Retailers Must Prepare for An Uncertain Future

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Editor’s Note: Tom Enright is Research Vice President, Gartner Supply Chain Practice

As brick-and-mortar stores start to slowly reopen in some places, retailers face an entirely new environment than the one they operated in at the start of 2020. The planning that so many did based off knowledge of their consumers’ needs, wants and shopping behaviors to a large extent now has a reduced value in understanding trading patterns through the remainder of this year and beyond.

As a result of the COVID-19 pandemic, classifying businesses as essential or non-essential for a locked-down world has drastically changed shopping demand. Those considered “essential,” experienced a surge in demand, while retailers caught on the wrong side of the definition of essentiality were forced to close shop and head home to figure out how to continue trading in an exclusive online world.

As non-essential retailers, shopping malls, towns and city centers start to slowly reopen, consideration should be given to the following trends that are likely to shape the retail industry for the rest of 2020 and beyond:

Perfection Can Be the Enemy of Achievement

Regardless of the precision of their contingency planning, no retailers were unaffected by the impact of COVID-19. Many subsequently realized that new consumer-facing initiatives can be sufficiently and effectively executed without needing to strive for perfection. In pre-COVID times, most companies followed with caution the traditional path of idea, proof of concept, pilot and go-live when bringing new consumer initiatives to market. The pandemic inflated demand for some products and services so dramatically that companies were forced to react by short-cutting timelines, embracing calculated risks and abandoning the horizon of perfection in order to get things done as quickly as possible.

For example, I know of retailers that established a curbside collection in the parking lot of their store with little more than a table, some associates, product and a handheld point-of-sale device. Pre-COVID, such an approach would not have made it past the idea stage.

The learnings from this enforced adoption of alternative development approaches must be used by retailers to increase their ability to be agile and innovative in the coming weeks and months as they face new consumer demands and operational challenges.

Online Sales Could Accelerate by Two or Three Years

From March to May, online sales went off every chart on which they had been drawn, with retailer after retailer reporting record days that surpassed all previously experienced peaks in volume.

Many of the companies I’ve spoken with feel the surge in online shopping volumes has been so great that they may achieve the level of online sales penetration next year that they previously planned to achieve in 2023 or later.

This effect of speeding up time will present enormous logistical supply chain challenges for retailers, but also require mature leadership on how to run a business being tilted so dramatically away from a traditional brick-and-mortar business toward an online one.

Curbside’s Moment Has Arrived

Online shoppers wishing to pick up their order at the store have clearly become advocates of curbside collection in recent months. The attractiveness of not needing to enter the store has been recognized by retailers such as Target, Dick’s Sporting Goods, Best Buy, Kohl’s and Ulta, all of which made curbside collection service available at an increasing number of their stores.

Even some retailers with stores inside shuttered malls are working with mall owners to try to establish curbside collection capabilities. One such example, Willowbrook Mall in Houston, Texas, offers consumers to collect curbside from a number of mall tenants.

I fully expect curbside and other emerging distance-related fulfillment options to become more prevalent and popular for the balance of 2020 and beyond.

While many stores and malls are starting to reopen, it’s uncertain when and to what extent consumers will return to brick and mortar shopping. Whether it’s a result of health and safety concerns or a growing preference for online shopping, there is no certainty that in-store shopping will return to pre-COVID-19 levels and each retailer may experience a different response from their respective consumer bases.

For now, it would appear that the only certainty to prepare for is uncertainty.

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2020-07-31 10:52:00

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