- 48% of retailers are planning a digital transformation in 2021 as a result of the pandemic, BDO said.
- Their focus will be e-commerce, including social and mobile shopping.
- 44% of consumers say they will continue online shopping post-pandemic, ESET data showed.
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Many retailers are planning a digital transformation in 2021, as the COVID-19 pandemic has pushed brick-and-mortar retailers to shift their focus to e-commerce, according to a report from accounting firm BDO.
Retailers moved to e-commerce channels, on the web, social media, and mobile devices, “out of necessity” in 2020 as stores shuttered and people shopped online from home amid the spread of the deadly COVID-19 virus, said Natalie Kotlyar, national leader of BDO’s retail and consumer products practice.
Now, 70% of Americans are shopping more online than they did before the pandemic, according to data from ESET, a global cybersecurity company.
As customer shopping habits are continuing to evolve, investing in e-commerce is a necessary endeavour, Kotlyar said.
“If retailers were procrastinating going into e-commerce for any reason, 2020 required retailers to enter into the e-commerce platform to succeed,” she told Insider.
According to the report, which surveyed 100 retail CFOs, 48% said they are pursuing a digital transformation this year. “The crisis settled any lingering doubts that the future of retail is digital,” the report stated. “COVID-19 accelerated the Amazon Effect, and whether the pandemic ends tomorrow or in 2022, there is no going back. Now, the industry must rely on digital to keep the lights on.”
A record of 12,200 storefronts closed last year, according to Fortune, which cited data from CoStar Group. Apparel stores took the biggest hit, with JCPenney, Neiman Marcus, and J. Crew, among the dozens of retailers filing for bankruptcy or liquidation. More store closures are expected in the new year, according to CoreSight Research, which estimated 10,000 closures in 2021.
Of those retailers surveyed by BDO, 64% said they plan to increase their e-commerce investments in the next six months, with 54% planning to boost their mobile channels in that same timeframe.
Amid the continued economic downturn caused by the pandemic, companies are looking to secure outside capital, and about a third of them want to use the influx of cash to drive a turnaround strategy, according to the report. E-commerce, social commerce, and mobile commerce topped the list for where companies would allocate their increased investments.
The data also showed that 43% want to reduce the variety of products they offer. Kotlyar said retailers need to focus on the 80/20 rule (in which 80% of sales come from 20% of the products) in selecting their inventory. “The retailers that truly understand their customer base will focus on what their customer wants,” she said.
Online shopping will continue to be the norm post-pandemic. ESET data showed 44% of consumers expect to do more online shopping once the pandemic ends. “Our habits have changed,” said Tony Anscombe, ESET’s chief security evangelist.
People like his elderly mum, he said, are likely never going to back to doing grocery shopping, except to perhaps get the perishables. And for busy parents who don’t want to drag their kids around the store, online shopping has become the easier route.
This doesn’t mean brick-and-mortar will disappear, though. E-commerce and traditional stores “can play and interact very well” together, Kotlyar said. As for how many consumers will shop online versus come to the store once the pandemic ends, that may depend on the industry. For example, electronics may move more to e-commerce, while groceries are a mixed bag, she said.
“An investment in e-commerce is going to improve the ecommerce platform,” Kotlyar said. “But it will also strengthen the relationship with e-commerce and brick and mortar.”