Retail Industry in Times of a Global Pandemic

Covid-19 continues to change the landscape of 2020 at a rapid pace. The number of people thought safe to gather in a single place seems to change as soon as we adapt to our new parameters – dwindling from 1000 to 10. People are saying farewell to what we previously understood to be normal and coming to terms with the reality of our deeply interconnected world. The struggle of temporarily separating from those connections means feelings of isolation are becoming familiar. After the panic of Covid-19 spread and was officially determined by the World Health Organization to be a pandemic, there have been a variety of challenges and changes, with technology facilitating rapid responses.


Shopping is one of the responses, we have so far seen, to how people are coping with this period of separation from others. Overnight, shopping behaviours shifted dramatically, including a swift uptake of bulk buying and the adoption of online shopping; shoppers have changed both what and how they are making purchases. Consumers have responded by stocking up and panic buying on a myriad of items, including but not limited to: groceries, toilet paper and medical supplies. Stores, and online stores alike, were unable to keep up with the demand; it is no surprise that medical supplies saw a 500% increase in online shopping. The face mask, shopped online and in-store, is now pervasive in major cities across the world, with still more and more every day mandating that it be worn. 


As many countries around the world are strongly encouraging, or even enforcing, their citizens to wear masks when leaving the house, my home town of Melbourne being mandated to do so; the omnipresence of face masks is synonymous with these unprecedented times. In response to this newfound ubiquity, Corsight AI, a subsidiary of Tel Aviv based computer Vision company Cortica, developed a groundbreaking artificial intelligence-powered facial recognition system. It can identify who people are even when they’re wearing masks. Reactive solutions like this from Israel have been deployed by law enforcement bodies all around the world. Adaptations to behaviour in online shopping are not only seen in essential goods, such as masks, but in a variety of areas.


Humans respond to crises in different ways. When faced with dangerous and uncertain times, of which we have no control, we tend to try whatever we can to feel like we have some control. When people are under a perceived threat it impacts everything from interpersonal relationships to how we choose our purchases. ‘Retail therapy’ is such an attempt to try to gain control of an uncertain situation, however, in a pandemic; there are additional layers to this reaction. As society has embraced social distancing as a way to slow the spread of the pandemic, there has been a natural decline in ‘brick-and-mortar’ shopping and an increase in online shopping.


The Israeli company: Forter, is a SaaS-based enterprise that provides fraud-detection services to online merchants and has responded to Covid-19’s effects on eCommerce by introducing the Smart Routing tool. This new product helps prevent revenue loss to merchants arising from false payments. Smart Routing can block fraudulent transactions before bank authorizations and utilizes artificial intelligence to avoid payment declines. Forter was founded in 2013 and was named by Gartner as a “Cool Vendor in EUBA, Fraud Detection, and User Authentication.” In addition to Forter’s newest product, which increases confidence for online merchants, there is technological advancement to match the changes in consumerism behaviour that dictate the ‘where’ and ‘why’ we purchase products. 


Donde is one such example, an Israeli based company that focuses on ways to improve online retail UX (User Experience). Donde is a platform that enhances the customers’ online shopping experience by utilizing artificial intelligence to think like the shopper and display results that they have in mind. It uses visual features, rather than text-based searches, coupled with proprietary algorithms that aim to mimic the way customers engage with products, providing the most relevant recommendations. Forever 21, one of the largest female apparel brands, has adopted the technology, Alex OK, their President was quoted as saying: “We’re excited to partner with Done Search and look forward to building on our early success to develop the world’s most intuitive Omni channel shopping experience.” With more products, on the whole, being purchased online that would have previously been in ‘brick-and-mortar’ stores, increased pressure is being put on shipping providers. 


Freightos, who is an Israeli company that provides an online marketplace for the trillion-dollar shipping industry, reported web-bookings as being 7 times higher in February of this year than last year. Though there was a slight drop in April, it was still 3 times higher than last year’s report. Their marketplace enables importers and exporters to reduce their logistics spend and save time with instant comparison, booking, and management. Freightos’s increased web bookings is a clear reflection of the shift and uptake towards online shopping due to Covid-19 and the sense instability it has brought.

Variety seeking behaviour in consumers is a form of control, it allows shoppers to increase self-esteem by making their own (seemingly) random consumption choices. This, in turn, allows consumers to exert a level of perceived independence in the face of their increasingly uncontrollable environment. This perception of ‘control’ and the role of the self, created by the consumer is significant. Product selection is a means for consumers to express independence and their own identity, particularly in a climate where they perceive this to be taken away from them. Another of those added layers is that the global spread of Covid-19 has come with volatile and inconsistent information, that we are bombarded with every day. When people absorb contradictory information from multiple sources, it is human nature to over, rather than under, prepare. The addition of conflicting sources only heightens the need for consumers to feel control in the face of increasing uncertainty.


Acknowledging that stores create 1 in 10 of the world’s jobs, it becomes increasingly important for physical stores to maintain a competitive edge over e-commerce platforms, through human exchanges between customers and store staff. But how can this be achieved during a time of social distancing? Seeing other people bulk buying essential products and clearing shelves, and a resulting perceived scarcity of products validates the decision to stock-up, which in turn creates more of a scarcity of products. This buying behaviour is motivated by a sense of fear and uncertainty – no one wants to be left behind without resources. We find ourselves metaphorically peering over our neighbors’ fence to measure our preparedness, albeit from the requisite 1.5 meters.


The global retail industry has already long been undergoing a significant shift to the virtual eCommerce space. The unprecedented record spike of eCommerce presence and usage in 2020 seems to be a real turning point, given social changes and limitations, which have dramatically reshaped consumer behaviour. Israeli retail technology is at the forefront of this tectonic change for it enables the advanced and rapidly growing virtual shopping experience, which increases productivity and efficiency, providing confidence, safeguards and superior customer experiences. All of these elements are happening as the retail industry matures and gains exposure to even more connected potential customers. These customers are then increasingly exposed to online shopping opportunities, which are powered by the effects of digital technology change implemented for the retail industry.