COVID-19's Impact is Building a More Resilient Retail Sector

The retail sector has been faced with many challenges and obstacles over the past several years. One of the greatest of those challenges being radically shifting consumer demand alongside higher expectations.

Due to this ever-changing landscape, department stores have struggled to maintain success with their traditional models. In fact, even prior to the COVID-19 pandemic, retailers were already making major changes in order to stay relevant and compete against major e-commerce competitors like Amazon.com. When the pandemic arrived, it only accelerated the need for the retail industry to pivot even further.

Whether it was the overwhelming increase in demand or the sharp decline in discretionary spending that drove some retailers to close their doors, the effects of COVID-19 have had the greatest influence on the retail industry as a whole.

For the retailers providing access to essentials items, a dramatic increase in demand meant shifting focus to their e-commerce capabilities to protect consumers, employees, and suppliers with new boundaries and safety expectations needing to be met. As shelter-in-place orders expanded, and consumer anxiety about virus spread persisted, the increase across consumer age groups in online spending was clear.

The longer this crisis lasts, the more likely it is that this change in spending behavior will become the new normal. There was a pronounced shift toward online shopping long before the pandemic made an impact. The change in consumer behavior was most noticeable in grocery and other essential categories, leading many grocery and pharmacy chains to make quick adjustments that allowed for more ease of “buy online, pick up in-store” models. Many are turning to third-party logistics (3PLs) providers in order to leverage their guidance, industry connections and technologies.

Flexibility is Key

In order to respond to these changes and remain flexible enough to move labor from one set of tasks to another, retailers have needed to allocate and deploy workers across a broader range of activities. A flexible labor pool has become more essential than ever, particularly as health and safety mandates have been put in place to space out employees more carefully, minimize the numbers of consumers in brick-and-mortar stores, and limit a large majority of the workforce to work remotely — if at all.

This need for flexibility is accelerating the move toward more dynamic resourcing, from warehousing to distribution and beyond. A more fluid labor pool has become vital to success as well as the ability to respond to retail sector needs.

Many companies have taken this opportunity to seriously analyze the resiliency of their business models as well.

While organizations typically plan for disruptions to resources or processes, giving thought to the flexibility of the overall business model and its ability to survive a major shift or interruption isn’t the first thought for most. Smart retail companies are leveraging a systematic approach to strengthen the resiliency of their current business models, preparing them to ensure their ongoing operation during COVID-19 and beyond.

A key to successfully managing this scenario is investigating and identifying uncertainties across the business that are likely to be detrimental, and then coming up with dynamic solutions to a variety of potential circumstances. Identifying where infrastructure and software solutions are needed, considering what changes are necessary to mitigate potential impacts, and focusing on how updated technologies can facilitate business operations has the retail sector accelerating itself into the future. With a lack of movement at brick-and-mortar stores, for example, many retailers are changing how they use that physical space, creating micro-fulfillment centers that allow for faster delivery times in urban areas.

Establishing plans for changes now and in advance of further disruptions is making quick reactions and flexibility a more likely outcome.

The Future of Retail Post-COVID-19

In the broad scheme of things, the challenges of managing consumer demand, ensuring liquidity, and implementing social distancing measures have been difficult to face.

However, these trying times have forced an exponential growth in the form of more resilient solutions for an industry that was struggling in many ways. The dramatic rise in e-commerce functions for grocery alone stands as a testament to the need to remain flexible. Retailers can now begin to focus on not just surviving these challenges, but thriving as we move forward into the next phases of the retail industry.

Successful transformation is the key to going beyond mitigation to investment in omnichannel retail solutions for the consumers of tomorrow.

J. Garth Pickering is senior vice president of managed services at Redwood Logistics, which has been providing solutions for moving and managing freight for more than 18 years. The company's diverse portfolio includes digital freight brokerage, flexible freight management, and innovative platform services that simplify the integration of disparate supply chain technology.