Retailers need to act flexibly and treat this as a ‘Temporary Normal’: the ‘New Normal’ will come further down the road, when COVID-19 is no longer a threat. They must adapt to this unique scenario, making themselves flexible enough to respond to changes in shopping behaviour, while also keeping staff and customers safe. For example, how are stores going to manage limited physical interaction with shoppers and what will be the impact of certain items being placed in quarantine for a number of days? A lot could be learned from shops that remained open and adapted their operations during lockdown, whether that’s stripping back the range of products and services on offer, or offering Click & Collect pick-ups outside stores.
Big-bang sales will cause longer-term problems
Retailers will be keen to get tills ringing, but their brand propositions and profits could be eroded by blockbuster sales. Rather than making broad-brush reductions, retailers must consider the best approach for individual items whether optimising price changes, extending product lifecycles to the Autumn, or identifying which items could be stored and sold next year. Some markdowns will be necessary, but these should happen on an item-by-item basis, rather than a wide-ranging half-price sale across everything. It is here where AI and machine learning can drive a much more intelligent approach to pricing, making recommendations on a range of factors including weather, availability, consumer demand and wider news events. This will make a crucial difference at a time when retailers need smart pricing strategies, to ensure unsold stock doesn’t sit on shelves in store or in warehouses.
Increased automation will help retailers get back up to speed
During lockdown, consumers have forgiven retailers’ supply issues, but this honeymoon period won’t last much longer. A recent study from Warwick University found retailers’ attempts to react to changes in demand and supply during the pandemic were hampered by a reduced workforce, and over-reliance on manual processes. To meet this challenge, many retailers will invest a lot more in their supply chains to drive greater flexibility, visibility and automation. As we return to some normality but with backdrop of the pandemic still in people’s minds, consumers will expect goods to be available in store to avoid making wasted trips, a store layout that keeps them safe, and a more unified digital experience overall. If retailers cannot get back up to speed and give people what they want, when they want it, many of their customers will not be back.
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VP Retail Industry Strategy EMEA at Blue Yonder