The outbreak of the novel coronavirus epidemic at the beginning of 2020 has adversely influenced China's retail industry, especially the brick-and-mortar retailers. But some retailers, who got well prepared and responded quickly to the incident, have turned the crisis into an opportunity, according to a recent report.

The epidemic brings fresh inspiration to the retail industry. It also enables the industry to usher in new opportunities in the future, according to a report released by Nielsen, a global measurement and data analytics company, in which key retail companies and over 10,000 traditional grocery stores in China were surveyed.

 "The sudden COVID-19 outbreak is a huge test for China’s retail industry. However, retailers generally have shown great flexibility and resilience in a very volatile environment,” said Justin Sargent, president of Nielsen China, adding that many retailers see opportunity arising out of this crisis and that the epidemic will accelerate the future development of the retail sector.

Challenges for the retailers and their responses

The impact of COVID-19 outbreak on retailers during the Spring Festival was polarized, the report said. Among the surveyed retail companies, 42 percent said their sales declined compared to the same period last year. In contrast, 44 percent of retailers reported growing sales, 28 percent of whom reported significant growth.

By business types, most of the large businesses such as hypermarkets and supermarkets said their sales growth was good, and top retailers performed well, relying on strong supply chains. The growth of small businesses, especially convenience stores, slowed down. Stores specialized in personal care and cosmetic products, as well as maternal and infant stores, have been greatly affected. However, some maternal and infant stores showed significant growth, as they actively expanded online and social marketing channels to meet consumer demand during the epidemic.

The research showed that in light of the COVID-19 outbreak, three major challenges facing retailers are insufficient inventory of some categories, difficulty in logistics and distribution, and inadequate staff to deliver orders.

Some retailers, however, were able to organize the resources quickly, respond actively to the epidemic, and launched a series of measures to help turn crisis into opportunity. These measures included flexible coordination of the supply chain, ensuring the efficiency of product supply, assisting employees with solicitude, rationally deploying the staff, adjusting the store’s operating hours, expanding businesses through online channels and in community, and strengthening corporate brand marketing to enhance consumers’ trust and favorable impression.

Changes and opportunities for the retail industry

Like the retail industry’s changes in the SARS period, the consumption related to the industry is likely to rebound once the COVID-19 outbreak is over. The retail sector, which has been tested by the epidemic, is going to face changes and opportunities.

Nielsen research showed that 46 percent of the surveyed retailers were optimistic about the business prospects over the next half of the year, among whom 8 percent felt strongly that the business prospects will be very good.

Sargent noted that there will be huge lessons learned for retailers from this epidemic, and retailers are already starting to formulate their growth and recovery strategies in the post-epidemic period.

According to the research, 67 percent of the retailers said they would make efforts to expand online channels and accelerate home-based business and retail warehouse layout. 53 percent of them said they would change their product mix according to the shopping habits of consumers, and increase the inventory and on-shelf number of health, disinfection, and protection products. 43 percent of the retailers said that they would deeply work on the supply chain, especially the supply chain for fresh food, while also strengthening the ties with various brands as well as enhancing communication efficiency.

“In this epidemic, the retail industry has demonstrated its agility - remaining agile will continue to be critical going forward,” Sargent added.