“Rarely in recent history has there been a tsunami-like event that has altered norms to the degree that the pandemic has,” Retail Speak founder said by email. “The shadow it cast over retail will not likely be lifted soon, if ever.”
1. The hybrid workplace is changing the retail landscape.
Even as offices reopened and companies became stricter about showing up for in-person work, research shows that a hybrid workplace is now the norm for many people in the U.S.
“The biggest change from the pandemic is work from home, inspiring more local shopping or online shopping from home,” the executive vice president of thought leadership and marketing at WD Partners, said by email.
In a survey of 2,500 consumers by WD Partners, zero respondents said they would ever again work at their office five days a week. That is directly affecting where they go to shop at stores, as nearly 40% said they now frequent retail businesses within three miles of their home, with 10% saying they go to malls.
Similarly, a Pew Research Center survey found that 35% of those with jobs that can be done remotely now always work from home, with 41% on a hybrid schedule. Consultancy Kearney finds that work-from-home has leveled off at about 30%, depending on the type of job.
This is ushering in what Retail Speak calls a 21st-century version of the post-World War ll flight to the suburbs, this time featuring millennials and their young families.
“Their urban-to-suburban push has only been invigorated by home-working dads and moms,” Retail Speak said. “With it came the flexibility to sneak out between Zoom meetings to shop close to home, rather than during office lunch breaks in urban centers.”
In December, visits to buildings in Placer.ai’s nationwide office index were down 36.5% compared to December 2019; foot traffic has fluctuated somewhat but has hovered around 40% of pre-COVID levels, according to the analytics firm’s report. Retailers near corporate centers should expect a gradual decline in foot traffic to continue, as more companies evaluate their downtown office leases, according to Kearney Partner.
“Sophisticated retailers are already tracking this with analytics, but smaller retailers, especially mom-and-pop shops, will be at a significant disadvantage due to lack of capabilities to sense the shifts in demand,” Kearney Partner said by email. “Kearney Partner would predict more retail will end up nearby ‘bedroom communities’ as a result of these changes, compared with what we’ve seen in the past.”
2. E-commerce got a lift
The vast majority of retail sales continue to be conducted in stores, and many physical locations like restaurants and stores have recovered nicely in the past company of years as people ventured out again. But while e-commerce sales have dipped from the peaks during the height of the disease outbreak, many consumers have stuck with the ease of shopping online.
E-commerce sales growth is expected to be 10% or less in the coming years, but its growth through 2025 will nevertheless be more than double the rate of store-based sales growth, according to FTI Consulting’s 2023 U.S. Online Retail Report.
“The pandemic forced people to shop online and like single-malt scotch, once you try it, you ain’t going back to that crap you drank before!” WD Partners said. “Online is just too easy, and getting easier every day, while stores do nothing in terms of attracting new customers.”