Under Epidemic, the US Retail Industry Needs Transformation

The New coronavirus epidemic in the United States is spreading, but the digital transformation of the US retail industry has ushered in a growth opportunity.

Analysts believe that the epidemic or remodeling consumers' shopping habits will force the digital transformation of the US retail industry. However, major retailers in the United States have not yet made sufficient preparations for the "e-commerce era", and the transition still faces many restrictions.

Traditional retailers hit hard

On the 4th, American apparel retail company Cru Apparel Group applied for bankruptcy protection, becoming the first large-scale retail brand in the United States to go bankrupt due to the epidemic.

For many traditional retailers, the epidemic has brought a disastrous blow. According to data from the US Department of Commerce, retail sales in the United States fell by 8.7% in March, the largest decline since the data was recorded in 1992.

So far, about 1 million retail employees in the United States have been forced to take vacations. Take the US department store giant Macy's as an example. Since the outbreak, the group's 125,000 employees have mostly taken leave at home. Its stock has even been moved out of the S & P 500 stock index, and its market value has shrunk from about $ 6 billion in mid-February to $ 1.7 billion.

There are also many well-known retailers on the analyst's "bankruptcy watch list", luxury retailer Nieman Marcus is one of them. At present, most of the employees of the company were temporarily laid off.

E-commerce ushered in an opportunity

Unlike traditional retailers in dire straits, US e-commerce is rising in this sudden crisis. American grocery retail giant Target said that online sales in the first quarter of this year more than doubled from the same period last year.

Steve Kane, a partner at Bain & Company, pointed out that the outbreak has driven a surge in downloads of mobile applications and new registered users for retailers and courier services. As consumers gradually develop online shopping habits, he is convinced that "the shopping curve will change permanently."

Kane predicts that even after the epidemic crisis subsides, the ratio of online grocery sales to total grocery sales in the United States is expected to remain between 5% and 10%.

The research results of the well-known consulting company McKinsey also echo this prediction. McKinsey believes that during the epidemic, the ratio of online grocery sales in the United States to total grocery sales is expected to climb to 8% to 10%; in the future, this ratio may stabilize at 5% or 6%.

McKinsey ’s partner in charge of retail and grocery consulting services, Steve Begley, and the partner in charge of e-commerce consulting services, Vishwa Chandra, pointed out in emails sent to customers that consumers received more Multiple online shopping experiences, and at the same time cultivate the consumption habit of avoiding the flow of people when shopping. When the epidemic is over, they are likely to continue to increase online shopping behaviors. At the same time, strong online shopping demand has prompted American retailers to rethink their e-commerce service model and "use this to force a wave of disruptive online shopping."

Transformation faced limitations

Although e-commerce has ushered in development opportunities under the epidemic, some insiders pointed out that in the face of the rapidly increasing online shopping demand, many US retailers appear to be "under-prepared", leading to the growing growth of the online retail business facing many restrictions.

First, lack of strong logistics support. As online shopping shifts more logistics work and costs from consumers to retailers, it is difficult for companies to cope with the sudden increase in logistics pressure and cannot break through the growth bottleneck in the short term.

Second, the lack of sufficient labor force makes it difficult to cope with the surge in online shopping demand. Take the US retail giant Wal-Mart as an example. Since the outbreak, Wal-Mart has added 150,000 employees, and plans to recruit another 50,000, highlighting the pressure of labor shortage.

Thirdly, customer service related to online shopping is not in place and consumers cannot be satisfied. For example, many logistics services cannot specify the delivery time, or there are cases where delivery is not on time. At the same time, a large number of commodities are out of stock online, and even some merchants rush up online sales prices during the epidemic, resulting in a difficult shopping experience for consumers and physical stores.

Bain warned that consumers are now able to tolerate the "flaws" of online shopping due to travel restrictions, but as the epidemic improves, this tolerance will decline and consumer price sensitivity will also recover.