How the Pandemic Is Reshaping Retail

A new report outlines five ways the retail landscape will look different because of COVID-19.

December 18, 2020

NEW YORK—A new report from CBRE, a real-estate firm, highlights the impact the coronavirus pandemic is having on retail stores in five key areas, including having dedicated space for curbside service, CNBC reports.

“There’s a sort of misconception that e-commerce growth means the end of the store, that e-commerce essentially eliminates the need for the store, both for retailers and for customers,” said Melina Cordero, who heads CBRE’s retail capital markets business for the Americas. “And the reality is, it doesn’t,” she said.

“What we want to do is give more clarity about what really is going on, and how e-commerce impacts the store and transforms it, as opposed to replace it,” Cordero said.

Here are five ways COVID-19 is reshaping the retail future.

1. Mini Warehouses in the Back. Retailers from Kohl’s to Macy’s have redesigned their stock rooms to pack in more inventory and to use it for order fulfillment. “The store is becoming an extended part of the supply chain, to do ship from store,” said John Morris with CBRE’s industrial and logistics and retail divisions. “I think the first thing you’ll see is increasing inventories at the store level.”

2. More Space for Return Processing. “Part of a retailer’s overall strategy will be to encourage online customers to bring their returns to the store rather than mail them,” the CBRE report said. “Savvy retailers will employ sophisticated algorithms to make real-time decisions about returns, thereby improving customer experience, reducing costs and promoting environmental responsibility.”

3. Curbside Pickup is Here to Stay. Many retailers have embraced contactless curbside pickup, which has skyrocketed this holiday season. “Curbside pickup really became the newest addition [to stores] during the pandemic, because it was no longer like retailers had to deliver one more level of service. The customer didn’t have to come in the store,” said Michael Brown, a partner with Kearney. “It will continue to evolve, because it’s become a customer expectation.”

4. Staffing Adjustments. New technology in retail such as self-checkout kiosks has meant what retail employees do is changing, too. More staff are heading to the stock rooms or providing customer service. “I don’t think that automation is replacing all of the labor in the store,” Cordero said. “The goal is to streamline everything that’s happening in the store ... and you’re going to need to have people in the store who understand what’s going on all over.”

5. Rent Changes. With retail stores evolving to processing more online orders and adding curbside pickup services, rents will need to be adjusted too. “A new and more sophisticated pricing mechanism is needed to determine the value of stores and retail rents, especially for retailers that have more online channels,” CBRE said.

Frank Beard recently explored how COVID-19 is shaping 10 key trends in the convenience and fuel retailing industry for NACS Magazine. Read part 1, part 2 and part 3 of “Weak Signals No More” in the October, November and December 2020 issues.