Innovating During COVID-19: Retail Spotlight
July 21, 2020
By Elana Margulies-Snyderman
It is no secret that since the global COVID-19 pandemic, many companies and industries had to reinvent themselves to ensure success. In this three-part blog series on innovating, the first part will discuss how the retail sector transformed to e-tail and what the future holds.
The COVID-19 pandemic prompted retailers to move their businesses online and embrace e-commerce. However, the migration did not come without challenges. EisnerAmper spoke with with Elaine Russell, Principal at Greycroft, a Los Angeles-based venture capital firm where she focuses on retail; and Vibhu Norby, Founder & CEO, b8ta, a retail as a service company based in San Francisco with a chain of 22 standalone retail stores, which serve as presentation centers for consumer electronics and home goods.
Migration to E-Commerce
Retailers were forced to migrate their businesses online, and those that made the move quickest were the most successful.
“The COVID-19 pandemic has fostered a permanent increase in digital commerce,” Russell said. “Our D2C companies, such as our beauty brands, that carry their products online and in big box retailers, such as Target and Sephora, saw a huge surge in sales. Using social media, these brands have become even closer to their consumer and used this time to form a bond with their consumer and, ultimately, they weathered the storm well.”
Norby, who said e-commerce was never a focus for b8ta, saw its online presence up three-fold during the pandemic. The company also leveraged online and hosted livestream events, giving founders the opportunity to showcase their products.
“Entrepreneurs often don’t get a chance to evaluate their businesses or reinvent themselves in the middle of their businesses, but the COVID-19 pandemic gave us the opportunity to do so,” Norby said.
Focus on Sustainability
As a result of the shelter-in-place orders, the retail sector has seen an uptick in people making purchases with a focus on living healthier lifestyles, whether in-home fitness equipment or kitchen tools as people began to cook more.
“We have seen a greater demand for a wide range of electric transportation options from bikes to one- wheeled skateboards and more,” Norby said. “In addition, products for health and fitness have been huge and because people are cooking more, we have seen an uptick in kitchen device purchases.”
Russell added: “Health, wellness and sustainability will be bigger focus. People will change some of their behaviors becoming more mindful of the food they consume and purchasing more home fitness equipment.”
Since some of the states reopened their stores, traffic has not been at the levels pre-COVID-19 and might not be for some time.
“Customers are visiting stores with more intention and, therefore, we want to make sure we build the best in-store store experience for them,” Norby said. “Our stores are by appointment only, and we only allow one person in at a time plus their family. Our beta testers (retail associates) will have everything ready for the customer to preview upon their arrival.”
Norby added that its Forum component, which was launched prior to COVID-19, is a fashion and lifestyle concept. It allows brands to showcase their products/apparel by leveraging b8ta’s infrastructure and provides touchless fitting rooms in stores, which is essential these days.
Looking ahead, brick-and-mortar stores will not be as prominent, a trend that has been apparent due to the fierce competition from Amazon and a preference for online shopping.
“The department stores we know of such as Macy’s and Saks Fifth Avenue won’t exist in the future,” Russell said. “There is a feeling of loss when these types of stores go out of business. The customers who grew up shopping in department stores have a feeling of ‘where do I go now?’ In-store shopping still provides retail therapy for most, and future store will be encouraged to reinvent expectations and the in-store experience.”
Russell added: “For the younger demographics, they shop online already and the retail shift to ecommerce isn’t affecting them as much. Retail therapy now is on your phone and you can shop from the comfort of your home or bed whether for fashion, beauty or home improvement. The rising brands are more vertically integrated and have a social presence.”
With this shift to e-tail, many retailers will have to hire new talent to manage their online presence as they shift away from selling to wholesalers. E-tail is expected to stay for the long haul, even after the COVID-19, as consumers embrace the convenience of e-commerce.