10 Reasons Retail Will Never Be the Same Post-COVID-19, Part 1
The COVID-19 pandemic has been causing havoc across the globe, with countries, economies, people and businesses all bearing the brunt of this unforeseen crisis. The retail industry has been turned upside down, and retail businesses are scrambling to adapt to this new reality by finding sustainable ways to ensure business continuity.
With home quarantines and mandated store closures across multiple countries, retail has been dramatically affected. Over $100 billion disappeared in U.S. retail spend in March alone, and many businesses are struggling to stay afloat. With stores closed, consumers are limited to shopping online, some even for the first time. The situation has accelerated the switch to online shopping and has forced many consumers to get comfortable with e-commerce as their primary shopping channel.
COVID-19 has changed shopping patterns and consumer behavior for good. In the third week of March, online traffic in the supermarket segment increased by 161.4 percent compared to a similar period in January and February 2020. That trend is likely to continue. To survive and thrive in this new market reality, retail businesses will have to adopt a technology-first approach in all aspects of their business operations.
Here are the top five reasons why post-COVID-19 e-commerce will never be the same, coupled with insights on how retailers can adjust (reasons six through 10 will be featured in part two of this article, scheduled for Mon., May 18):
1. Remote working has triggered new online shopping behavior.
COVID-19 is continuing to spread, with over 200 countries and territories affected as of April. To curb the spread, many countries have enforced home quarantine, and have closed down workspaces, resulting in work from home (WFH) as the only viable option to ensure business continuity. This situation is changing work dynamics, making organizations more flexible and opening communication lines across departments and customers. Companies are already bolstering their WFH capabilities by adopting technological enablers and digitizing their processes and workflows. With people and organizations getting more comfortable with remote work, it's likely the trend will continue post-crisis and will be adopted more widespread, further driving online shopping behavior.
2. A digital-first approach is required to win and retain customers.
A shift to digital in retail has long been in the cards; the COVID-19 pandemic has only accelerated this trend. Prior to COVID19, e-commerce was estimated to double by 2023. The pandemic will only fast-track this growth, leaving retailers little room for delays in adopting a digital-first approach. Retailers need to focus all their efforts on preparing for an agile, digitally equipped omnichannel retail strategy, keeping customers at the center of their digital strategy.
3. Integrated inventory management must become a core capability to stay profitable.
Customers no longer use a single channel for shopping. They expect an integrated experience across devices and channels, which many retailers find hard to keep up with. Forrester Research reported that 31 percent of U.S. adults prefer the "click and collect" option to avoid a wasted trip to the store. Retailers must now ensure they have an omnichannel strategy in place with an enterprisewide centralized inventory management system in order to stay profitable. When stores begin to reopen, they will become spaces that help retailers enhance the customer experience, which will include in-store pickup and reverse logistics centers. An integrated omnichannel approach can ensure a unified experience for customers by monitoring, refreshing, and restocking inventory quickly and keeping a check on pricing and SKU movement.
4. New e-commerce shoppers with low (no) cost of acquisition will emerge.
The closing down of shops, limited stock availability at grocery stores, and social distancing have all forced shoppers to purchase online during the COVID-19 crisis. Consumers once skeptical of e-commerce are now getting comfortable with it and finding it convenient. Secure payment gateways, availability of more pricing options and a larger assortment of products, easy returns and quick deliveries are some of the many reasons customers are bound to stick to this channel even post-crisis. Furthermore, people are likely to exercise more caution and avoid public places and crowded shops long after the crisis ends, ensuring continued e-commerce shopping. We've come across a similar trend in the past where e-commerce grew largely in China through the SARS crisis in 2002 and 2003, with Alibaba emerging a market leader.
5. Logistics will act as a major differentiator in the retail industry.
COVID-19 has called attention to some glaring inconsistencies in e-commerce logistics and supply chain. With e-commerce being the new go-to shopping channel and research suggesting a continued growth in e-commerce demand, retailers need to be prepared. One bad experience with a delivery or a reverse pickup and customers will move to a different provider. Walmart recently announced a robot-powered warehouse that's expected to enable a pick-and-pack order rate that is 10 times faster than that of a human. It's evident that logistics will play a major role in making e-commerce businesses successful. Post-crisis, e-commerce players will have to invest in finding reliable logistics partners, automating their logistics and supply chains for real-time updates, and finding innovative ways to meet customers’ logistics expectations.
COVID-19 has disrupted the retail sector, altered consumer behavior, and made lasting changes to the e-commerce landscape. All the data and estimations point to the fact that the e-commerce segment will never be the same following this crisis. Luckily, artificial intelligence-driven retail solutions and strategic business process alterations can level the playing field by empowering businesses to transform, make informed decisions and drive profitability.
Sanjeev Sularia is the CEO of Intelligence Node, a real-time retail price intelligence platform that empowers businesses to drive product-level profitability and grow margins.
Sanjeev Sularia is CEO of Intelligence Node, a retail analytics and AI price optimization company that offers the world’s largest retail product index. Prior to founding Intelligence Node, Sanjeev was the CFO for Exclusively.in, a fast-growing high-end fashion e-commerce site acquired by Snapdeal, and CFO for Shersingh.com, a private label e-commerce company acquired by Myntra. Sanjeev is a graduate of London Business School and a Forbes Technology Council member.