid the uncertainty borne of the pandemic.
Companies should review the amount of inventory they have on hand and liquidate anything unnecessary, advises Ron Oertell, chief financial officer of LendingUSA, LLC.
“While the price received for such inventory may not be the amount the store originally planned, the additional liquidity may provide the bridge needed to survive the retail downturn caused by COVID,” Oertell said.
And when making new purchase orders, it’s all about quality over quantity, explained Alexandre Therrien, Lightspeed strategic solutions manager.
“It is no longer profitable to fill distribution centers with as much inventory as possible — retailers must be conscious that they have the right inventory,” Therrien advised. “To do so, they have to get to know their purchasers on a deeper level and build inventory around their needs.”
Lean into digital
Amid the pandemic, e-commerce sales experienced unprecedented growth.
According to an eMarketer forecast, U.S. online retail sales is projected to climb 18% for the year to top $700 billion, representing 14.5% of the overall retail sales pie. For retailers that weren’t already aboard the digital train, now is the time to beef up online offerings.
“Retailers need to be nimble and agile because at a moments notice they may have to shutter their doors,” explained Farla Efros, president of consulting firm HRC Retail Advisory. “The safest best is to focus on the digital platform.”
For companies that have historically focused on brick-and-mortar, it’s not too late to get started, explained RICS Software CEO Jason Becker.
“Don’t get swindled by people who want to build you a fancy e-commerce website. Start small, get results and expand from there,” he advised. “We’re all still learning about Facebook Shops, but we think it’s going to be a huge opportunity, especially for those who haven’t invested in e-commerce tooling yet.”
Offer flexible payment options
In light of economic uncertainty and discretionary spending cuts, point-of-sale financing can allow customers to purchase products they otherwise may not have been able to afford.
Oertell noted that this may also be a way to “deepen the relationship with the customer and thereby integrate potential future transactions with such customers.”
Afterpay, a platform that allows customers to pay for their purchases in four interest-free installments, has seen significant growth in 2020, acquiring more than 1 million new customers amid the lockdown period from mid-March to May.
“There is a growing interest and demand among consumers to pay for things they want and need over time using their own money — instead of turning to expensive loans with interest, fees or revolving debt,” said Nick Molnar, co-founder and U.S. CEO of Afterpay.
Embrace contactless services
As shoppers continue to worry about contracting the coronavirus, no-touch services have become the norm for retailers across the board. Chains ranging from Kohl’s to DSW to Dick’s Sporting Goods have rolled out curbside pickup services, and companies are also offering contactless payment options, such as Apple Pay. What’s more, retailers including Nordstrom and Saks Fifth Avenue are offering same-day delivery and virtual appointments — allowing for experiential retail without the typical high touch.
Such contactless options will continue to be a must for retailers “until we figure out the new normal,” Efros predicts.
While curbside pickup has emerged as an especially popular option, it is not without its challenges. In an Euromonitor International survey, one-third of customers reported out-of-stock products as a challenge when using click-and-collect services.
Focus on at-home categories
Even as cases surged in Arizona, California, Texas and Florida, sporting goods, hobby stores, electronics stores, mass, hardware and home centers saw an 18% year-on-year increase in spending for the four week period ended July 11, said Commerce Signals CMO Nick Magiapane.
“The trend is likely to continue as people keep eating, working and staying at home. They won’t just watch Netflix all day,” Magiapane said, adding that most of that growth is from online sales, which spiked 60.6%.
In the sporting goods space, there’s been a shift from the pinnacle consumer to the novice, said NPD Group senior industry advisor for sports Matt Powell noted during FN’s July 15 virtual roundtable, “Outdoor & Fashion: The New Frontier — How Reinvention Will Reshape The Market.”
“The specialty industries — snow, ski, bike, run outdoor — have always been focused on the pinnacle consumer and have left business on the table. The people who are shopping today, where we have seen the surge in the business, is coming from the novice, from a family consumer,” he said.
For instance, Powell explained, a specialty running store should cater to the casual runner with sneakers priced at about $75, in addition to the pricier styles for the pinnacle customer.