Are stores going to turn into ghost towns?

Discussion
Photo: RetailWire
Dec 11, 2020
Tom Ryan

According to survey findings from Square, 56 percent of retailers expect that many consumers will not shop in-store at all over the holiday selling season. Yet an accompanying survey of consumers found 79 percent feel safe shopping in a physical store.

The survey of U.S. consumers, taken in November, found 53 percent of consumers still wanted mask requirements for stores.

A number of other recent surveys appear to indicate that consumers remain somewhat comfortable with in-store shopping when safety measures are in place and see benefits versus shopping online:

  • A survey taken in late October from ENGINE Insights found 85 percent of consumers plan to shop in physical stores for their holiday gifts. However, 72 percent plan to go to stores during less busy days and times.
  • A survey from NMI taken in in October found 29 percent plan to primarily shop in-store this holiday season and 40 percent plan to shop both in-store and online. When asked which factors will have the most impact on their choice of retailer on Black Friday, the top answers were: store sanitization, cited by 47 percent; social distancing guidelines, 45 percent; and convenience of purchase, 43 percent. 
  • ICSC’s Thanksgiving Weekend Survey conducted online on Nov. 30 found that, of those who chose to shop online, 44 percent listed health and safety concerns as a reason, with bigger factors being convenience, cited by 60 percent, and wanting to take advantage of promotions, 47 percent. Among those who chose to shop in-store, the top reasons were: seeing, touching or feeling items, cited by 55 percent; getting items immediately, 54 percent; and the convenience of one-stop shopping, 39 percent.

The in-store optimism comes despite Sensormatic Solutions reporting store traffic over Black Friday weekend tumbled 49 percent, although the company suggested weekday traffic rates over December should improve.

Brian Field, senior director of global retail consulting, Sensormatic, said in a statement, “All of our data suggests that more shoppers are using their work-from-home status to visit physical stores during the week. It appears this trend will continue into the holiday season.”

DISCUSSION QUESTIONS: How concerned should retailers be about drops in store traffic this holiday season? Do you think the reported 49 percent decline in Black Friday weekend traffic is being extended across the holiday season as a whole?

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Braintrust
"The holiday shopping season will be more spread out, and that's not a bad thing. Having more shopping days with fewer crowds could be a very nice shopping experience upgrade."

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36 Comments on "Are stores going to turn into ghost towns?"


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Mark Ryski
BrainTrust

The pandemic situation is fast changing – and not for the good. The survey results from October are already stale. Since the situation has gotten worse, and lockdowns have been extended or expanded, the impact on retail store traffic will continue to be felt. The 49 percent drop in Black Friday reported by Sensormatic is largely skewed to mall-based retailers, so the impact is likely being over-stated, but the general direction is correct. Store traffic is going to be significantly impacted this holiday season.

Peter Charness
BrainTrust

Black Friday is probably an indicator, but not necessarily the whole story. The convenience of shopping online rather than dealing with in-store madness (doorbuster lines and all) makes shopping online for Black Friday a compelling alternative. But there is no question that the balance between online and in-store is going to remain skewed towards online this holiday season, and will probably stay skewed until customers feel safe to be inside public places.

Neil Saunders
BrainTrust

What nonsense! Sure, traffic may be suppressed. Sure, people may consolidate store visits so they lower the risk of viral exposure. Sure, *some* people may avoid stores. However there is absolutely no evidence that the majority of consumers are completely avoiding stores. It’s actually the opposite: foot traffic has been rebuilding and people have started to go back to non-essential retailers. Plus, the majority of sales still take place in stores rather than online.

As for Black Friday, the reason traffic dropped on that day and over that weekend was mostly because retailers sensibly engineered a much longer selling season so some physical sales were pulled forward into November and even October. This meant that the crowds of past years did not materialize. The comparison is not apples and cannot be extrapolated to the wider trend of store shopping over other periods.

Cathy Hotka
BrainTrust

Fear not, retailers! A drop in in-store shopping is to be expected this year, but once vaccines reach critical mass, customers will be back. And based on the number of delivery trucks on my street, people are buying plenty of things online.

Bethany Allee
BrainTrust

The reality is that physical locations must evolve to address new customer needs. The other reality is that in-person shopping is not a priority for many Americans. Now is the time for retailers to determine how they’ll best leverage their in-person shopping experience to adhere to what customers need right now – and how this impacts their future.

Georganne Bender
BrainTrust

Are stores going to turn into ghost towns? Of course not. Yes, people are shopping more online because of the pandemic but I believe that once we have a vaccine store traffic will come back because people like to shop.

