The epidemic accelerates retail e-commerce to replace traditional shopping models
The outbreak of the COVID-19 novel coronavirus has caused overcrowding in shopping malls across Asia. Except for the first few weeks when consumers ran out of toilet paper, instant noodles and rice in supermarkets, most people avoided crowded places and delayed purchases of non-essential items.
In addition to the slowdown in business travel, the tourism industry has also been greatly affected. According to data from the Singapore Tourism Board (STB), affected by the COVID-19 virus epidemic, the number of tourists visiting Singapore this year is expected to decrease by 25% to 30%.
The epidemic will indeed have a negative impact on the retail industry, especially for countries that are highly dependent on tourism income. Under the pressure of retailers to reduce rents, shopping mall owners such as Capitaland Group will provide 20% to 30% rent reductions for tenants affected mainly in downtown shopping areas at the end of March 2020.
In Malaysia, retailers saw sales decline of up to 50% after the shopping center owners to encourage them 30-50% of the rent rebate. The Ministry of Tourism of the Philippines announced that the national shopping mall sales will be postponed until further notice. It was originally scheduled to start on March 1, 2020 (Sunday).
The epidemic accelerates retail e-commerce to replace traditional shopping models
Contrary to the downturn faced by traditional retail, e-commerce has benefited from the virus outbreak as people are now turning to online grocery platforms to buy daily necessities.
For example, Carrefour reported that during the Chinese New Year, vegetable shipments increased by 600% year-on-year, while JD.com (JD.com) increased its online grocery sales by 215 in the first 10 days of February 2020. %, reaching 15,000 tons.
This behavioral pattern is similar to the impact of SARS (Severe Acute Respiratory Syndrome) on purchasing behavior. SARS has stimulated the development of e-commerce. Similarly, with the outbreak of the new crown pneumonia epidemic, it will promote the rapid transformation of traditional store-based sales to digital and omni-channel retail.
When SARS broke out, it helped accelerate the development of China's e-commerce industry. In 2004, SARS forced JD.com to start selling products online, and it is now one of the largest online retailers in China .
SARS has given birth to offline to online business models, and the rapid development of Alibaba and Taobao. This epidemic will further force the traditional economy to transform to a digital economy and accelerate the reshaping of the industry ecology.
Just like SARS, the outbreak of the COVID-19 epidemic will cause consumers to move their purchases online. With the globalization of the spread of COVID-19, its impact will be more profound. So, in this challenging era, what can retailers and shopping malls do to maintain revenue growth and relevance?
Esther Ho, Dean of the School of Business Administration, Nanyang Technological University, Singapore, stated in an article in the Singapore Straits Times: “It will be physical store sales that will be most affected by the epidemic . This may prompt retailers to seriously consider switching to the Internet, especially In the case of successful experience to share."
Examples of such success stories include Iuiga (Singapore's self-operated e-commerce platform for lifestyle products), which reported that although their sales in physical shopping malls have fallen sharply due to COVID-19, their online Sales have surged.
In the past 10 years, most well-known retailers have begun to enter e-commerce as part of their overall channel strategy, whether as a branded online store or as part of an existing online market such as eBay, Amazon, Lazada, Qoo10.
More companies can use this change in consumer behavior to promote their digital transformation, ensuring that customers can reach them even in the current difficult times.
What can shopping malls do to stay relevant?
Affected by the COVID-19 virus, shopping centers are also facing tremendous pressure. As a landlord, ensuring the survival of tenants directly affects profits. Fewer tenants means less rent. This is especially true if a major component of rent is the percentage of sales generated by tenants’ stores in their malls. However, during this period of time, it is difficult to attract consumers into the shopping mall and maintain the normal flow of people in the mall.
Retailers have shown that the way to mitigate their store losses is to move their business online. Shopping malls can also do the same thing, allowing regular customers to continue shopping in their favorite shopping malls, but as an online shopping market.
Online markets are not emerging markets, they have achieved tremendous development worldwide. In fact, Euromonitor reports that 47% of digital commerce sales in Asia in 2018 were done through the market. Shopping centers themselves are physical markets. In fact, they are a collection of different suppliers in physical locations.
Therefore, in order to stay relevant in this difficult era, shopping mall owners can create an online version of their shopping mall in the form of an online marketplace for shopping mall brands by adding a digital multi-vendor market platform to their current business model.
Adopting the dual strategy of "offline to online" (O2O) can not only add new distribution channels for mall tenants, but also alleviate the sales loss of physical stores.
Those loyal customers and those who frequent shopping malls will now be able to avoid the virus in the crowd, and can shop in their favorite online markets in a safe and comfortable environment.
The COVID-19 virus is spreading globally, and there is no sign of ending. Its continued influence will lead to fundamental changes in consumer behavior, promote the growth of e-commerce and the slow demise of traditional retail.
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