Covid 19 coronavirus: What shopping will look like when retailers reopen the doors after the pandemic

Shoppers in the post-Covid world could see a return to the style of the old department store days, when service was king.

Jonathan Elms, Massey University professor of retail, says "Mr Selfridge" days are ahead, with retailers more aware of trends in the market and what consumers want, and reverting to service-based retailing.

There is no doubt that the pandemic and subsequent closure of shops has changed New Zealanders' spending habits, says Elms.

After more than six weeks when spending was limited to the essentials, retail analysts expect consumers to be more cautious about parting with their money and who they spend with.

Elms expects retailers to return to simple ways of operating: a focus on quality products, building strong customer rapport, a concentration on service, and offering consumers a reason to visit a bricks and mortar store.

"It's all about personalisation and individualisation, trust and rapport - that's what good retailing is about," he says. "The principles behind the 'Mr Selfridge' type era are as relevant today as they were 100 years ago.

"Today it will be on different platforms, it won't necessarily be a department store per se. Consumers will demand more and retailers have to live up to it - and it's not just about price; it's about the service and experience."

Elms says lockdown would have been a time of reflection for consumers and many would not have missed the non-essential goods they'd become accustomed to buying before the pandemic.

Most Kiwis would now be in a "positive space" and used to life under lockdown and the new norms it had created, he says, so the old ways of living and purchasing would not have the appeal they once did.

"Covid has messed everything up in the sense that we are having to re-look at and re-think through how we buy things, why we buy things and where we buy from.

"Some of the activities that we have been engaging in over the last four weeks, we're likely to take them forward with us," he says.

Online spending domestically has enjoyed a huge increase over the past couple of months, at the same time as spending at international merchants has fallen.

Sales at domestic online retailers were up 24 per cent in March, boosted by an increase in spending on groceries and liquor. Spending at international sites, meanwhile, was down 18 per cent on March last year, according to figures from BNZ.

The rise in online shopping is expected to continue, now that people who were not familiar with buying on the internet have enjoyed the convenience, says Elms.

He predicts that once the pandemic has blown over, New Zealanders will buy in bulk, and online will become the preferred method of shopping, with visits to a physical store perhaps limited to checking out a product ahead of a purchase, or to pick up an online order.

"[It may be] that we change and don't want to be in stores for a variety of reasons - Covid-19 has acted as a trigger to displace what we were used to, and the more disruptive it has been, the more we have reflected upon our past behaviour, and the more likely we are to continue that moving forward."

Online orders will grow in volume and sales values, and the types of products that can be bought online will be wider, he says.

Consumer research conducted in recent weeks has found that New Zealanders are now more patriotic and willing to buy local and support local businesses than they were before Covid-19.

"There's this feeling that we're trying to get the New Zealand economy going again, that we're all in this together and need to be supporting our local domestic businesses," Elms says. "Things seem to be more localised than they have ever been, and I think this trend will significantly increase."

Visits to shops are expected to be more purposeful in the post-Covid world. Photo / Getty Images

Sustainability will become paramount for consumers once a new sense of normality outside lockdown is established.

Elms says the impact of the pandemic has the potential to be positive, as it is causing a rethink in the way businesses operate, and in consumption habits. "I think there'll be a move towards fix and repair, I think fast fashion retailers will accommodate and evolve to match those new realities," says Elms.

"Absolutely, Covid-19 has the potential to do some very negative things for the economy and people's health and wellbeing, but at the same time there is inevitably going to be opportunities emerge from it in a positive way."

In the months ahead, as the country moves through the recovery phase, it will be crucial for retailers to have a user-friendly website. Before the pandemic, this was not considered essential for an organisation's success.

"I would have said six months ago that some businesses could operate very successfully having a robust bricks and mortar store, but I think that is now a risk and to minimise the risk, retailers - regardless of their size or what sector they are from - need to reconsider what they are doing in terms of their online operations because it provides an avenue to reach the consumers," Elms says.

"Expectations have changed, business models have changed and the landscape as a whole has shifted dramatically."

