Retailers Are Downsizing: Why They Might Close Their Stores After Covid-19

Shops are reopening since the coronavirus restrictions are slowly being lifted, but some of Australia’s retailers are preparing to close their stores voluntarily as online shopping continues to increase.

Photo Credit: euronews

With the coronavirus pandemic still looming threat for the world, retailers are struggling to keep their business light on. Some retailers have closed their doors during this time as people have changed the way they shop since quarantine began. The online shopping habit is leading consumers to abandon visiting physical stores. It is a hard step for retailers to ‘never reopen’ the store as the assumed temporary closure turns to a permanent one.

Fast-fashion retailer Zara announced their closing of as many as 1200 stores around the world last week to boost online sales. And Australian denim retailer Jeanswest is also shutting 37 of its 146 stores. The hit is even being felt at music and gaming stores, with at least 19 EB Games stores across the country shutting down.

As the possibility of more retail stores vanishing from shopping centres becomes real after a massive surge in online shopping, some store are looking to downsize their store network due to the uncertain future. Meaning many stores could be shut, with a massive reduction in employees and complete re-configuring of supply chains. Much of these activities are to prepare for the preliminary shifts towards the online store.

Photo Credit: ABC News

Shoppers May Keep Shopping Online in The Future

According to Webalive, in 2019 80.8% of people in Australia were shopping online. Soon, one out of every ten items may be purchased from an e-commerce store.

Foot traffic in shopping malls and streets plummeted due to the restrictions that were put in place to curb the virus. The change in shopping behaviours was ultimately influenced by the quarantine period as many non-essential businesses were encouraged to close. This meant that many Australians chose to head online for their shopping fix. This is a lasting change in shopping habits that fosters online purchase.

The ‘work from home’ order that many had to follow also increased online shopping. Australia Post recorded an increase in online orders placed during 2-5 pm. Shopping from the comfort of your own home also allows people to have a more flexible shopping experience, free from the limited trading hours in the physical stores.

People’s shopping behaviour brings a seismic shift and the wave of store closures may continue in the future. Covid-19 may accelerate the process of resizing, retailers are preparing to switch their focus to their online businesses to survive such a challenging time.

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