Jun Li: Pandemic roils retail landscape, spurs innovations

June 4, 2020
Contact: Jeff Karoub jkaroub@umich.edu

Vacant retail building. Image credit: iStockFACULTY Q&A

ANN ARBOR—Some players in the retail industry were struggling before the pandemic, but shockwaves have rippled through the sector in the wake of COVID-19. Still, many are finding ways to adapt and innovate.

Jun Li

Jun Li

Jun Li, associate professor of technology and operations at the University of Michigan’s Ross School of Business, discusses the realities of the current retail landscape and what she sees on the horizon.

It would have been hard to predict the economic blows we have experienced in the wake of the pandemic. In other ways, it seemed to magnify some trends already underway, such as the moves toward online. What of the retail landscape even resembles what you and others saw for 2020?

Probably nothing. The pandemic changed what people shop for, where they shop and how they shop. Every aspect of retail is shifting because of it, though it may be to different extents for brick and mortar retailers versus online retailers, or for grocery stores versus fashion brands. Some demands are suppressed (for example, clothing and luxury goods), and some are amplified (for example, home products). Consumers shift where they buy (offline to online) and how they buy (bulk purchasing). Every retailer is coping with these and other changes.

Before COVID, you talked about the bumpy road for major legacy brands such as JCPenney, which recently filed for bankruptcy reorganization. How much of what is happening now is just too difficult to battle back from?

JCPenney was already on a downturn. It had struggled financially for years because of the shift to online shopping. The COVID pandemic only accelerated that. For others, the change was more abrupt. The luxury retailer Neiman Marcus, for example, took a hard hit because of plummeting sales, and filed for bankruptcy reorganization in May.

What are some bright spots, if any, to the retail landscape? What is working that might seem counterintuitive or just surprising?

Online retailers and retailers with established online or omnichannel strategies coped well. They adapted fast, quickly expanded their online capacity and met with the surged demand with relatively low delays. Supermarkets and grocery stores also dealt with the change remarkably well. They not only managed to meet with the increased demand. They innovate. They created safe shopping environments, such as curbside pickups, limited orders, special shopping hours for seniors and first responders. All these are worth noting. They exemplified the agility of the sector as a whole.

What else is important to know about the state of retail amid the pandemic and what do you envision coming out the other side?

A question on everyone’s mind is, of course, “Will these changes last?” Even though the economy has slowly opened up, consumers are still reluctant to go out shopping. So for a while, retailers will have to continuously innovate how they do business. Online retailers will enjoy a premium for some time, as others struggle to attract people in stores. It is safe to say that any retailer lacking an online-offline strategy will find it difficult to survive the COVID pandemic and the era to come.