Coronavirus will reshape retail and consumer landscape

The coronavirus is the biggest threat to retail and consumer firms since the global financial crash of 2008. So says Neil Saunders, Managing Director at GlobalData.

“It is a complex crisis because it is affecting both demand and supply chains which means retailers are suffering at both ends,” he comments. “And this is on top of all the other issues retailers are already dealing with. It is no exaggeration to say that the coronavirus will reshape the retail and consumer landscape; it will leave a scar just as the financial crash left its mark.”

GlobalData research shows that 91% of American shoppers are now concerned about the coronavirus, with 31% of those saying they are very concerned. Since the start of the crisis, almost 47% of consumers have stocked up on at least one product to help prepare their households for potential isolation or quarantine.

Social distancing behaviour is not as common yet, but 27% are staying in a bit more than usual and 26% are traveling less. Only 12% are currently visiting malls less. Personal habits have also changed, with 65% of Americans washing their hands more frequently and 55% cleaning surfaces in their homes more. Almost 38% have taken to cleaning surfaces outside of the home such as at work or when they travel.

The changes have proved to be a boon to many cleaning and hygiene categories such as hand sanitiser and disinfectant wipes which 46% and 35% of consumers have stocked up on, respectively. Non-perishable goods such as pasta and tinned produce have also seen strong volume uplifts.

“Given that a lot of this buying is outside of normal household budgets, consumers are very focused on price which is driving them to mass merchants like Walmart, big grocers like Kroger, the dollar stores, and warehouse clubs like Costco. Drugstores have also benefitted but mainly because of their focus on personal care products,” says Saunders.

It is not all good news for retailers, however. 89% of people expect the virus to worsen in the US over the next month and in response 27% say they will reduce visits to malls and the same number will cut back on trips to restaurants.

“Such a sudden and sharp drop in footfall will significantly diminish retail takings and will push many retailers into the red. Reflecting this, a downturn in demand is also the biggest concern for US retailers, closely followed by protecting their staff,” Saunders concludes.