Nearly half of retailers expect the spread of novel coronavirus (COVID-19) to pull down their revenue, according to a survey by Digital Commerce 360.
Of more than 300 retailers polled, 47% said they expect “some downside revenue implications” from the coronavirus pandemic, the Chicago-based B2B e-commerce market researcher said in its “Taking the Pulse: Retailers and the Coronavirus” study, released yesterday. Another 9% anticipate “significant downside revenue implications.”
Thirty-three percent of retailers reported that it’s too early to say what COVID-19’s impact on their revenue will be, and 4% said it’s too difficult to tell. Meanwhile, 14% expect no impact and 5% said they’ve adjusted their earnings projections to account for the affect of coronavirus.
“The coronavirus, known as COVID-19, is bound to have many consequences for consumers, but for retailers, this is uncharted territory,” study author Lauren Freedman, senior consumer insights analyst at Digital Commerce 360, said in the report. “Our findings suggest that most are cautious and taking some action, although it doesn’t appear that panic mode has set in,” she noted.
Sinking consumer confidence is one key reason many retailers forecast a negative financial impact from coronavirus, which yesterday was declared a global pandemic by the World Health Organization (WHO). Of respondents to the survey, conducted during the week of March 2, 80% think COVID-19 will have at least some impact on consumer confidence, with 22% expecting a significant impact.
By and large, retailers are embracing a proactive response to the coronavirus spread, Freedman pointed out. Twenty percent reported taking aggressive action, and 44% said they’re taking some action now and expect to do more later on. Just 36% of retailers are taking a “wait-and-see” approach.
“Given the 24-hour news cycle, retailers certainly could have moved into panic mode since they’ve taken this survey,” she said. “It will be interesting to see how this evolves in the weeks to come.”
Much of the challenge facing retailers from COVID-19 is supply chain-related, according to Freedman. When asked about the actions they’re taking, retailers cited supply chain communication (48%), contingency planning (34%), minimizing disruptions (32%), working with partners to mitigate supply chain risks (22%) and adjustments to marketplace participation (22%). Another 23% are “wisely” monitoring the situation in China, she said.
“Inventory will certainly be a challenge, as 44% of those surveyed expect production delays. Thinking further ahead, 40% believe there will be inventory shortages throughout the year,” Freedman explained. “Product delays (44%), consumer confidence challenges (42%) and inventory shortages (40%) are expectations of retailers. This is an ideal time to collaborate with industry peers, according to 20% of retailers surveyed. As time marches on, 19% and likely more will reforecast future revenue.”
While news reports about consumers emptying stores of health supplies and dry groceries continue to stream out, retailers have differing views about how coronavirus will affect online sales. Some say consumer fears of getting infected in stores will spur more e-commerce deliveries, while others believe shoppers will rein in all purchases — online and brick-and-mortar — because of concerns about the broader economic fallout from COVID-19.
In Digital Commerce 360’s survey, 38% of retailers said they expect coronavirus to lift their e-commerce business, with 8% anticipating a significant boost. Thirty-two percent expect a decrease in online business, and another 4% think e-commerce sales will be down significantly. Twenty-two percent don’t expect coronavirus to change their e-commerce business projections.
“There has been discussion that ecommerce might be the beneficiary of coronavirus, which may be the case,” said Freedman. “Our survey, instead, revealed a mixed bag of sentiments.”
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