Blog

COVID-19’s Lasting Effect on Retail and Delivery

By Brian Jungeberg, Vice President, Transportation Practice


COVID-19’s Lasting Effect on Retail and Delivery

Last March, the delivery industry could only guess how the rapidly spreading COVID-19 pandemic would impact operations. In a matter of weeks, U.S. retailers shuttered their brick-and-mortar stores with no sense of when and how they would reopen.

With nowhere to go, shoppers quickly shifted their buying behaviors online, forcing retailers to quickly alter their business models and rev up e-commerce efforts – thrusting the delivery industry into overdrive.

As we cross the one-year mark of COVID-19’s disruption, and the rollout of vaccines brings hope for a new normal, we took a look back on the ways the pandemic has transformed the industry and what it means for the future.

Accelerating Trends

This sector is no stranger to transformation. Over the years, it has evolved with every new trend – from the emergence of the fax machine and internet to the evolution of mobile apps and every technology innovation in between. While the use of technology and the demand for e-commerce was already on an upward trajectory, COVID-19 accelerated this trend seemingly overnight.

In fact, buyers spent $861.12 billion online with U.S. merchants in 2020, up an incredible 44.0% year-over-year. While many in the industry predicted consumers would rely on e-commerce more and more, no one saw the possibility of a five-year plan develop in a mere few months.

Adaptation

The retail and delivery industries are resilient. While many were scared at the start of the lockdown, that quickly evaporated as they were able to reassess, bounce back and make the changes needed to keep going. Companies were able to rework their business models to better support e-commerce and make deliveries on time, at a low price and without sacrificing service standards.

New Shopping Habits

The pandemic has impacted virtually all aspects of our lives but largely how we shop. Buyers are more comfortable ordering online and receiving delivery than ever before.

Not only have shoppers pivoted to digital platforms for day-to-day needs, such as lifestyle and hygiene goods, groceries, financial services, etc., but there’s been a stark change in purchasing behaviors. With an economic downturn, many have moved to value-based purchasing, only buying items that are essential, reducing impulse buys or discretionary spending.

Additionally, online purchases and delivery aren’t reserved for just younger generations anymore – it has become mainstream across all generations. And those changes will be permanent, lasting long after the pandemic.

Even with many brick-and-mortar stores reopening in one capacity or another, the convenience factor of online purchases and delivery is now ingrained into shopping behavior.

Looking Forward

Because of all this, the delivery industry will continue to be guided by the booming demand. Many discovered over the past year that retail and delivery companies built a model that was not sustainable in the last-mile delivery space, especially when it came to promising free, next- or two-day day delivery. When demand was manageable in 2018 and 2019, those services were easy to offer. With the hyper-increased volume, it became tough for these companies to meet the standard they had set.

Temporary fixes used to address these challenges over the past year will need to be transitioned into permanent solutions.

We’ll continue to see delivery companies try to shift their business models and reinvent themselves in order to keep up with the demand and offer quick and reliable delivery. As well, we’ll see new players enter the space to try to profit off of the thriving market.

Moving forward, these shifts will lead to an increased adoption of technology as delivery companies try to optimize driver routes, bolster safety procedures, boost driver performance and enhance the overall delivery experience for consumers.

Want to learn more?

Find me on LinkedIn, here.

Connect with the Risk Strategies Transportation team at transportation@risk‐strategies.com.

Email me directly at bjungeberg@risk‐strategies.com.


Tags: