RETAIL AND COMMERCE

Disruption to Resumption: Choosing the Next Step for Retailers

PRIME Philippines Research & Advisory • May 15, 2020

The prolonged and continuous improvisation of the community quarantine has left business operations in a vulnerable state. Majority of retail operations are struggling to adapt to the impact of the COVID-19 pandemic to the industry. Though use of digital retail is progressive during this period, physical retail establishments are still reeling from being temporarily closed down. As the country prepares to reopen the economy with ease and caution, retail establishments must determine how to adjust to the aftermath of the global pandemic that took the world by storm.

 

With the recent announcement of shifting specific areas under Modified Enhanced Community Quarantine (MECQ), one of the sectors allowed to partially operate are retail establishments such as malls and other standalone retail stores. This implies that only 50% of the labor workforce of the establishment are allowed to be on site. Hardware, clothing, restaurants, electronics and other basic necessity stores are allowed to operate, subject to the protocols mandated by the government. Although a number of these shops are expected to resume operations by May 16, leisure activities like cinemas, playground, barbershops, and salons are still prohibited.

 

As an extensive precautionary measure, the Department of Trade Industry mandated a set of guidelines on the operations of malls and shopping centers in areas under Modified Enhanced Community Quarantine and General Community Quarantine. Retailers are required to ensure the safety of their employees and customers by limiting the number of people inside a store at any given time, with a density of 1 person per 2 square meters of vacant walkable space. Given this, retailers should make sure to organize their sale areas and provide options for contactless payment to facilitate social distancing among consumers. Mall and store entrances are also expected to be reduced in order to create one-way flow, limit entrance access, and regulate foot traffic. Shops with pick-up and delivery services are advised to have centralized locations to facilitate movement of goods and sanitary protocols from sellers to customers. Such implementations are deemed necessary to ease the transition from the disruption of business operations while prioritizing the health and safety of the customers. 

 

Retailers providing basic necessities and essential goods are seen to be the least affected in terms of customer demand. For retailers offering products that are deemed as ‘non-essential’, even partial operations are still not permitted. Therefore, retailers in this category are recommended to venture digitally through social media and e-commerce platforms. One of the stumbling blocks that retailers could face would be how to entice customers to their online stores. Retailers in ’non-essential’ industries should look into how they can integrate effective digital consumer experiences in their products or online stores. This may include promotions or quick response service. While maintaining online presence, retailers should also strategize on how to manage their inventories.

 

Although the reopening of retail establishments is favorable to customers who prefer physical transactions, retailers cannot assume that returning to their accustomed operations would be tactical. Consumers are observed to be coming less often to stores, although they are spending more time and are spending more money. This could translate to a decrease in consumers’ point of sale exploration and impulse purchases. Because customer reluctance to physical purchasing is expected to be sustained and since there is no guarantee when normal operations will commence, the emerging trend of retailers going digital is deemed as a wise move. Taking retail stores online will require being adept with the use of technology, understanding how retail e-commerce works, and grasping the sense of digital customer service and behaviors.

 

The retail industry is observed to be one of the most affected sectors but also one of the most agile in adapting to the outturn of the worldwide pandemic. Normal operations of malls and other retail establishments are yet to be authorized. Nevertheless, going digital is the most cost-effective way as long as certain requirements and conditions are met. Retailers should use this time of uncertainty as an opportunity to assess its customers’ reception towards their digital user experience. Reevaluating customer behavior and engagement should be top priority as shoppers will continue to expect these on-demand purchasing and transaction conveniences well into the future.

Tags:
PRIME Philippines, real estate, retail sector, impact of COVID-19 to retail sector, Modified Enhanced Community Quarantine (MECQ), Department of Trade Industry, mall guidelines during quarantine, reopening of retail establishments, COVID-19
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