What franchise systems operating in the retail space can expect in the wake of COVID-19

By Gillian Livingston

Retailers have watched customer traffic plummet with the forced closures due to the novel coronavirus pandemic, but as the country reopens, pent-up demand is luring customers back to both corporate and franchise-owned stores.

PiinPoint, a provider of location intelligence for retailers, landlords, and real estate professionals, has been running data insights monthly, measuring the volume of foot and vehicle traffic levels to determine the impact of the economic closure — and the pace of recovery amid the subsequent reopening.

“The biggest piece is that retail is recovering gradually,” says Jim Robeson, co-founder and chief executive officer of PiinPoint. “The data shows that recovery in some industries has been much faster than others.”

The key for franchisees has been how well they were able to pivot their operations to deal with this new reality, says Gary Prenevost, president of FranNet of Southern Ontario and Eastern Canada.

Those operations that were able to move more business online, improve delivery options, offer curbside pick-up, and make their customers feel safe were able to handle the restrictions more effectively and will be able to recover faster, he says.

It’s no surprise that the retailers that have had better outcomes during the pandemic are those that didn’t have to close completely, such as hardware and grocery stores.

In fact, those retailers have seen “significant short-term increases in traffic” despite the lockdown, as consumers focused on filling their cupboards and starting do-it-yourself home improvement projects while stuck at home. However, other retailers “are still feeling the effects of COVID,” Robeson says. But as the economy opens up, a desire to return to some semblance of ‘normal’ is bringing consumers back to retailers and their favourite franchises.

“People want to get out, but responsibly and safely,” Prenevost says.

Home improvement stores have benefited from everyone staying home. While visits to home improvement stores were down about 39 per cent in April compared with a year ago, PiiinPoint’s data shows an increase of more than 19 per cent in June. 

In the days surrounding the May Victoria Day long weekend, retailers like Home Depot, Home Hardware, Lowe’s, and Canadian Tire saw several days where demand rose 50 per cent compared to a year ago.

Essential trips such as visits to the grocery store were still down an average of 10 per cent from March to June as consumers avoided unnecessary outings, but were gradually increasing. In the latter part of May, visits to grocery stores were up 10 per cent year over year.

“In the early days of the pandemic, a lot of households reduced their shopping trips, stocking up for a week or more at a time,” says Robeson. As visits increase, it indicates more people are returning to earlier patterns.

As expected, those retailers who were forced to close completely or to severely restrict customer access have been hit harder by the pandemic closures. Electronic and office supply retailers have seen a 57 per cent decrease in visits year over year from March to June, while clothing and home stores saw visits drop by a whopping average of 64 per cent.

The hardest hit sector by far has been restaurants, which have experienced an 85 per cent average decline in visits from March to June, as they were forced to shut their doors to patrons but were allowed to continue offering takeout.

Quick service restaurants with a drive-thru service were able to manage better, as visits fell by just 16 per cent in June after experiencing a 70 per cent drop in visits in April.

With fewer people making long car trips, or driving to work or to shop, gas stations saw a 64 per cent average decrease in visitors from March to June.

“There are some industries that are going to take longer to recover,” Robeson says.

As consumers start to return to retail, it will be vital for businesses and franchises to make the customer experience as pleasant and safe as possible to keep customers coming back, Prenevost says.

“How do we make our customers feel safe, how do we make our staff feel safe, and also train them in the short term to respond to customer fears?” he says. That includes making sure masks are worn, hand sanitizer is available, and staff have protocols for how food or products are handled.

To monitor the recovery rate as the retail industry gets back to business, PiinPoint uses its Mobile Location Data to track movement patterns of consumers in major Canadian cities.

Access to this kind of data can help retailers make decisions regarding their reopening, says Robeson. It can allow a retailer to track the traffic levels of each of their locations, the broader market surrounding a group of stores, or even that of their competitors.

“With mobile data, we can essentially draw a box around a property and see week over week – or time of day – how movement patterns around these locations are changing, not just based on visitors but also on consumer behaviour,” Robeson says. This includes the distance consumers are travelling to reach your store, changes in trends over time, and the brands your shoppers like, as well.

“It just gives you another level of insight that you may not have otherwise,” he explains.

PiinPoint’s Mobile Location Data can tell retailers what other brands their customers also like. “It’s really the movement patterns that we observe,” he says.

With that data in hand, retailers can make decisions about how to best operate their business as stores are allowed to reopen, Robeson says, including “what stores do we open first, based on traffic that we’re seeing?”

Prenevost says he’s hearing from franchisees that the downtown customer base hasn’t yet returned, with many offices still closed, and instead owners are focusing attention on their suburban locations.

Traffic patterns can also indicate which hours to operate — such as whether a later opening or closing time makes more sense due to when consumers are out shopping, Robeson says.

 “People are still inherently afraid of going out and congregating,” Prenevost says, but they do want to get out and enjoy summer. So the more outdoor and safe options franchisees can offer, the better their recovery will be, he adds, such as offering a patio for a restaurant, or curbside pick-ups for retailers.

The data can also help a retailer target its marketing and know which neighbourhoods to focus more heavily on at first, to monitor the impact on their competitors “and how the rest of the area is performing, and what brands are seeing a higher level of traffic than others,” Robeson says.

Information is key to help franchises reboot their business after the shutdown. “The more data that a business owner has, that makes for way better decision making,” Prenevost says. “Overall, I think that’s a really good strategy.”

The data can indicate any new trends businesses can capitalize on. “With the mobile data we can understand by time of day, day of the week just how patterns are changing on a weekly basis,” he says.

The data can also indicate the distance customers are willing to travel to get to your store, Robeson says, and how those patterns are changing.

“Travel patterns have changed dramatically,” he says. “People are not travelling as far to grocery stores” or to bigger-box stores like Costco — a 10 or 15-minute drive — instead preferring to stick closer to home — such as a five-minute drive.

Another area of interest is how well curbside pick-up retail options are performing, says Robeson. The data can examine “dwell time” or how long someone remains in one spot. “So if there’s curbside pick-up we can see at that spot of a grocery store, how busy it is, and the number of visits,” he says. 

An interesting trend showing in the data is that once consumers have decided to go shopping, they are making multiple stops instead of just one visit to one retailer, Robeson says.

“The data clarified the effects that COVID has had on retail — and the degree,” he says, confirming that home improvement, grocery, and restaurants with delivery or take-out options were able to manage much better than others.

The pandemic has sped up many trends, including the move to more online shopping and the introduction of curbside pick-up, and those will continue, Robeson says. “There is a greater comfort now of buying online.”

This is also a chance for franchises to find better ways to communicate electronically with their customers, Prenevost says, and strengthen their online shopping strategy to attract new customers.

“That’s where there’s real, important business to be gained or if they don’t do anything, to be lost,” he says.

Those businesses that manage through this crisis “will be that much stronger and healthier, and there will be less competition because of the natural effect this is going to have on businesses,” Prenevost adds.

How many other changes will remain — such as different traffic and shopping patterns — will be borne out over time, Robeson says.

“Retail is going to be just fine. Although some industries will be more impacted than others, retailers will need to revisit the way people shop with them and what that looks like,” he adds.