WASHINGTON, D.C. — “As long as the virus is a threat, it will have a negative impact on economic growth,” Deloitte’s Chief Global Economist Ira Kalish said during a session at this year’s completely virtual National Retail Federation (NRF) trade show.
Underlining the extreme impacts of the pandemic, Kalish told the online audience that 2020 was a “year like no other. We saw the sharpest decline ever in real GDP in the second quarter, followed by the sharpest increase in GDP in the third quarter.”
In the midst of a second wave of the coronavirus pandemic and the outbreak of a new strain of COVID-19, economic growth is likely to be very slow this year, although a successful rollout of the vaccine could bode well for a robust recovery at the end of this year and into 2022, according to the economist.
Walmart’s Chief Customer Officer Janey Whiteside, who spoke with Kalish in the session entitled “Economic Outlook: Truths and Consequences,” described 2020’s developments as a “year we’ve never seen before, and continue to see for the foreseeable future.”
Whiteside said the year will be noted for squeezing “five years of digital acceleration into five weeks.” This acceleration in technology expertise made it possible for Walmart to grow its online ordering and pickup and delivery businesses. Pickup and delivery, especially for food, grew dramatically for the chain last year.
The big question for retailers after the pandemic, according to Whiteside, is: What will be the next iteration of the in-store shopping experience?
Deloitte, in its just released 2021 Retail Industry Outlook: The New Rules of Retail, highlights five priority areas where rules need to be rewritten. They are:
Hope at the end of the tunnel: Deloitte projects substantial U.S. GDP growth in the second half of 2021 as vaccine deployment becomes widespread. However, GDP will not likely return to the pre-COVID-19 (Q1 2019) level until early 2022.
Digital investment drives growth: Most retailers expect a digital engagement increase throughout 2021. However, only three in 10 executives surveyed rate themselves as having mature capabilities within digital, and thus are planning major e-commerce, contactless capabilities, and store technology upgrades.
Improving supply chain resiliency: Eight out of 10 retailers expect moderate to major supply chain investments in 2021.
Health and safety remain a top priority: Most retail executives plan to make moderate to large investments in health and safety in 2021, with three-quarters investing in sanitation and barriers, while one-third plan to invest in employee testing capabilities.
Cost realignment opportunities: COVID created a unique opportunity for retailers to rebalance cost structures. New rules of profitability will enable retailers to explore alternative ways of engaging consumers.
In another NRF Show session entitled “Navigating Disruption to Drive Sustainable Growth and Balanced Business Objectives,” former PepsiCo CEO and Chairman Indra Nooyi presented an optimistic view of post-pandemic retailing.
“Consumers are dying for interaction,” Nooyi said when asked about when consumers will start returning to brick-and-mortar stores en masse. “People are longing for togetherness, to shake hands, hug, high-five. Once we all get vaccinated, there will be a huge rejuvenation of retail, travel, foodservice, theaters, concerts. It’s going to happen, and technology will enable more things to happen in those places, but it will not replace them.”
As for meeting consumers’ post-pandemic needs, Nooyi said CPG companies must “double-down on healthier eating and protecting the environment.” The pandemic has been especially traumatic for people with high morbidity due to unhealthy eating habits or compromised respiratory systems.
She concluded that even though many companies grew their sales during the pandemic, they will now have to figure out how to ultimately make a profit.