How COVID-19 Is Changing What We Buy, and How We Buy It
SMITH BRAIN TRUST – Every July and August, parents across the country prepare their school-age kids with some traditional back-to-school goods: gleaming new sneakers, a fresh backpack, binders, paper and packs of bright yellow pencils. Not so much this year.
With many schools planning to start the school year with virtual learning, parents have a different back-to-school supply list in mind. And with a pandemic still raging across much of the country, they’re looking to buy those supplies while limiting their trips to brick-and-mortar stores.
For the U.S. retail industry, that means big changes during one of its busiest times of year, says Maryland Smith’s Jie Zhang.
“The back-to-school shopping season is very important for retailers across a wide range of sectors,” says Zhang, professor of marketing and the Harvey Sanders Fellow of Retail Management at the University of Maryland’s Robert H. Smith School of Business. “In general, competition is fierce during this shopping season, but this year the race is even more heated as companies are vying for their share during an ever more challenging time.”
Early indicators show retailers seeing a significant bump in demand for technology products, Zhang says, as parents look to equip their kids at much younger grade levels with electronic devices such as laptops, tablets, headphones, and webcams, because of the shift to online learning.
Other traditional back-to-school fare, meanwhile, is likely to languish on shelves. That includes clothing, footwear, home furnishings and small appliances for dorm living. With many colleges and universities offering hybrid learning or all-remote options, fewer young adults are heading off to live on campuses.
Back-to-school shopping is the second-busiest season of the year, in terms of overall spending, according to the National Retail Federation. Consumers spent an average of $976 on back-to-school shopping in 2019, compared to $1,047 in the November-December holiday season.
Across the board, Zhang says, retailers with strong e-commerce positions are likely to perform better this season.
“It’s not surprising to see who the biggest winners are,” says Zhang. “Companies like Amazon, Walmart, Target, Best Buy and Apple, all have these capabilities. For Best Buy and Apple, in particular, selling technology products online is a major advantage due to the heightened demand for those products.”
By contrast, department stores like JCPenney, Macy’s and Kohl’s, and apparel stores such as Gap are likely to struggle, dragged down by the lackluster demand for their merchandise and less-than-robust e-commerce operations, Zhang says. Brick-and-mortar shopping these days is less of a draw, as states around the country report an upsurge in COVID-19 infections.
“People are very reluctant to go back into stores in large enclosed spaces, even as lockdown restrictions are lifted,” says Zhang. “Department stores and mall-based apparel retailers had been struggling long before the pandemic, and COVID has served as a catalyst to propel the failure of some of them.”
The pandemic underscores the long-standing trend among the retail world’s strongest players toward the importance of maintaining an omnichannel presence – a mix of online, mobile app and brick-and-mortar. In the past four months, consumers have turned to e-commerce, even for things they were used to purchasing in-person – for example, fresh groceries and household goods.
“Even when things come back to a reasonable level of normalcy, many consumers who have enjoyed the benefits of online shopping may not want to switch back to brick-and-mortar stores, and retailers will have to adapt to the new norm of consumer preferences for the long term,” Zhang says.
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