What impact does the coronavirus have on trade?

Empty parking spaces – full doorstep?

For weeks, the coronavirus has dominated the media. The reporting and the uncertainty have led, and in some cases still lead, to hoarding purchases. Interesting from the point of view of buyer psychology: empty shelves suggest an (impending) shortage that in fact does not exist. What are the consequences of the Corona virus for the trade?

The toilet paper paradox

While the wittiest content is circulating on the net about this toilet paper paradox, the current situation has far-reaching consequences for retailers, some of which threaten their very existence. Retailers lose – online retailers win? Is that so? One thing is certain: Even for those who survive the crisis economically, business will be different afterwards.

Clear losers: tourism and event organisers, art and culture

Everyone is struggling right now. There are industries that cannot come up with a plan B, even with a lot of imagination. The tourism industry cannot offer booked package tours virtually. It is to be feared that not only the booked trips at Easter or Whitsun will be affected – no one can currently foresee whether the situation will have eased by the summer holidays.

The same applies to artists of all genres. Even if the concert or the comedy evening can of course be broadcast over the internet – the essential element, namely the community experience, cannot be broadcast – it can only be postponed. With the #AktionTicketBehalten campaign, organisers appeal for solidarity with the industry.

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New structures, new opportunity?

Dance schools, fitness studios or music teachers offer their students online courses. These offers are also being accepted quite well at the moment, under the appeal of the new. The solidarity of the members, for example in the dance studio, is great. But what happens if the contractually agreed offer cannot be offered for several months and the paying member is forced to save money himself? Also, the vast majority of measures are clearly “improvised”, there is a lack of planning and lead time.

Retail: Is online retail the clear winner?

For the most part, the lack of planning also applies to restaurants and retail. Take-away offers and delivery/bring services as well as shopping in the boutique via video call are new, creative and charming – and are willingly taken up by a group of regular customers as long as their own wallets are still keeping up due to short-time work, their own sales slumps and order lulls. Already now, the turnover that was made through “walk-in customers” is completely disappearing.

The impact on online trade

So sales are shifting completely to online retail then? No. Social restrictions mean that consumers spend most of their time at home: whether at work in the home office, during leisure time or under quarantine. The coronavirus is not only a health risk, but has implications for the entire global economy. Overall, the spread of the coronavirus and the associated economic consequences are causing share prices to fall worldwide and across all sectors.

It is true that online shops are open around the clock and do not have to find and establish new distribution channels. Online retail will clearly feel the effects the least. But in times of the Corona crisis, online trade also benefits only to a limited extent. Customers are unsettled. One fifth said they would postpone larger purchases for the time being. The online fashion trade is also already registering declining search queries.

Current surveys confirm the slump in sales also in e-commerce

In March 2020, the Händlerbund surveyed 412 e-commerce companies on the current situation:

• 70 percent are affected by the Corona crisis.
• 55 per cent are already experiencing losses in business.
• 82 percent expect the situation to worsen.

Add to this:

A survey of more than 130 BEVH member companies showed that

• 84 percent of respondents are already feeling the effects in their own online business,
• 40.9 per cent of the companies have fewer orders from their customers, only eleven per cent have an increased order volume.
• 59.8 percent complain about current effective delivery delays or failures, and
• 28.4 percent are currently experiencing effective delivery failures.

Online generalists with drastic measures

The first effects of the situation on online generalists like Amazon are already becoming visible: More people are ordering essential items like groceries ,drugstore products and household items from Amazon. To avoid bottlenecks, the mail-order company is therefore prioritising such orders with immediate effect. For other product categories, this can lead to delivery times of almost a month. According to Amazon, prioritised shipping will continue until at least 5 April 2020.

An opportunity for specialised online retail?

So anyone who currently needs books, toys (Easter is coming!), consumer electronics or a new printer will turn to the online offerings of “specialists” like Thalia, Müller, Mediamarkt or Conrad Electronics. So these online suppliers will probably get the most of the generally “small cake” at the moment.

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Changed shopping behaviour, even afterwards?

It remains to be seen how the online giants will win back this clientele. But a simple principle will benefit them here: Customers like to make shopping as easy as possible. Before searching for the desired products on several websites and completing several order processes, we are usually willing to pay a little more for individual items – as long as we can get them from a single supplier.

To keep contacts outside the home to a minimum, we also buy just the bare necessities at the supermarket. Drugstore items such as nappies, the usual shower gel or hand cream, but also groceries are therefore increasingly ordered online. This new buying behaviour could become “engrained” over the next few weeks – and thus endure even after the crisis. For online shops, it is therefore important to rethink and, if necessary, adapt the product range to the changed consumer behaviour.

Sources:

https://www.e-commerce-magazin.de/onlineshopping-boomt-diese-produkte-kaufen-die-deutschen-in-der-krise/

https://www.adzine.de/2020/03/medienkonsum-und-kaufverhalten-verlierer-und-gewinner/