Welcome to the first blog in a four-part series penned by the ShopperTrak global retail consulting practice team, sharing insights that can help retailers and shopping center operators as they reestablish their connections to shoppers in the post COVID-19 retail reality.
Brian Field, Senior Director, Global Retail Consulting Practice, ShopperTrak
I am sitting on my apartment’s balcony as I write this post, looking out on a very quiet Lake Shore Drive. This highway typically was crowded with pre-rush hour traffic just a few months ago. Even as all of us in Chicago only recently had our shelter-in-place order rescinded, other geographies within the United States and around the world are also starting to slowly reopen for business. As they begin their own process of opening to a wary public, still overwhelmed by Coronavirus reports, brick-and-mortar retailers and shopping center operators face a unique set of challenges.
In my role as the Senior Director of the ShopperTrak global retail consulting practice, I, along with my team, have been spending most of our time studying shopper trends during this pandemic. We believe there are some core practices that can help retailers and shopping center operators as they reestablish their connections to shoppers. Additionally, there are some numbers that bear watching that can help to answer the most pressing question on everyone’s minds: when will shoppers signal a return to normalcy?
My team and I have put our collective thoughts into a series of posts that combine best practices and analytics to help make shopper journeys less mysterious and hopefully more profitable in this period of transition. You can find the rest of this series on our website, along with our weekly reporting on the impact of COVID-19 on year-over-year in-store traffic results.
Each post is devoted to one topic. Pete McCall, from our American team, will cover why operating a safe, clean building is now simply table stakes and how store layouts can better support social distancing needs. Andy Sumpter, from our UK team, will discuss how service models will change and Grant Gustafson, also from our North American team, will speak to what all of this means for brick-and-mortar customer engagement. Throughout, we will provide some thoughts on how to measure success in serving this new, purposeful shopper.
Before you jump over to the rest of our series, let’s review some traffic trends that we have experienced since the pandemic first broke internationally in January 2020. On our website, we have posted a series of reports relating active and total COVID-19 case counts to year-over-year traffic results for many geographies across the globe. While the timing and circumstances are different, it is worth looking at China and South Korea to see if we can get any sense of what a United States recovery might look like.
The very day after China imposed a country-wide lockdown on January 23, they experienced a year-over-year shopper traffic drop to below -60%, which quickly then fell below -90% between the end of January and mid-February. Then, as the active case counts began to fall (the dark blue line) the government eased restrictions and traffic slowly rebounded. The total time from the lockdown order until the final reopening of Wuhan on April 8th was about 75 days. Since that time, except for a couple spikes due to shifts in seasonal holidays between 2019 and 2020, there has been a steady rise in China’s traffic comps. They currently sit in the -20% range. While this number is still negative as compared to last year, it’s a very noticeable improvement over the period in mid-February when they bottomed out in the mid -90’s.
In contrast to China, South Korea had a completely different response to the virus outbreak. They did not put the entire population on a lockdown and instead prioritized testing and contact tracing. They only quarantined those who tested positive. Notably, South Korea’s Active Case trend has a much later and flatter curve than in China. South Korea also experienced drops in traffic well before the total case count rose. This was probably a reaction to what was happening in their neighboring country.
What is notably different from China is that the South Korean population did not wait for their government to start taking precautions. As a result, you can see South Korea never experienced the extreme traffic declines we saw in China. Shopper traffic disruption began on January 31 when traffic dropped below -10% for the first time and slowed around mid-April when South Korea was in the -40’s. This also puts their timeline at a little more than 70+ days. This closely parallels what happened in China.
The U.S. is unique because each state’s governor has played a role in influencing shopper activity, which is highlighted in the blue. But like South Korea, the U.S. consumer did not wait to change their behaviors in response to governmental action. Rather, consumers decided to stay away from stores long before the states began “Shelter in Place” orders. You can see that traffic started to decline as the virus began to spread in a more societal manner. Given the public’s proactive response to the beginning of the pandemic, now that some states are beginning to reopen, the U.S. turnaround will not be immediate.
One could argue whether the state lockdowns have prevented more virus outbreaks, but it is clear that shoppers were already staying away long before any orders were announced. Remembering these individual shopper choices and the underlying reasons behind them is essential to understanding the timeline for their return. Initial U.S. traffic numbers have not moved much from a week ago. Comparing the timelines from China and South Korea, and assuming that the clock started on the United States in early March, it should come as no surprise that the United States started to see the beginning of meaningful retail progress toward the end of May when traffic results moved from the -60%’s and -70%’s and into the -50%’s. The impact has been gradual; not rapid, but it’s a positive sign for things to come.
There are many factors that will influence this, such as state and local government actions and economic conditions that impact shoppers’ purchase decisions. But the single most important factor will be consumers’ comfort with getting back to their old routines and putting themselves out into the public space again. Social Distancing will be significant, at least in the beginning. How shoppers will engage with stores and each other will be a primary concern during the early stage of the retail recovery. Keep in mind that it took about a month for China to get from the -50% to -20% in year-over-year traffic, even after the lockdown was eased. And that is still not in positive traffic territory. Shoppers will be searching for the “new reality” in retail. What is encouraging is that many retailers and shopping center operators are already hard at work on those definitions. Click here for the rest of our blog series to find out more.