Retail: lessons learnt amid corona crisis

Managing spiking demands, safeguarding shoppers and employees, and anticipating a new normal. These are some of the big issues that retail is facing amid the covid-19 crisis. Considering their role in helping communities to stay stocked up on essential goods, retailers’ ability to quickly adapt to this new reality was of vital importance. This article exposes the most notable topics and reactions in the sector. 

The priority of protection

Grocery stores have remained open to service large numbers of people. The first priority was to maintain hygiene measures and social distancing.

A list of actions that are observed:

  • Promoting - or even demanding - contactless payment options and self-checkout.
  • Restricting the number of people inside the store as well as making it compulsory to use a shopping cart.
  • Limiting opening hours to allow for hygiene measures and to give employees extra rest.
  • Putting plastic screens around cashiers, while shelf stockers wear emergency vests and - in case of delivery - drivers leave groceries at the doorstep.
  • Offering free testing to employees as well as stay-at-home policies and paid sick leave.
  • Rewarding workers with a bonus, vouchers or extra time off.

 

Balancing demand and supply

Consumer needs and expectations are rapidly developing during the evolution of the outbreak. Depending on the country and specific stage - or so-called threshold level - it is experiencing, there are major disruptions in what people are buying and how they prefer to do so. 

Retailers have to stay constantly aware and informed of what is happening locally.
Next to hoarding behaviour on products like toilet paper and pasta, there are examples of consumers selecting healthy food the one week, and buying indulgence products like cakes - or home baking products -  the other. Next to that, the enormous boost in online shopping raises several struggles by itself, whereas demands exceed capacity. 

As a result of these rapid changes, retailers simplify their operations and focus on supply chain continuity for prioritized products. This means proactively managing high variation in demand with measures such as: 

 

  • Maintain ongoing communication with suppliers.
  • Using real-time data to identify urgent demand. Then redirecting inventory and creating space in distribution and fulfillment centers, and in-store. 
  • Limiting product variety and services like fresh food counters. 
  • Reducing promotion intensity and introducing a maximum on prioritized products. 
  • Re-allocating staff towards essential tasks or high demand categories. 
  • Raising wages and expanding the workforce. 

 

Regarding e-commerce:

  • Increasing omnichannel expertise and upscaling IT capability.
  • Boosting delivery capacity and optimizing routes. New partnerships are arising.
  • Changing online services by accommodating more delivery slots while relaxing delivery requirements at the same time.

Anticipating a new normal

While addressing these short-term challenges, retailers are also working to foresee the post-pandemic ‘new normal’. Predicted trends are for example online shopping becoming mainstream and a need for radical transparency in supply chains. Furthermore, this crisis causes retailers to recognize the need for building resilience to cope with similar situations in the future.

In anticipating these developments, the following issues are relevant:

  • Adjusting stores to be (virtually) cashless and intensifying self-services.
  • Measuring real-time shelf availability and automating replenishment. 
  • Creating a seamless omnichannel customer experience in e-commerce as well as a flexible backbone to react to (online) demand spikes. 
  • Embracing technology in the supply chain, e.g. in warehousing or demand forecasting.
  • Rebalancing the supplier mix with a more local orientation.

For the longer term, business strategies could be reshaped profoundly. Possibilities include new partnerships with food service or tech companies as well as finding new franchise models of ways to improve the value chain, e.g by vertical integration.

 

Source acknowledgment

  • What food retailers should do during the coronavirus crisis (McKinsey, 2020)
  • COVID-19 Future Retail Disruption Planning for Scenarios (Edge by Ascential, 2020)
  • Five actions retail supply chains can take to navigate the coronavirus pandemic (McKinsey, 2020)

More about how Puratos is facing covid-19