We are all living in “Lockdown times”. The outbreak and subsequent fallout of Corona Virus (COVID 19) is a global Black Swan event- is this an understatement? This situation has posed hitherto unstated, incomparable and unpredictable conundrum in the socio-economic and public environment.
What do these times imply for Retail space especially in the discretionary spend items? (Non-Food and Pharma sector most affected due to closure of Malls, Shopping arcades and Boutiques.)
Key to understand is how Humanity rebounds and overcomes the pandemic and the way GDP recovery moves in V, U or L shaped in months ahead. In addition, would consumer actions be more gradual or quick, is a question which has perhaps many answers and yet no firm conclusion.
Hence, COVID’s aftermath is perhaps an opportunity to reset and completely restructure the industry value chain. The key tenets of this recovery would be:
- Ability to ensure liquidity while derisking liabilities,
- Manage a surge in demand with expectations of special promotions or deep discounts,
- Scale-up digital capabilities (eCommerce, Omnichannel) to manage inventory reduction & pricing,
- Availability of open and consistent supply lines to meet future demand, ability to innovate and rejuvenate the brand portfolio and effective contract management.
Also for many players, repurposing of supply chain could also be an effective way to tackle the crisis in the economic context.
As Normalcy returns (even if the Anti Corona Vaccine is not developed but economy opens up on certain conditional terms of social distancing, Safe Zone). Companies which stand to gain more would be the ones who demonstrate a differential approach in Health & Safety with an assurance of sustainability. Gaining confidence in every sphere of activity and every stakeholder group – Consumers, Employees, Suppliers, Institutions is the key. Do not be surprised if a “COVID 19 safe Business” compliance certification is mandated by regulation or institutions. An early step in this direction would be seen as innovative and leading to instil confidence.
A Key differential (which to some extent is COVID agnostic too) would be the ability to do predictive analysis using AI of consumer behavior, footfall conversion, consumer preferences and leveraging data around shopping experiences, entertainment and communication preferences. Use of social media must be done such that the consumer feels empathy for the brand besides recall. How a company made use of gaming portals, online apps and chatbots during this lockdown period would help it in retaining consumer interest and awareness of its products, especially amongst new-age millennials. All actions on ground must reflect these studies done when stores are opened or closed, geographical or segment-wise decisions are taken across the value chain and organisation. Leveraging online sales, eCommerce portals and Omnichannel will be a decider and give an early mover advantage.
A reality of future after COVID 19 is “Innovation” which has come to stay and needs to be scaled up, as consumer preferences would be more selective for which strategy needs to be very adaptive. Work from home success has led many organisations announce it as a new normal for large sections of their workforce. Social distancing norms would mean there is more scope for virtual sampling, Digital sell in, virtual showrooms, nearshoring and social selling. It would also lead to fit for purpose office spaces, more use of digital communications intraoffice as well.
When real Life Retail open’s and life comes back to normal, there would be more need for digital solutions, which do not require human touch. Wallets, Barcoded EDC machines, Mobile based POS solutions would be the new preferences of consumers. Our success lies in our ability to predict this need and be prepared for this. There could be a surge in Commercial drones where delivery of products may not require human interface after selecting a product online or thru Omnichannel. Innovation in this sector could increase. Likewise, many gadgets, instruments can help as against traditional shelf shopping using hands and displaying items physically.
On the commercial side, many companies would also be renegotiating contracts. There would be more clarity on “ Pandemics to be considered as Force majeure by default in all commercial contracts ” as we would see a plethora of legal opinions and court decisions in time to come. Solutions also would to offer easy pay solutions or microfinance solutions through digital banking for middle-income groups, which form part of retail clientele.
Within a couple of quarters, V shape recovery looks possible to eternal optimists, however, how much of that pie one gains, depends on how much appetite for change and adaption companies have within themselves.
The views are author’s personal.