One of the things my partner Rich and I do each holiday season is visit stores to observe what’s going on. While we haven’t seen crazy crowds as in past years people are still shopping in-store. Sometimes I think the goal of these clickbait polls is to stir controversy and spread doom and gloom. The sky may be a little grayer right now but it certainly is not falling.

Mark Ryski
BrainTrust

Georganne I do agree that it’s not all doom and gloom, and essential retailers that remain open during the holiday season will likely be very busy. However across the many thousands of retail stores that my company tracks store traffic in daily, the data are clear — store traffic is significantly down. The vaccine news is definitely positive, but the effects won’t be felt until well after the holiday season.

Georganne Bender
BrainTrust

I agree, Mark, that store traffic is down. Of course it is, and we expect it to be so until we get this pandemic under control. The effects of the vaccine won’t be felt for a while but it will be felt and for the better.

I am so tired of hearing about the death of brick-and-mortar stores and I am sure the retailers who work in stores are, too. 2020 is an aberration, let’s wait until things shake out in 2021 before we call the coroner.

storewanderer
Guest
4 months 9 days ago

Given the financial situation of many retailers (highly leveraged), they cannot simply “expense cut” through this period of significant in-store traffic declines. These loans have covenants and other terms that need to be met, often revenue based. A few retailers that aren’t highly leveraged can get through it with the “expense cut” method — but the highly leveraged ones are in a much more precarious situation. Basically at the mercy of their lenders. You would think lenders would like to be flexible to keep retailers afloat, but ask Toys “R” Us about that.

Di Di Chan
BrainTrust

Massive traffic in stores should not be the target experience. Pandemic or not, no one likes waiting in long lines. The ideal situation for retailers and shoppers is to spread out the foot traffic, so people are spending more time stress-free shopping. The pandemic changed shoppers’ behavior: people are shopping less frequently with bigger baskets. People are avoiding rush hour shopping even more now. Instead of everyone crowding and rushing for one day to get Black Friday shopping done, many retailers spread Black Friday deals to an entire week — and it’s working pretty well given there’s a global pandemic going on.

The holiday shopping season will be more spread out, and that’s not a bad thing. Having more shopping days with fewer crowds could become a very nice shopping experience upgrade.

Dick Seesel
BrainTrust

The drop in Black Friday store traffic was triggered by the pandemic but also by the extended promotional calendar and the growth of safer shopping options. The 49 percent drop on that day may not be as severe during December, but there’s no doubt that store traffic will fall. I’d expect big box “one stop shopping” retailers like Walmart and Target to gain more share at the expense of department stores and mall-based retailers.

In just two short weeks (from Thanksgiving week to the current week), the average daily cases have risen by 22 percent and (unfortunately) average daily deaths have risen over 60 percent to catastrophic levels. State and local governments are now imposing new restrictions that weren’t in place before Thanksgiving — at least, they’re trying to.

Lee Peterson
BrainTrust

Short answer: yes. Also, this is just the tip of the iceberg. Over 100,000 stores are expected to close in the next five years, so it’s a lot bigger than Christmas traffic. The new normal combo of e-commerce, BOPIS, delivery, dark stores and touchless retail in general is changing the game to something completely different than the landscape we knew just 20 years ago. Retail is now a digital-first world and those that adjust to that in haste will be the big winners going forward.

Raj B. Shroff
BrainTrust

Totally agree, Lee.

Chuck Ehredt
BrainTrust

This is a dramatic question aimed to invoke emotion. Customers are full of emotion now due to COVID-19 but hopefully that will soon pass. When things stabilize, some customers will be embracing the store experience, others will expect delivery, and others will embrace a more hybrid approach. Whatever meets their functional or emotional needs.

In that context, retailers need to optimize their assets to generate ROI – and that will include further optimizations to the supply chain (including the last mile). I imagine an element of the store will be fulfillment, but there are products that people really want to see, touch, and experience before laying out their hard-earned money. In such an ecosystem, retailers need to adapt and design their business model to be as agile as possible to respond to evolving trends.

