10 Reasons Retail Will Never Be the Same Post COVID-19, Part 2
To read part one of this multipart series, click here.
The COVID-19 pandemic has caused havoc across the globe, with countries, economies, people and businesses all bearing the brunt of this 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 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 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 reasons six through 10 why post-COVID-19 e-commerce will never be the same, coupled with insights on how retailers can adjust (to see reasons one through five, click here):
6. Decentralized manufacturing will see fast adoption.
COVID-19 has disrupted the complex global supply chain. Procurement of products from Italy, China and many other manufacturing hubs has been severely affected with the closing down of factories, logistics nearly halted, and borders closed. The National Retail Federation (NRF) estimates show that imports at major U.S. ports dropped to their lowest level in five years this March.
This situation is making organizations reconsider moving manufacturing near-shore or on-shore. Decentralization of manufacturing will also see increased adoption as companies avoid putting all their eggs in one basket and spread their manufacturing across locations to minimize risk. In a recent development, Samsung electronics took a big step by deciding to shift its production of some premium flagship phones to Vietnam. This trend will only gain momentum post-crisis, as companies re-evaluate opportunities, risks and liabilities, and reorganize their operations.
7. Plug-and-play productized SaaS solutions will be vital to respond quickly to demand.
The COVID-19 pandemic has opened our eyes to situations that once seemed implausible. It has exposed the inadequacies in retail businesses urgency to be prepared for such situations, now and in the future. Businesses need to be better equipped with digitized, integrated, data-driven solutions that can be accessed and deployed with ease. This has given way to increased demand for plug-and-play productized, cloud-based technology that can empower businesses to increase profits and margins, despite these troubled times.
8. Retailers focus on assortment and merchandising will increase to stay competitive.
With increased e-commerce demand, retailers will have to match up to bigger audiences and more competition. Agile assortment planning will play a key role here. Offering a unique assortment of inventory that customers actually want to buy will be a real differentiator in retaining old customers and attracting new ones. Retailers will have to strategize in real time, leveraging competitor insights and market movements to display the right assortment at the best prices to attract customers as well as increase profitability and market share. Doing so will not only give retailers an edge over competitors, but will also maximize full-price sell-through rates and minimize cash-to-cash cycles.
9. Increased importance of price compliance (MAP controls) to prevent price gouging.
The COVID-19 crisis has left demand-supply patterns in total disarray. Due to a spike in demand for certain goods, like masks, cleaning supplies, etc., price gouging has become rampant across countries. In the U.S., due to the growing price gouging of essentials, most states have enforced regulations to ensure price compliance. With an increase in instances of price gouging, counterfeit products, noncompliance with minimum advertised pricing (MAP), and stringent compliance policies, companies are reassessing their risk, re-evaluating their processes, and deploying advanced price monitoring mechanisms to protect themselves against such instances.
10. Comparative shopping will become a natural part of the buying journey.
Today’s buyers have access to information at their fingertips. They're informed and make buying decisions after assessing multiple options across channels, irrespective of where they make the final purchase from. It’s more evident every day that purchases across categories are digitally impacted in at least one way. A Forrester study shows that by 2022, digital touchpoints will influence 57 percent of total U.S. retail sales, making a case for adopting a more unified, integrated e-commerce approach to engage consumers in every channel and at every stage of the customer buying journey.
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.