As well as developing their e-commerce strategies, Elms says retailers are also re-examining their supply chains. "Over the past 20, 30 years, supply chains have become more and more globalised, involving multiple different businesses and multiple different countries. We're now in a situation where if one of those businesses falls down or the commercial landscape of a particular country isn't as gelled together perhaps as New Zealand, then the whole chain will fall apart. So I think a lot of businesses are looking at more domestic or regional supply chains rather than global ones."

This could result in large retail chains bringing all or part of their manufacturing back to New Zealand or Australia.

"The indicators at the moment suggest that firms are considering their place and where they buy stock from. Whether that is going to be a shift back to having items manufactured in New Zealand, I'm not sure," says Elms.

He believes New Zealand retailers will experience an initial spending rush once the country moves into alert level two or one, but that will die down as people become aware of their personal finances and the wider uncertainty in the economy.

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But retail spending could return to pre-Covid levels within six months, depending on how quickly the wider economy can bounce back and security returns, he forecasts.

"New Zealand is very well placed to bounce, relative to other places in the world."

Retail analyst Chris Wilkinson, managing director of First Retail Group, also believes retailing will rebound in the coming months, but he warns that it won't last long.

"As stores open there may be a flurry of activity, but we shouldn't confuse that with long term; we think it will subside as people work out where things are at," says Wilkinson.

He, too, says retailing is faced with new consumer values and changing expectations brought about by the pandemic, which "creates a real need for businesses, shopping environments, town centres and cities to understand these changes and respond to them meaningfully."

Chris Wilkinson, managing director of First Retail Group. Photo / Mark Mitchell

Even before coronavirus, consumers had been moving away from products in favour of experiences, and Wilkinson believes this trend will be heightened as pandemic restrictions are eased.

"People have changed their behaviours seismically through this and what we know is transformational behaviour happens over time, and when you do have that it is hard for some people to go back to the way they were."

As a result, retailers will have to rethink their store portfolios, particularly where they place their shops, Wilkinson says.

"Retail will really need to focus on aspiration ... and not just being another store or shopping destination," he says.

"They will want to consolidate and cluster, and what we're already seeing is an appetite for what we call 'category clusters', here and in Australia, where businesses can be confident that they are going to have bigger audiences if they sit alongside a competitor in the area."

Shopping malls would need to shift to become more entertainment-based, or offer compelling events to draw shoppers back post-Covid 19.

Role of the physical store

While there is still a place for the physical store in the post-Covid world, analysts expect there may no longer need to be so many of them. The role of bricks and mortar will become more of a showroom, rather than the place where the transaction occurs, they say.

Marc Moore, co-founder of jewellery brand Stolen Girlfriends Club, agrees. He believes the classic physical store layout will get a revamp once New Zealand opens up again.

"Layout is going to be really important. There's going to be new methods of practices," Moore tells the Herald. "Imagine really beautiful stores, sparsely laid out, not a whole bunch of product, almost like a gallery.

"Bricks and mortar retail will eventually become a gallery almost."

Marc Moore of Stolen Girlfriends Club. Photo / Supplied

The Tesla store on Auckland's Karangahape Rd is an example of where retail is heading, he says. "You go to that store and you cannot walk out with a Tesla ... you go in there to interact with the staff, they tell you about the whole brand, story and show you online; you basically learn about the product ... and then you order it on their computer system and then it is delivered to your house at a later date."

Moore says that as click and collect continues to grow in popularity, the store will be the showroom where consumers can touch and feel product

Covid-19 will fast-track changes that retailing needs to make "bricks and mortar more inspiring" and encourage retailers to improve their e-commerce business, he says.

Stolen Girlfriends Club will look to change its systems when its Auckland stores reopen, and aim to implement personal shopping to increase the level of service.

"The service aspect of retail is really going to have to lift its game. Everyone is wanting a personalised service and want to feel special," Moore says, adding that he expects retail to be slow for the next three months.

He also believes consumers will increasingly choose to buy from New Zealand companies as opposed to those based offshore: "I think being a New Zealand business will definitely work in our favour, especially for our domestic sales."

• Covid19.govt.nz: The Government's official Covid-19 advisory website