We recently had a Q&A session with supply chain expert Sean Sherwin-Smith about the impact of the Coronavirus on retail.
Broadly speaking, how do you see Covid affecting the world of commerce and ecommerce?
What has been brought into sharp focus for business leaders is the ‘virtual’ or digital operating capability of their businesses. This ranges from remote working, online sales sustainability and their supply chain – call it their ‘digital business continuity plan.’
Those more traditional businesses operating an omni channel model – especially those who have treated digital as a secondary or supplementary sales channel have quickly discovered to their cost how fixed assets quickly become an Achilles heel when all focus needs to be on sales and supply chain to service the only (online) channel open to them.
Agility to adapt in any crisis is key to any organisms survival and the ‘retail Darwinism’ we are witnessing – especially across supply chains – is demonstrating that those businesses that have embraced e-commerce at every level have become the fittest and by default will survive.
That said, online retailers are not immune to the pandemic. If supply chains are not resilient, where supply (risk) is not spread across multiple vendors and manufacturers, digital only retailers run high risk of seeing trading partners being dragged down by those failing omni channel businesses. We are already witnessing the death of department stores in the US and with their huge global supply chains the ripples will be felt throughput the industry.
How will shopper’s behaviour and expectations have changed in a post Covid world?
I think consumers don’t really know what to expect in respect to high street / retail park shopping. Combined with a nervousness to socialise there is highly likely to be a very slow return to physical shopping albeit that you will get a segment of the population who will want to resume their pre pandemic behaviours.
will consumers really want to queue up outside stores?
Given that social distancing may still be in effect until the end of the year (depending on country) will consumers really want to queue up outside stores? Consumers have tolerated this for groceries out of necessity (and lack of delivery slots by super markets) – will they be happy to go through the same experience for non essential/shopping for pleasure?
A possible solution is “click & drive” – where the consumer buy’s online but drives to a store (“kerb side”) to collect their goods. This still heavily relies on retailers having a digital shop front but is a half way house for ‘socialised shopping’.
One consideration for retailers is that Covid19 has acted like a reset button. The opportunity exists now for retailers to reinvent their sales channel/journey – fully automated stores (RFID etc), more personalised shopping experiences (booking shopping slots – more showroom and local distribution centre rather than the pre pandemic ‘browse and shop’).
Even for the digital channel, the landscape can be remodelled – reduction of free shipping and free returns!
the landscape can be remodelled – reduction of free shipping and free returns!
For sure, the role of physical stores will have to change to be sustainable and have a continuity plan for future challenges. Landlords will have to accept this and also rethink how they operate and charge to accommodate this!
Which services provided by retailers will be redundant after Covid and conversely which services will flourish?
With a reduced social interaction, the shopping experience will have to be more personalised and convenient for the consumer. There is some interesting work going on around “Experience” stores (see Museum of Ice Cream) which will make physical shopping more of an event. “Click & Drive” will certainly be a favoured method of shopping lending itself well to retail parks but high street / shopping centres will struggle with this.
Who do you see being the big winners in a post Covid world?
Initially pure play e-commerce will flourish but humans are social animals and throughout history have gathered to trade – retailers who find a way to enable this in a safe and responsible way will win through. Again,. landlords will need to come to retailers with ideas on how to enable this. One area I think is going to be high on peoples minds (although perhaps not for the first few days after lockdown) is sustainability. We have temporarily experienced a world with far less traffic and pollution – there is already talk of businesses realising that staff working from home is not such an impossible way to work and often more productive. Have consumers enjoyed a “cleaner” environment? Would they go back to the pollution just to go shopping in the old way?
Oddly it’s going to be all those back to basics, old skool rules of retailing:
- Ethical and Responsible – Adopt sustainable practices where supply chains are environmentally friendly and robust – suppliers are treated fairly
- Customer Loyalty – You will need their loyalty the next time there is a crisis!
- Personalisation – personalised social media, create a strong customer experience across the whole purchasing journey, not just on your website!
- Stay agile: multiple, balanced, sales channels (for resilience) but in a format that allows businesses to be able to be fleet of foot – eg pop up (short term rent) stores, distributed “dark” DCs (localising delivery and risk).
- Stay lean: collaboration – focus on what you are good at and let other specialists do what they do best. For example use 3PL and 4PL to manage your supply chain.
- Shared User networks rather than dedicated operations….share resources and the share the risk!
What ‘good practice’ standards do you think will be challenged by Covid enforced changes, eg free delivery and free returns?
There is a chance now to reset the bar on “free”. Only loyal customers will earn the right to “free” as long as the retailer has the ability through data to identify these customers or understand in minute detail the cost and success of individual SKUs to operate subscription based shipping models like Boohoo and Next.