The research and advisory firm Gartner has an interesting piece up online about how retail is working in China, where COVID-19 started and has pretty much gone (maybe just for now).
The piece suggests while stores are mostly back open, the aisles are not filled and bricks and mortar people are feeling even more pressure to add or shift to digital channels. Foot traffic is waaaay down and sales are down 30 to 40 percent.
Before the crisis, reports Gartner, offline retailers in China faced an uncertain future. Large shopping malls had already experienced three consecutive years of revenue decline from 2016 to 2019. E-commerce giants Alibaba and JD.com were encroaching into offline retail, bringing with them an arsenal of cross-channel consumer insights data and the flexibility of multiple online and offline purchase channels.
COVID-19 was no gift to offline retailers in China. Many stores closed, and those that remained open saw depressed sales. By mid-February, H&M had closed 64% of stores in China, and sales were down 89% from the same period in 2019.
As the number of new COVID-19 cases declined in March, offline retailers quickly reopened. A mid-April survey from the China Commerce Association for General Merchandise found that 81% of retailers had reopened 100% of stores, and a further 15% had reopened at least 90%.
But the data suggests that despite the removal of formal lockdown orders and rapid store reopening, the pain for traditional retailers has not yet abated. The same survey found that only 77% of retailers saw foot traffic above 50% of pre-virus levels. Anecdotal reports of Suning and Walmart stores also suggest that some locations received only half of the typical store traffic.
This is rapidly improving—just a week prior only 61% of retailers saw foot traffic of at least 50%—but 50% foot traffic is still a far cry from full recovery. Nearly half of survey respondents estimated sales between 60% and 70% of 2019 levels, while a mere 3% claimed sales equal to pre-virus levels. By mid-April, H&M sales were still down 23%.
The shadow of a potential “second wave” of infections still haunts offline retailers in China. Facing anxious customers, electronics retailer Gome adopted a common strategy for combating the virus in its more than one thousand stores—all customers must undergo temperature checks, masks are mandatory, and the entire big box store will be periodically disinfected.
Local beauty retailer Wow Colour similarly mandated that all employees undergo regular temperature checks and wash hands, and specified the disinfectants that will be used to regularly clean its stores. JD even mandated that only three hundred customers are allowed in a store at a time. Though necessary, these measures represent an additional cost for already strained offline retailers.
Dave Haynes is the founder and editor of Sixteen:Nine, an online publication that has followed the digital signage industry for some 14 years. Dave does strategic advisory consulting work for many end-users and vendors, and also writes for many of them. He’s based near Halifax, Nova Scotia, on Canada’s east coast.