CHICAGO–Even as the federal government continues to add hundreds of billions of dollars to relief efforts in response to the economic calamities caused by the coronavirus, many retailers say they expect to see only limited business benefits from the stimulus packages, according to new research.
The survey conducted by Digital Commerce 360 of 107 retailers during the week of March 16 and found that while 43% suggested they were taking aggressive action to curb the effects of COVID-19 on their business, 38% of retailers are still only taking some action and 19% have adopted a wait-and-see attitude.
“Many retailers are shifting models to address the times, including revising business models by adding wholesale channels, updating sites and systems, and implementing ecommerce,” said Digital Commerce 360 in its analysis.
Among some of the key findings in the research:
Consumer Confidence Takes a Hit
Not surprisingly, 97% of retailers report declining consumer confidence as consumers find themselves in a waiting game to purchase. Fifty-four percent see COVID-19 causing a significant decline in consumer confidence.
Sinking Revenues Frighten Retailers
Again, not surprisingly, the research found “far and away, the biggest impact being seen from COVID-19 revolved around demand and declining revenues.” Some of this was a result of retail store or production closures, according to Digital Commerce 360, or reduced traffic to those that were open. Half of retailers expect business revenues to see significant downturns relative to COVID-19 and an additional 27% project some revenue declines.
Survival is Top-of-Mind for Sellers
“There was great worry about survival and the future of one’s business where liquidity and cash flow were challenged, and the reality that any outside investment had ground to a halt,” said Digital Commerce 360 of the survey findings.
According to the research, that “harsh reality” already includes:
- Declining consumer confidence impacting business: 48%
- Updated sales outlook: 44%
- Re-forecasted revenues: 40%
- Reduced store traffic: 27%
- Adjusted financial guidance: 25%
Mixed Results
The survey found 55% of retailers are seeing e-commerce declines as a result of the coronavirus. While some sectors (34%) report positive results, the remaining 11% find ecommerce as initially projected.
“While employee furloughs and work-at-home models are inevitable, using the web to move more shoppers online may produce an upside for some retailers,” the analysis reads.
The research further found commerce has a reinvigorated role to play as retailers:
- Encouraged shoppers to buy online: 44%
- Messaged COVID-19 plans: 38%
- Sent COVID-19 email promotions: 21%
“Traffic, conversion and AOV are down for almost half of retailers,” Digital Commerce 360 said. “Conversion rate increases are likely due to the absolute need for certain essential products, but overall there may be significant browsing yet substantially less buying online. Lastly, AOV being down could be a function of financial hits taken by consumers amid COVID-19 as they watch their wallets.”
Supply Chains are Compromised
The research further found supply chains are challenged and inventory shortages are the new normal as seasonal products are rendered irrelevant. Current circumstances include delivery delays (22%), cancellations due to inventory shortages (15%) and more backordered product (14%).
Addressing the supply chain is fundamental to surviving COVID-19. Supplier communication and coordination top the list of supply chain action, said Digital Commerce 360, including:
- Communication: 53%
- Coordination for risk mitigation: 51%
- Contingency planning: 25%
- Revisiting supply chain: 21%