Retail: Turning crisis into opportunity – Part 1
As the world continues to cope with the ongoing pandemic and address widespread health concerns, many industries have been feeling the heat. These unprecedented times have brought many unique challenges for individuals and institutions alike. For businesses, it serves as a stark reminder to plan and prepare for unexpected realities with resilient and flexible business models.
In particular, retailers have witnessed significant disruptions over the past few months. While most are in fire-fighting mode, it’s more critical than ever to stay connected with customers, keep them informed about product availability, and take proactive measures to ensure safety.
Retail lessons from challenging times
Let’s examine where this crisis began, where we’re going, and the lessons that can be learned along the way.
Where we were: Pandemic Retail
Before lockdowns were declared in most countries, people took to the streets to express panic by stockpiling essentials like personal care, food and beverages, and home care items. In hindsight, this was bound to happen. This short-term increase in demand led to peaks in supermarkets and closures in discretionary retail, causing SKU forecasting and stock planning to go by the wayside. Moreover, it reduced the spend on non-essential goods (apparel, furniture) and high-ticket items (consumer electronics, jewelry).
Where we are now: Lockdown Retail
Since the lockdowns were imposed, retailers have been dealing with a lot: managing consumer demand, ensuring liquidity, overcoming supply chain disturbances, and supervising store operations to ensure social distancing, proper hygiene and employee safety. On the other hand, shoppers are looking to protect their lives and livelihoods, demanding a focus on safety, fulfillment and ease of shopping. These motives have given rise to a significant surge in eCommerce and digital payments, leading to digital shopping and demand for safer delivery options.
To help retailers mitigate these disruptions, we have identified the retail areas most critically affected by the crisis and suggested best practices that can be used now and in the future.
There are many ways to address the hot spots arising during lockdown retail. Every business is different, but a few that we consider to be most effective are:
- Pickup and Delivery - Virtual queuing, delivery slot scheduling, curbside pickup, conversational commerce through chatbots, crowdsourced delivery.
- Workforce Enablement - Temporary paperless hiring/onboarding, employee health monitoring, digital training for queue reduction and store safety.
- Supply Chain & Merchandising - Local sourcing, fine tune demand planning (SKU aggregation of essentials), retune assortment planning (quantity, substitution, brand alternates), compassionate pricing and shelf management, fulfillment augmentation including last-mile delivery.
- Store Procedures - Social distancing heat mapping and video surveillance, scan-and-go/mobile POS for queue reduction, store visit appointment schedulers, assembly of hygiene kits and essential meal kits.
Many global retailers are reimagining their operations in order to respond to this dynamic situation. Below are a few examples of actions that retailers are taking:
- Increasing online fulfillment capacity — A U.S. retailer has converted some of its supermarkets to “pick up only” to meet click-and-collect demand.
- Repurposing production facilities — A French multinational conglomerate has switched from producing perfume to making hand sanitizers.
- Pausing algorithmic buying — An American supermarket chain has deactivated automated ordering to focus on manual ordering of essentials and to push demand away from on non-essential categories.
- Serving the needy — A British supermarket chain has been freeing up delivery slots and issuing delivery credits to help deliver essentials to vulnerable shoppers and patients in isolation.
- Operating in crisis mode — A German supermarket company struck an ingenious agreement to meet demand by “borrowing” staff from temporarily-closed fast food outlets in Germany.
A retailer in need is a retailer indeed
One casualty of this disruption is brand loyalty. The public now values preparedness over virtually all other factors, so speed and agility will prove to be key levers. Retailers that can respond and adapt quickly will benefit in the short term and insulate themselves from more serious long-term consequences. Vendors must take the pulse of the current landscape, balance different fulfillment types, prioritize delivery efficiency and proactively communicate important business or product availability updates.
One casualty of the health crisis is brand loyalty. The public now values preparedness over virtually all other factors, so speed and agility will prove to be key levers.
As consumer behavior shifts, a deep understanding of local conditions and the ability to strike the right tone with customers across all channels will be the keys to success.
In part 2 of this series, we will explore the road ahead and the immediate steps that retailers can take to ensure long-term competitiveness.