Richard J. George, Ph.D.
BrainTrust

This is a good follow up article to yesterday’s discussion on shoppers returning to stores. In essence, retailers need to address two shopper issues: what will keep them away and what will make them visit stores in the new year. As discussed previously, shoppers will not visit stores in which they don’t feel safe. Retailers need to constantly assess from a shopper’s perspective, whether their stores are viewed as safe. So the lack of safety will keep them away. What will be the positive reasons to venture into the stores? Simply – make it fun, interesting, convenient and a value. Give them a reason to drive by other retailers to visit your store.

storewanderer
Guest
4 months 9 days ago
The stores are absolutely safe. COVID spread is from interacting with infected people. They are deserted of customers, so it is very safe. There is nobody to interact with. I have never felt more safe in my local mall, than I have this month. The place is so empty of customers, it is almost creepy. It reminds me of the other mall that used to be here that went out of business and was demolished, it has so few people inside now. And the anchor stores (Macy’s and JCP) are even more empty of customers, than the mall itself. But the consumer needs a reason to visit the mall. This past year, we are not going out nearly as much so no need to buy as many new clothes. Other categories like beauty, given the mask rules, are severely down in demand for certain categories. Perhaps some folks used to go out to the mall and pair it with getting something out to eat but now that is not so easy with restaurants closed in… Read more »
Gary Sankary
BrainTrust

I believe there is reason to be concerned, especially for retailers who have not invested in digital capabilities to reach their customers. Strategically-minded retailers went big on investments that allowed them to balance their customers’ demand for products and services and their desire for safe shopping experiences. For many of those retailers, given their performance so far in 2020, the holidays will be very successful. I strongly believe that reducing store traffic during this pandemic is the right thing to do, and we need to remember that in many cases the retailers themselves implemented strategies around Black Friday to do just that.

Raj B. Shroff
BrainTrust

2020 has been a wake up call. We have been pushed to realize the efficiency of online shopping, the possibility of remote meetings and the great feeling of not making frivolous trips to the store. In the near-term those drops lessen the likelihood of impulse add-ons and much easier to build baskets in a physical setting. That will hurt. And it’s easier to order online and have a gift sent than to buy in-store, package up, then ship to family. I do think Black Friday traffic is a bit of foreshadowing for holiday foot traffic, especially with rising cases.

Longer-term, retailers should be concerned about the drops if they aren’t preparing for the continued shift to e-commerce and any other changes in post COVID-19 consumer behavior.

Jeff Sward
BrainTrust

Retailers needed to be worried about holiday store traffic six months ago, and three months ago, and one month ago. It should have been clear early on that store traffic was going to be down, so it was only a question of how much. And then Black Friday gave us a pretty good clue. And six months ago who knew what the real drop was going to be? Inventories will be both oversold and undersold. There are so many more factors in play for a successful 2020 than there were in 2019. Cleanliness and traffic control, BOPIS, in-store fulfillment of e-commerce orders, local delivery, unemployment and lack of stimulus to name a few. So mall traffic will be down, but we shall see which retailers emerge with the best execution.

Lisa Goller
BrainTrust

Yes, many retailers will imitate Target and Walmart’s successful use of stores as e-commerce fulfillment hubs. Also, Whole Foods and Kroger have embraced dark stores for fast, urban fulfillment.

By contrast, this year Amazon expanded its fleet of fulfillment centers, stretching from North Dakota to Mississippi, as it operates comparatively fewer stores.

Regardless of how they fulfill e-commerce orders, retailers must unite their company’s merchandising efforts for efficient omnichannel service.

Rich Kizer
BrainTrust

No, they are not going to be ghost towns. In our conversations with independent and chain stores, we have found that they are gearing up to reshape the experience in the stores. They have planned Ladies Day, Guy’s Night Out and many other promotional efforts in-store. I believe that folks are ready to take action. They are doing all they can, and that’s a lot. Stores are being relayed to present great ideas and merchandise/promotions to build sales and traffic in this last rush period. I know they are hearing much about their business being in danger, I hope they take that with a grain of salt and prove that they can and will survive in this market with their streetwise ingenuity.

storewanderer
Guest
4 months 9 days ago

You cannot even do promotional events or build a critical mass of traffic in this last rush period like you describe in many places because 1. Many people do not want to attend such in person events during the pandemic and 2. Many areas have capacity restrictions that will either make very difficult or outright prohibit this sort of thing.

In my area the local Dillard’s does a “by invitation” Christmas Party every year. The party involves a small gift bag with some samples in it, some refreshments, some product demos, raffles, and a small discount on most items in the store (10-15%). The “invitations” go to the customers who are on the mailing lists of some of the salespeople in the store. They do the party on a Sunday night at 6 PM after the regular store closing time. This event typically has hundreds of people show up. This year, they invited fewer people, and even fewer showed up, I don’t even think it was 75 people who showed up.