How to prepare for retail’s third wave
Most businesses have already introduced changes post-pandemic, but it is the next phase of this overhaul that will matter most
Retailers don’t have the luxury of focusing solely on the short-term impact of Covid-19. Many of the changes the industry is implementing to counter the effects of the pandemic will become permanent.
We’ve started to refer to these types of pandemic-related industry changes as “The 3 Waves”, spanning from the immediate changes that ensured stability in the earliest days to more long-term, strategic changes that will become institutionalised.
First wave
This started when the US economy shut down in early March and had an obvious impact on all retailers. Stability and continuity became the primary focal points.
Retailers were forced to throw as many resources as possible into maintaining operations. This meant optimising labour hours in ways that minimised costs, ensured customer demands could reasonably be met, and maintained employee health and safety.
While declining performance is the expectation, successful retailers found ways to stay afloat in the earliest days of the pandemic — such as offering kerbside delivery and selling meal prep kits — and shifted toward the next phase where new ways of working and engaging customers started to become the norm.
Second wave
When operations stabilised following the efforts in Wave 1, essential retailers were able to focus on institutionalising new ways to engage customers with online and in-store experiences.
Everything from directional flow lines to special store hours for immuno-compromised customers, plexiglas dividers to prevent contact, new cleaning regiments, and increased support for kerbside pickup have created a new retail normal. In an effort to provide a safe environment for shoppers and store associates, retail leaders have made efforts to get people in and out of stores as quickly as possible, while also limiting the number of people allowed in the store at any given time.
Even when the pandemic quiets down, retailers will still take precautions to maximise the health and safety of customers and employees in stores, corporate offices and on warehouse floors. Things like “buy online, pick up in-store” (BOPIS) with kerbside pickup options, contactless purchases, and increased integration between digital and physical experiences will become standard means of engaging with customers. The ability to scale up digital capabilities to support these initiatives and meet evolving customer demands will be critical to business success.
Third wave
At some level, the long-term transformation should occur simultaneously with Wave 2. While there’s no one-size-fits-all way to adapt, there are certain strategies that will become essential to rebuilding viable retail businesses.
1 Product sourcing
When demand for certain non-discretionary products spiked as Covid-19 broke, it became clear that supply chains weren’t agile enough to adjust quickly to keep up with demand. Part of the problem is that many retailers haven’t diversified their product sources to a point where shortages at the back end don’t impact customers.
Retailers need to find ways to balance profitability with product sourcing diversification, by identifying the regions that will help them limit travel costs, inspection costs, and lead times. It won’t happen overnight — but making data-driven decisions about where to source products will unlock long-term value.
2 Intelligent automation Retailers will implement more automation solutions to help maximise shopper and employee safety, keep up with consumer demands, and manage both fulfilment and in-store operations. Food, drug, and mass-merchandise (FD & M) retailers in particular are expected to capitalise on automation investments for both the front and back of stores to help meet post-crisis needs. One thing that the pandemic has made clear is that the majority of supply chains and operational procedures weren’t designed to maximise flexibility. Consumer behaviour changed so rapidly retailers weren’t able to adapt without service suffering to some extent.
Going beyond prescriptive automation to embrace intelligent automation will make it easier to streamline end-to-end processes.
The combination of artificial intelligence (AI) and robotics can bring data-driven approaches to supplier quality, merchandising, distribution, logistics, and fulfilment.
3 Last mile
Enabling and optimising last-mile delivery will be critical to satisfying customer expectations, reducing marginal costs and improving overall efficiencies.
There are a few tactics that can help retailers optimise last-mile delivery, including:
• Providing flexible delivery options.
• Creating a collaborative network with suppliers to maximise back-end visibility.
• Leveraging brick-and-mortar stores as fulfilment centres to minimise shipping costs and delivery times.
• Using technology to maximise the value of delivery routes by serving more customers in the same amount of time.