Wave 1 - COVID-19 - caught us off-guard.

Survival and revival: Retailers need to prepare for two e-commerce waves

Are you one of the countless small business owners wondering how you can survive the COVID-19 crisis? Will your staff return? What about your customers?

If you’re in retail, the following article by Jane Cohen, a Partner at KPMG Strategy, is a five minute read that may help you to navigate the next few months.

E-commerce will play a critical role for the retail sector during the current pandemic and will drive lasting change to consumer behaviours. Even prior to the current environment, retailers were primed for e-commerce to grow rapidly in 2020.

Two sequential waves

We expect to see two sequential waves of accelerated e-commerce growth as a result of COVID-19.

The duration, scale and time between these waves of growth will depend on the effectiveness of local and global interventions to manage through the dual health and economic crises.

Wave 1

The shock switch from physical to online channels as a result of public space shutdowns.

Wave 2

Regrowth starts but now stays online, due to permanent changes in shopping behavior.

Wave 1 - COVID-19 - caught us off-guard.
Wave 1 – COVID-19 – caught us off-guard.

Here and now in Wave 1…

Currently we’re in the midst of Wave 1. The good news is that all the people who normally fill malls and shopping plazas haven’t just disappeared. They may be more conscious of expenditure, but they are still shopping or at least trying to shop.

The queues are invisible but they’re crashing servers and online fulfilment processes around the country. Many e-commerce channels cannot meet demand – meaning sales opportunities are being squandered.

We need to act fast as an industry to open the spillway gates on the dam and come up with creative solutions. This may involve converting stores to dark stores, creating ‘click & collect’ pop-ups, opening phone ordering if platforms are unstable, converting store teams to local delivery teams and partnering with other retailers.

Whilst some of these solutions will be inelegant, it enables more possibility to keep the revenue flowing and people employed within the conditions of the pandemic.

Wave 2 is definitely coming…

The onset of the second wave of e-commerce growth will come as consumer confidence begins to recover, as it did in the wake of the Global Financial Crisis. That recovery fueled a four-year e-commerce boom. 

By the time that that stage arrives, consumers will have bought almost everything online during social distancing – everything from diapers to lawn-mower blades.

When they are ready to spend, they will start online. Life will return to shopping malls but it will be different and retailers with truly omni-channel experiences will be best positioned to succeed.

There will also be a shift in the kind of goods bought online. This is the first time that most people have gone online en masse for essential items.

Previously, online channels were primarily used to buy more discretionary items such as apparel and consumer electronics. Now people are buying daily essentials online, from groceries to pharmacy products and alcohol – all sectors with low online penetration rates.

A shift in consumerism

Another permanent change will be a shift in consumerism. The current experience will change how people think about money and material goods, and how people live and shop.

The value of community and re-connecting with our environment will become more important. Consumers will focus on health and wellbeing, family time and improving their home environment. They’ll expect retailers to provide all these things at a value price point, sustainably and responsibly. 

The second wave is coming. You need to be ready to ride it!
The second wave is coming. You need to be ready to ride it!

So how can retailers prepare for these waves of change?

·         Rapid e-commerce capacity supplementation must be part of every retailer’s immediate crisis action plan

·         Omni-channel experience investments should be accelerated in preparation for the recovery period

·         Start assessing inventory pain points and prepare to respond to an always-on sales event calendar

·         Elevate products speaking to value, health and wellness, children and family time, community and home

·         Re-build with strong socially and environmentally aware propositions that deliver great value and customer care, as spending money even on essential items becomes a careful decision making process

Sustainable change rather than Band-Aid fixes

We will all benefit greatly from the triumphs of the pre COVID-19 digital revolution. We have the tools to manage our groceries, our finances, our relationships, and our health and well-being despite social distancing. As a result we have the ability to recover faster and in better shape, than even five years ago.

But it is time to get serious about transformation. Many retailers are far from achieving this and must be careful not to rush with permanent solutions too quickly so as to avoid ‘regret spend’.

Once the necessary Band-Aids are in place, we urge retailers to invest time and effort to design a more flexible operating model – one that can respond to crises like COVID-19, which experts say could become more common.

Digital and e-commerce is a lifeline for consumers, retailers and employees. It is core to retail’s survival and its revival. We will embrace it wholeheartedly to survive – no matter what demographic, geographic, attitudinal or behavioral segment we belong to.

What changes are you planning to implement for a sustainable retail future?



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