The global pandemic caused by COVID-19 killed retail. It was the final nail in its coffin. It’s done so much irreversible damage to an industry that was already on life support to begin with. The virus essentially shut down retail worldwide.
Shopping malls, strip malls, and standalone retail locations were forced to close back in March. That meant permanent closures for many retail giants, as they did not reopen when their local Governor’s rolled out phases that allowed many to resume business as usual, albeit under new guidelines.
For U.S. businesses, the CARES ACT and SBA Payroll Protection Program offered some assistance, but not everyone that wanted to participate and deserved help received it. Some retail giants, like Target and Walmart, have survived.
Others, like Victoria Secret, Bed Bath & Beyond, Pier 1, GNC, and Macy’s have closed many locations permanently. Why? Consumers aren’t venturing out as much, as they want to avoid COVID-19 exposure and the unemployment rate and record job loss numbers are putting a lot of financial strain on consumers. They are being frugal and tight with their money now more than ever.
Large retail giants are pivoting to an online-first focus, and mom and pop retail are migrating online, creating eCommerce storefronts using platforms like Shopify and WooCommerce. Just as restaurants had to pivot to a more tech-friendly solution, retail needs to follow suit or continue to die a slow painful death. Here’s why retail is a dead end and eCommerce is the future.
Online Shopping is More Convenient and Safe
Online shopping has always been more convenient to some degree. It’s the reason why Amazon has morphed into the giant its become. Lower prices and not having to leave the house was always appealing, but now there is another reason to shop online: safety.
The CDC recommends that people stay inside, limiting their potential risk of being exposed to the virus. With many people carrying COVID-19 while not displaying any symptoms it can be picked up simply by being out and shopping.
This is why the retail stores that are currently open require masks to be worn, as they are taking every precaution to limit infarction and the spread. So, now you can shop online and save money while also avoiding COVID-19? Sounds like an easy decision for me.
Brands Can Easily Target Their Ideal Customers on Social Media
Large retail brands tend to do blanket marketing using traditional TV, print, billboards, etc. This branding is designed to get consumers to walk into their locations and hopefully spend some money.
They tend to not market-specific offers this way or single out a specific customer because the cost is too great to go that narrow with the marketing message. Online marketing allows the brand to deploy hundreds if not thousands of messages, each targeting a specific audience with a specific offer.
Through retargeting across display ads and social media ads, as well as through email segmentation, a brand can put laser-targeted offers in front of customers, both new and existing, that have a high probability of converting.
A more targeted marketing message is always going to convert better and deliver measurable results. When you have to throw out a wide net you are only going to capture a very small percentage of those that engage with the advertisement.
Lower Customer Acquisition Costs & Higher Customer LTVs
I mentioned measurable results above, and that’s why eCommerce is so attractive from a brand standpoint. When they put up a billboard in Los Angeles they cannot attribute sales and revenue to that specific billboard, which might be one of the hundreds all over the U.S.
But, when they run an ad on Facebook they know exactly how much revenue that ad was responsible for generating. They can see what each impression, click, and conversion cost them. They know down to the penny how much each customer cost to acquire.
They are also able to collect more data on each customer, which can then be leveraged for continued marketing with offers that have a high likelihood of converting. Over time the lifetime value of each customer acquired via eCommerce becomes higher.
Retail giants can escape shoulder crushing operational overhead by abandoning physical stores while acquiring customers at a lower cost and turn them into more profitable customers over time simply by pivoting to eCommerce.
It’s a win-win for brands with no downside. RIP retail.