The retail industry is significant in all of the OECD nations. It serves as a conduit for consumers from upstream industries, accounting for about 5% of GDP and employing around 1 in every 12 people. COVID-19 has wreaked havoc on the retail sector, with shock levels varying significantly across brick-and-mortar and online shopping stores, essential versus nonessential stores, and small versus large merchants.
The following are stages in economic recovery that nations should adopt right now for the benefit of businesses, employees, and customers to protect the retail sector from the consequences of the global economic crisis and improve its resilience, an effective economic recovery plan:
Ensure that liquidity assistance programs are available to all retail businesses, regardless of their size.
Help key merchants manage labor shortages by easing demand-supply matching for retail positions and giving health and safety requirements guidance.
Support the implementation of social distancing techniques by retail businesses.
Ensure that the sector’s competitiveness remains adequate in the aftermath of the crisis.
Increase the resilience of retail businesses by diversifying their sales channels, particularly by assisting small brick-and-mortar businesses in going online, which are the basic economic recovery facts.
The recent mitigation efforts targeted at delaying the new coronavirus (COVID-19) pandemic have had a direct impact on the retail sector’s supply, demand, and day-to-day operations. All resale operations of new and used products (except motor cars and motorcycles) to the general public for personal or home consumption or use are included in the retail sector.
Due to a variety of variables, commerce has a significant overall influence. The retail industry is a vital economic recovery force: it employs around 1 in every 12 people in OECD nations and accounts for over 5% of GDP. Furthermore, because it primarily serves end demand, it plays a significant role in value chains as a household provider and an outlet for upstream industries. It also frequently supports operations in other hard-hit sectors, such as tourism. Furthermore, because the retail sector employs many people, any interruptions have a disproportionately negative impact on employment. The industry also relies on low-wage and part-time workers, as well as on-call and gig workers who are not covered by standard social security mechanisms, exacerbating the sector’s social repercussions.
COVID-19 issue has a wide range of effects on the retail industry and that is why the countries need a strategic planning which are some of the phases of economic recovery. First, whether social distancing measures are judged necessary has an impact on particular retail enterprises. On the one hand, most nonessential retail activities have been shut down; on the other hand, essential retail enterprises typically function in severe conditions, such as labor shortages, substantial supply chain and working conditions disruptions, and occasionally big surges in demand for specific products. In the United States, for example, although apparel retailer sales fell by 89.3 percent year over year in April 2020, food store sales climbed by 13.2 percent, according to the Census Bureau.
According to Eurostat, although non-food product sales in the EU fell by 23.8 percent year on year in April 2020, sales of food, drinks, and tobacco climbed by 1.2 percent. Data from Internet searches show that necessary and nonessential retail products have divergent patterns in most OECD economies, particularly in the nation’s worst hit by the epidemic. Second, lockdowns and social distancing tactics have a more significant impact on brick-and-mortar businesses than on online shopping retailers, potentially hastening the ongoing move from brick-and-mortar to online commerce. In France, for example, Nielsen says that over the confined period, e-market commerce’s share rose significantly to about 10% of total consumer goods sales, up from less than 6% in 2019.
To keep shops solvent, governments must first make liquidity support accessible to them swiftly and efficiently. Because nonessential retail businesses are seeing historic decreases in demand as a result of the lockdown, liquidity support will aid otherwise solvent shops in avoiding “death by accident.” Governments have already provided significant and cross-cutting emergency assistance; now, they must guarantee that it is available to all retail businesses, whether tiny independent stores or huge chains. Liquidity assistance measures should only be made accessible to viable companies outside of an emergency to avoid a negative influence on economic recovery and growth dynamism.
Second, governments must assist necessary merchants in coping with labor shortages. Because of containment measures and confinement limitations, essential retail companies are seeing an increase in product demand as well as a decrease in labor supply. For example, Nielsen reports that sales of shelf-stable groceries (food that can be safely stored at room temperature) more than doubled during the week leading up to the lockdown in almost all countries compared to the same week in 2019, while the Institute of Grocery Distribution reports staff absenteeism rates of 20% or more during the early stages of the lockdown.
While many shops have been forced to reduce their employment as a result of the epidemic and to put the business in an economic cycle of recovery, others are employing more employees to satisfy rising customer demand. Governments (e.g., Australia, France), retail trade organizations (e.g., the United States), and even big businesses (e.g., Alibaba) are seeking to lower transaction costs and speed up the reallocation process by establishing online platforms for jobs in critical industries (including retail).
In the long term, measures for global economic recovery to improve the retail sector’s shock resilience will pay off. Brick-and-mortar stores may diversify their sales channels by growing their online sales, for example. In Korea, for example, the government is bolstering its support for small firms seeking to sell online.
The government of Japan will give a business continuity subsidy to bring economic recovery growth, allowing businesses to diversify and extend their sales channels. Governments should pay attention to regulatory hurdles that prevent conventional merchants from participating in online sales (e.g., permitting and zoning laws) as well as framework circumstances that impact demand to shop online from best stores such as digital literacy, customer protection, security, and reliability of payment gateways. Finally, because COVID-19 has a complex impact on food and agricultural supply, the retail sector should consider how to make its supply chain more resilient where necessary, such as by relying on more diversified sources of goods, improving inventory management, and leveraging data analytics to improve sales forecasts and supply chain tensions.