Five Retail Trends That Will Outlast the Pandemic

Consumers fundamentally shifted the way they spent money and time during the pandemic. While retailers continue to look for a fast recovery due to pent-up demand, additional stimulus checks, and accelerating vaccination rates, some shifts in the retail landscape will take years to normalize. Other shifts, however, are here to stay.

Though India and Brazil continue to struggle with soaring COVID-19 infections, most other regions around the globe are experiencing a broad decline in infection rates and easing lockdown measures. Many governments are considering, or are currently providing, additional economic stimulus money to restart growth. Perhaps most important, multiple COVID-19 vaccines have now been shown to be effective and are being distributed at an increasing rate.

In the meantime, consumers are likely to continue prioritizing certain retail categories, such as grocery and home improvement. Some categories, depressed by the pandemic, will experience a short-term surge due to pent-up demand. Other categories, such as apparel and accessories, will take much longer to fully recover.

As we highlighted last November, five important consumer trends have come out of the pandemic. These trends will continue to affect retail for the next three to five years:

• Consumers are spending more time and money on in-home activities as working from home becomes a permanent feature for many employees.
• Consumer spending is accelerating due to growing consumer confidence and pent-up demand; but the recovery is uneven, and many consumers—and retailers—will be left behind.
• E-commerce penetration exploded in 2020 and will persist as consumers stay loyal to the online channel.
• Consumers continue to seek better health and cleanliness, in tandem with personal wellness, leading to more purchases in these categories and a continued desire for strong safety measures from retailers.
• Populations have shifted as consumers have fled urban communities for less densely populated areas, forcing retailers to reexamine their store footprints and operations.

Retailers can respond to these trends by doubling down on the use of data analytics to understand how their customers’ needs are changing and by modifying their operations to address those evolving needs. We recommend that they focus on distinctive value propositions, safe in-store experiences, and improved e-commerce offerings. At the same time, they should continue to manage costs as closely as ever, understanding that a postpandemic return to normalcy may be both startlingly different and some time in coming.

Our perspectives are detailed further in the slideshow below.