While the so-called “retail apocalypse” turned out to be a big ol’ bust, recent times haven’t taken it easy on brick-and-mortar retail.
Business consultants and retail strategists have long been calling retailers’ attention to the game-changing forces challenging the industry. Retailers have chosen when and where to adapt, for better or worse, doing their best to protect capital and minimize risks while evolving to meet the demands of the 21st century.
Then came something no one really saw coming. Hello, COVID-19. Greetings, social distancing. Good day, quarantine.
But retail isn’t taking the pandemic lying down. Instead, quick-thinking leaders are positioning their stores to come out better than ever when this crisis subsides. Here’s what they’re doing and how it will position brick-and-mortar retail for a post-COVID-19 rebound.
Excelling at Customer Experience
In “Adapting customer experience in the time of coronavirus,“ McKinsey & Co. identifies four actions businesses can take now to address customer needs and prep for the future. They are:
- Focus on care and concern
- Meet your customers where they are
- Reimagine the post-COVID-19 world
- Build agile capabilities for the future
For the sake of retail, let’s explore “meet your customers where they are” and “build agile capabilities for the future” in more depth.
Right now, shoppers are working essential jobs or at home. Visiting a store is either (a) not possible or (b) poses a health risk. Yet retailers are capitalizing on their brick-and-mortar presences through omni-channel innovation.
Here are the services some are rolling in light of the pandemic:
- Curbside pickup (Best Buy, DICK’s Sporting Goods)
- Click-and-Collect/BOPIS (Kroger)
- Contactless Same-Day Delivery (Michael’s, H-E-B)
- Drive-Through Services (Walgreens)
- Contactless Payment (Publix)
What retailers learn from these advancements will position them to plan for tomorrow and prepare for the future. The coronavirus brought omni-channel acceleration to a tipping point, but consumers will likely to continue to expect and utilize these services once the crisis subsides.
Diversifying Supply Chains
Early in the crisis, retail realized that an outsized reliance on Chinese and other non-domestic supply chains spelled vulnerability. Now, retailers are working around the clock to secure a fast and reliable supply that’s responsive to changes in consumer demand.
With their stores open, essential retailers are taking several steps, according to McKinsey & Co.’s April 2020 article, “Five actions retail supply chains can take to navigate the coronavirus pandemic.” These include:
- Securing demand. This involves reducing the number of SKUS sold so that suppliers accelerate orders and thereby maintain stock, etc.
- Redirecting. This includes moving inventory between locations depending on needs, bypassing inventory replenishment and allocation algorithms.
- Adding capacity, safely. This means reallocating labor and making sure there are precautions to protect workers’ health and policies to support them.
As crisis ebbs and flows between a retailer’s outposts, the more agile a retail supply chain, the better.
For non-essential retailers, the path to supply chain reform looks a bit different. For these retailers this might include:
- Enhancing regional fulfillment for omni-channel flows (Bed, Bath, & Beyond)
- Investing in core over seasonal merchandise (Levi’s, Lululemon)
- Shortening time to market from concept to consumer to better respond to demand fluctuations
These are some things retailers are working on. But NRF’s April 2020 interview with Forrester analyst Sucharita Kodali shares how retail is re-evaluating for the future. These are a few ways she suggests supply chains could evolve now:
- Government-subsidized factories may support core manufacturing in the US for national security
- Retailers will invest time in risk-based scenario planning to support supply chain diversification
- Retailers will set aside cash reserves to offset unexpected events that impact supply chains
Given these changes, retail supply chains are poised to emerge from the crisis more prepared to ride choppy tides than ever before.
As the COVID-19 recession progresses, consumer spending will continue to take a hit. As of April 24, 2020, the jobless rate stands at 23%, with 26 million claiming unemployment in the last five weeks.
While shoppers will be more thoughtful than ever about what they purchase, stocked shelves full of products shoppers will take on a whole new meaning in our post-quarantine universe.
And, once they emerge from sheltering in place, they’ll be eager to resume parts of life that make them feel human again. Reflecting on the future of brick-and-mortar inRetail Dive’s article, “The consumer after COVID-19,” Simeon Siegel, managing director at BMO Capital Markets, said “humans aren’t built not to interact.” Although people won’t buy as much overall, pent-up demand will draw consumers to stores.
Retailers have long been nudged toward advancement, often taking baby steps rather than making bold moves. But in a post-COVID-19 world, even the most cautious leaders are finding that incrementalism isn’t enough. Those who find their stride by making bold operational changes for survival now and resilience in the long run.
CB4 helps retailers move beyond the spreadsheets and traditional reporting tools that are holding back their business. We use simple but sophisticated AI to unlock unique, revenue-boosting opportunities at each store in your chain. Then, we send the alerts to the store staff who are best suited to resolve the problem and restore lost sales.
Learn how we’re helping retailers rise to meet ebbs and flows in demand by watching this short video.