Despite the intentions of the federal government, 40% of retailers expect to see only limited business benefits from the stimulus package, according to research from Digital Commerce 360.
Some, 34% expect to see at least some benefit, while 23% expect no impact at all. The remaining 3% believe it will actually harm their business.
Digital Commerce 360 surveyed 107 retailers during the week of March 16 and found that while 43% suggested they were taking aggressive action to curb the effects of COVID-19 on their business, 38% of retailers are still only taking some action and 19% have adopted a wait-and-see attitude.
Many retailers are shifting models to address the times, including revising business models by adding wholesale channels, updating sites and systems, and implementing e-commerce.
Five key issues are clearly mandating that retailers take aggressive actions under these challenging circumstances.
5 Key Findings
1. Consumer Confidence Takes a Hit
97% of retailers report declining consumer confidence as consumers find themselves in a waiting game to purchase. The majority (54%) see COVID-19 causing a significant decline in consumer confidence.
2. Sinking Revenues Frighten Retailers
Far and away, the biggest impact being seen from COVID-19 revolved around demand and declining revenues. Some of this was a result of retail store or production closures or reduced traffic to those that were open. Half of retailers expect business revenues to see significant downturns relative to COVID-19 and an additional 27% project some revenue declines.
3. Survival is Top-of-Mind for Sellers
There was great worry about survival and the future of one’s business where liquidity and cash flow were challenged, and the reality that any outside investment had ground to a halt. That harsh reality already includes:
- Declining consumer confidence impacting business: 48%
- Updated sales outlook: 44%
- Re-forecasted revenues: 40%
- Reduced store traffic: 27%
- Adjusted financial guidance: 25%
4. Ecommerce Sees Mixed Results Depending on the Sector
55% of retailers are seeing e-commerce declines under the Coronavirus. While some sectors (34%) report positive results, the remaining 11% find e-commerce as initially projected. While employee furloughs and work-at-home models are inevitable, using the web to move more shoppers online may produce an upside for some retailers. Ecommerce has a reinvigorated role to play as retailers:
- Encouraged shoppers to buy online: 44%
- Messaged COVID-19 plans: 38%
- Sent COVID-19 email promotions: 21%
Traffic, conversion and AOV are down for almost half of retailers. Conversion rate increases are likely due to the absolute need for certain essential products, but overall there may be significant browsing yet substantially less buying online. Lastly, AOV being down could be a function of financial hits taken by consumers amid COVID-19 as they watch their wallets.
5. Supply Chains are Compromised
Supply chains are challenged and inventory shortages are the new normal as seasonal products are rendered irrelevant. Current circumstances include delivery delays (22%), cancellations due to inventory shortages (15%) and more back-ordered products (14%).
Addressing the supply chain is fundamental to surviving COVID-19. Supplier communication and coordination top the list of supply chain action including:
- Communication: 53%
- Coordination for risk mitigation: 51%
- Contingency planning: 25%
- Revisiting supply chain: 21%
