Retail-Beyond the crisis

The ongoing pandemic continues to rapidly affect economies across the world and the end is still not in sight. Many industries have been hit at unprecedented scale and it will be months (or years in some cases) before they can crawl back to pre-pandemic levels of business.

In the last few months I have written series of articles (please read my old articles on my LinkedIn page), where I spoke about how this crisis has impacted and made significant erosion in the overall business for the Retail Industry. Not to forget the change in consumer behavior and buying choices.

But the times are changing as majority of the countries are easing restrictions and allowing gradual opening of the physical shopping stores so the situation might be a little different by end of this year provided retailers quickly shift their focus to devise post-crisis strategies to bounce back to the growth path. This article helps the retailers by giving them a ready made, non-exhaustive list of multiple strategies, they can adopt, to deal with the changed retail landscape but first lets understand the challenges they faced.

Challenges

The retail industry has faced numerous challenges in past few months. Apart from the regular day to day issues, they have dealt with some specific ones as follows:

·        Increased consumer demand (primarily in certain essential categories)

·        Spur in numbers of new consumer classes and shopping patterns (On online channels)

·        Reduced consumer retention, confidence and brand loyalty

·        Speedy adoption of digital payment methods

·        Supply chain disruptions and logistics issues including inventory management, delivery to customers and returns

·        Financial issues - Availability of liquidity to continue with regular business activities and operations (due to low revenues and pending rental, salary and interest payments)

·        Social distancing and personal hygiene measures

·        Health and safety of the staff at all levels

These challenges were daunting as they all came together in a heap and most of the retailers were not ready with the responses. The pandemic is still evolving and no one can predict with certainty what the final outcome will be however it certainly provides an opportunity to all the retailers to reflect, review and formulate new strategies for a faster recovery and to navigate through the post-crisis period.

Strategies

With the gradual lifting of lock-downs across the world, more and more people will start going back to work and resume daily life which will result in a sudden spur in travel, leisure, dining, shopping etc. activities. While other industries are preparing themselves in the best way they can, the retail industry need also to be ready with an adequate response to tackle the “New normal”.

I have compiled a list of strategies which covers most areas of retail businesses and can be adopted for a smooth shift into the post-crisis situation:

1.   Increase online presence – The crisis has made it clear that customers who did not have any prior experience of shopping online have also been forced to shop online. Data suggests that there has been exponential increase in their numbers and new types of customers (read oldies) have been added to this category. It’s expected that this will continue to grow even after the current crisis has passed away. Retailers who are not present in this medium have to quickly do so and the others who were present before the crisis, have to learn and enhance the experience in a better way. In short, retailers need to capitalize on the new realities of consumption.

2.   Learn from online retail – We know that the shopping experience and customer service levels are much better on online channels than the physical retail stores therefore it’s the first and foremost requirement for the retailers to invest more on creating same level of experience and provide customer service to the highest levels in the physical retail stores. This additional investment will offset with expected increase in customer satisfaction and repeat buying.

3.   Delivery and returns – The customers feel better when they are able to track their online orders and DELIVERY is completed on or before time. Also it enhances overall experience if the updates are shared with them using different devices and channels. Similarly in case of RETURN also the flexibility has to be given to the customers about the location of pick up (from home or from a nearer location to their home) and timing (as per their availability. This is even more relevant in these times of social distancing and hygiene protocols. The retailers can take help of technologies to make this happen.

4.   Increase customer engagement – There are still many countries where lock-downs are in place or have been re-imposed due to increase in infected patients, so in those countries customers are at home or have gone back to homes. In this scenario, majority of their shopping is carried out through online channels and that too for most essential categories therefore; there is an opportunity for retailers to create offers and experiences around those categories for increased revenues and customer engagement.

5.   Social Media Enhancements - Retailers need to increase their efforts for more social media enhancements to get better customer response through personalized contents, online forums etc. Using the customer data base to interact with customers based on their shopping behavior in the past could be another way to keep the customer engaged and connected. This saves on the physical marketing and promotional costs.

6.   Change loyalty programs – The loyalty programs of the past where the customers were rewarded for more and more purchases will become things of the past due to the changed scenario in post crisis situation. The customer reward programs have to be reinvented to tie with their engagement on digital platforms.

7.   Gauge customer behavior and provide customized experience – The customer behavior as captured through their online experience and inside a physical retail store, could be combined to get insights to design new customer offerings. Technology can help the retailers to understand the difference between shopping revenues generated pre and post crisis.

8.   Robust supply chain and advance technology – Retailers suffered huge losses due to disruptions in supply chain during the lock-down periods. In the post crisis scenario they need to collaborate with their supply chain partners for effectiveness and efficiency. The sourcing countries, ports, mode of transport, order timing, forecasting etc. have to be re-purposed to avoid sudden disruptions. Inventory and logistics need to be planned in a dynamic way to cater to the sudden rise in demand in certain categories. Digital strategy such as use of Machine Learning and Artificial Intelligence to predict the volume, is the way forward to avoid issues arising out of such crisis.

9.   Manage Costs – Retailers need to manage their costs by having operational improvements and focusing on optimizing cost to maintain sufficient cash. Build a resilient financial model which can cater to any such disruption in the future. Speed and agility are the key factors in designing such model.

10. Agility in decision making: This pandemic has taught one thing that the operational models work only when they have the flexibility for change and is supported by a team which is agile and can act quickly to handle and meet the requirement that is most critical at the given point in time.

11. Employee engagement: The top leadership need to connect with the employees more often, especially staff at the store level and the ones supporting logistics and supply chain. Their health, safety and financial security should be the top priority for any organization to generate a sense of belonging. If needed the staff should be re-skilled to be ready to cater to the new ways of shopping channels.

12. Customer communication: Retailers need to ensure that they continue communicating with their customers throughout the crisis and after the crisis period. Even before customers walk into the physical retail store, it’s critical to communicate with them and build trust in terms of safety, cleanliness and maintenance. It’s all about letting consumers know what to expect once they’re inside of the store. Whether it’s showing them how properly keep distance while standing in line or updates on a safer checkout process etc.

Conclusion

As I mentioned in the beginning, this is not an exhaustive list and there certainly are many more strategies which are already being adopted or will be known to us as we move forward towards the post crisis scenario when the virus is completely gone out of our system.

The industry has learnt the lessons and is in the process of developing skills to stay relevant. Those who like the old ways of doing things will become irrelevant and the ones who engage customers with purpose and mission will win. The crisis has fast-forwarded the need for all retailers to think and execute in ways that were forecast to take place over the next 5 to 10 years.

Omni-channel is the way forward where different channels will exist concurrently and the retailers have to constantly evaluate one channel over other to devise future strategies. However; one thing will always remain common ir-respective of the channel, which is that the retailers will have to continue investing in futuristic technologies to build customer-centric, data-driven capabilities that supports flexible retail operations and offers product/service as per the needs of the customers while ensuring a robust supply chain.