Serena W.: How has this pandemic exacerbated the retail industry with regards to growing competition from the e-commerce( e.g. online grocery platforms, food takeaways, online clothing brands and even subscription ecommerce) industry? And would this mean that physical stores will no longer be deemed necessary in the coming years? Can you please advice how businesses with physical stores as their channel should adapt and respond to the current turmoil as it could irrevocably change future operations?

Answer by Cordula Cerha, Assistant  Professor at WU's Institute for Retailing & Marketing:

The pandemic has seriously disrupted the retail industry. Both traditional stores and online-businesses are faced with unprecedented challenges. Most brick-and-mortar stores are in lock-down, and e-commerce businesses face difficulties to keep up with growing demand, as supply-chains are shaken by the crisis.

Many small competitors who have not had an online-shop so far have set up e-commerce offerings, as these are currently the only way to reach customers at all. By selling online and delivering to homes they can generate at least some income for their business. For consumers online purchases are a way to avoid having to leave their homes. These days many people without prior online shopping experience have placed their first orders. So, retailers and consumers alike have been nudged by the crisis to try something new. This of course is an impulse for e-commerce and may encourage future online activities of both buyers and sellers.

It has to be said though, that many of the current online-activities by small competitors are born out of desperation and not the result of thorough business planning. In order to be successful in the long run e-commerce, as all other businesses, requires a viable business-plan. Many of the online activities at the moment are likely not covering their own cost. That managing the last delivery mile to the consumer at a reasonable charge is everything but easy, is an experience that all retailers share, the biggest and most powerful among them. 

My advice for businesses with physical stores is to use the current crisis to try new offerings and be open to modern technologies but to also use their business sense. The key will be to focus on one’s strength, like authenticity and originality. Differentiating themselves from big players like Amazon, who are offering high usability of the website, seemingly endless choice, reliable and speedy fulfilment, and convenience concerning returns, will be difficult. Small shops need to offer something unique in order to compete with the big e-commerce selling machines. Competing on price will not be an option.

At the moment many customers feel a sense of solidarity to support local businesses and are willing to pay extra, but I am sceptical that this will be a long-term phenomenon. Price has always been a strong factor, and will also be so in the future, especially if times will turn out to be economically challenging.

But I would like to end on a positive note. I have the strong feeling that during these difficult times of self-isolation consumers will also miss the social aspect of shopping. Going to the store has always not only been about providing oneself with goods, but also about meeting people and interacting with others. So, once the crisis will be overcome (hopefully soon), I am confident that people will enjoy being out in the high-streets and shopping centres again, looking for experiences and inspiration in stores.