The COVID-19 pandemic is accelerating structural shifts in the retail industry.
Shortly after the outbreak, e-commerce sales surged in many countries as consumers avoided crowded places and social distancing measures kicked in.
In Singapore, a surge in online grocery sales overwhelmed booking systems. Demand for online food delivery soared, requiring operators to expand their workforce. Retailers, ranging from home furnishings to healthcare products and electronics, also saw a rise in online sales.
Many shoppers, staying at home, buying online for the first time, and discovering the ease of online shopping, could form new digital habits, which may become permanent. This could propel the surge in online shopping to the next level, especially in Singapore, where the internet penetration rate is high and the online market share of retail sales is still low (8.5% in March 2020, according to SingStats), compared to developed countries.
Amid rapid structural changes, retailers accelerated the adoption of e-commerce strategies. Some outsourced their online businesses by partnering with large established e-commerce marketplaces that offer integrated services, ranging from hosting product listings to sales, payment, inventory management, delivery and tracking. This minimises their capital commitment and administrative burden in the face of a liquidity crunch amid the pandemic. Robinsons partnered with Lazada to expand its e-commerce reach, for example.
Many F&B players partnered with food logistics operators, including GrabFood and FoodPanda, or logistics providers, Lalamove and Zeek, while others looking to establish a stronger online presence built their own e-commerce platform. A new digital platform offered by DBS Bank built a branded e-menu with an integrated shopping cart, order management and payment platform within three business days. The service includes connecting merchants with logistics partners to offer food delivery services.
Nevertheless, post-pandemic, consumers will return to physical stores for real-life shopping experiences. Frustrated shoppers without a grocery delivery slot may return to the supermarket.
According to SingStat, the online market share of grocery sales in Singapore for March 2020 has fallen to 7.5%, from 7.8% and 8.5% in January and February 2020, respectively. The surge in food delivery may ease as some consumers prefer to enjoy the full dining experience in a restaurant ― when safe ― rather than eating out of takeaway boxes. Shoppers generally desire the “look, touch and feel” experience of buying.
However, concern about pandemic safety is set to continue. Restoring shoppers’ confidence regarding their safety is key to driving foot traffic back into physical stores. Industry players need to enforce safe distancing and hygiene rules and step up efforts on contactless buying initiatives such as self-checkout and cashless payment options.
Shoppers will also have reduced spending power amid the economic downturn. Industry players need to revamp their offerings at accessible pricing to widen the consumer base and target promotions towards visiting stores upon their reopening.
Incorporating in-store strategies for pent-up demand, alongside an omnichannel strategy for the medium-term, could drive a post-pandemic recovery of the retail market in Singapore.
Figure 1: Online market share of total sales of retail trade and
the respective retail types in Singapore
Source : SingStats, May 2020
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