Impact of COVID 19 on the digital transformation of Retail stores

The pandemic has affected people’s lives and industries in ways unexpected since last year. One of the industries that have been forced to remain dynamic is Retail – from essentials to luxury and from traditional stores to D2C brands.

Digital transformation has thus moved from “Good-to-have” to a survival need for organizations. This has become evident from the acceleration and improvement of E-commerce and omnichannel experiences across grocery, food, lifestyle or pharmaceutical retailers. Digital transformation does not only mean online sales but also, the transformation in physical stores.

Retailers have been through certain realities shaping their priorities – such key trends and their drivers observed in the store transformation are discussed below.

Dark stores: Oh, not so dark:

Retail demand and sales peaks have shifted centers – people have moved from large mall experience-focused shopping to neighborhood convenience-focused shopping.

This forces retailers to relook and re-purpose their most valuable real estate spaces. Data-driven analysis of sales pre- and post-covid and prediction based on macro-economic factors will allow them to flex some of their retail stores to dark stores. Dark stores will enable local inventory storage and ease timely fulfillment of orders during the disrupted transportation phases also. These spaces can also be double purposed as “Click and collect” centers for direct customers since investments have been made in the ambiance and set-up, unlike traditional warehouse spaces.

“Click and collect” or “Drive-through” shopping experiences have gained traction more than ever before. Businesses have definitely paid attention to these trends, for example, Mcdonald's has incorporated “Drive-thru” in its new powerful digital experience growth engine strategy. More retailers will follow the suite since it offers more flexibility and choice to customers.

Not panicking through “Panic buying”

Panic buying has put a large pressure on essentials retail supply chains. Though the panic buying trend has reduced considerably from the initial days of the pandemic spread and lockdown announcements – there have been erratic differences in the supply and demand trends caused.

A sudden spike in the demand for health, hygiene and wellness products has demanded a change in sourcing and demand planning decisions. Redirecting resources from hedonic categories to such essential categories has become crucial.

Bulk panic purchase of some non-perishable goods during the first wave meant that households hardly bought them for the following few months, while retailers had stocked them up based on the spiked demand.

These fluctuations have affected the predictive capabilities of organizations and challenged their demand and supply planning

Touchless – everywhere:

Organizations have been focusing on automation for touchless back-offices since pre-covid times. But touchless has taken a whole new meaning these days. Retail stores are getting equipped with more and more digital enablers – to make a shopping experience as touchless as possible. This spans across digital points of sales, chatbot sales assistants, QR code scanning spots and self-checkout apps. While humans crave social experiences due to lockdown and restrictions, some retailers have made social shopping experiences possible through virtual call applications. VR and AR trial rooms are getting pervasive in lifestyle segments.

 While macro-economic factors like unemployment, job losses, prolonged work from home scenarios, lock-downs and employee health concerns continue to pose threats to the retail industry, the players continue to transform through these tough times, navigating through ambiguities and change with resilience.