Coronavirus May Accelerate 2 Retail Trends: Immersive Online Shopping & Urban Fulfillment Centers

<em>Source: SafeGraph</em>

The Signal: SafeGraph, an analytics firm that tracks store visit data, released a tool showing how foot traffic across US commerce is being affected by coronavirus.

For the most part, the patterns drawn from the data are consistent with our basic intuitions. Compared to March 2019, foot traffic year-on-year (YoY) is down for airports, bars, restaurants, hotels, theaters, and malls; conversely, foot traffic up sharply for general merchandise stores and supermarkets.

Discretionary retail goods are being forced exclusively online while essentials and consumer staples retain a physical option.

More granular data around this shift will come with Amazon’s next earnings release (end of April) and the Census Bureau’s Q1 2020 e-commerce sales report (May).

The Opportunity: As social distancing measures continue to force people at home for long periods, how might consumer behavior change in a post-corona world? To tease out some answers, we spoke with Gabriela Baiter, founder of Wherabout Studio, an experiential retail studio that helps online brands move into physical retail through pop-ups and concept stores.

Baiter believes there are retail trends on the front-end (storefronts) and the back-end (logistics) that could be accelerated during and after the crisis.

• Immersive Online Shopping: With more retailers and brands pivoting to digital, Baiter is exploring new online shopping experiences that help brands stand out from the competition.
  
  Instead of static product pages, Whereabout Studio is creating online shopping options that combine "shoppable virtual storefronts" with "clienteling solutions" (e.g., on-demand FaceTime with a store associate).
  
  During the current crisis, such an integrated digital solution allows sales associates to stay employed and provides consumers with a shopping experience that lowers the confidence gap before purchase via explorable 3D environments and photo-realistic product renderings.
  
  Companies providing these solutions separately include Obsess (virtual stores) and Hero (clienteling solutions).
  
• Urban Fulfillment & Returns: A second retail trend is a race to achieving same-day fulfillment during a time when "now" is even more critical. With many brands still fulfilling orders in the 3-5 day range, the current crisis could further cement the same-day delivery expectation set by Amazon Prime.
  
  One solution for brands looking to speed up delivery is Dark Store, a fulfillment solution that allows same-day (and one-hour) delivery. Dark Store, with dozens of locations across America, is able to meet this demand by:
  
  • Turning empty storefronts (~1.5k square-foot range) in urban areas into fulfillment centers that accept inventory from various retailers.
    
  • A proprietary technology stack with the firm’s own APIs and intelligent routing solutions to make sure inventory is as close as possible to the end consumer.

Firms like Dark Store -- which came out of R/GA's Connected Commerce Accelerator -- are uniquely positioned to step into vacated leases of the worst-affected brick ‘n mortar stores during the current crisis.

Another R/GA firm solving the urban fulfillment problem is Happy Returns, a service that streamlines the customer return process and creates a seamless method for in-store returns or exchanges (we previously covered here).

According to Appriss Retail, merchandise returns cost retailers more than $300B and the opportunity should only grow in a post-corona world.

A firm like Happy Returns addresses a very clear pain point and provides value to all players involved in the return process:

• Customer (can process return without a box or receipt at a conveniently located "return bar" with an immediate refund initiated; the contactless drop-off option is particularly relevant now).
• Seller (keeps the customer happy as well as increases revenue potential via point-of-sale exchange suggestions and reduced costs via cost-effective shipping).