The COVID-19 outbreak has rendered a lot of plans dysfunctional for individuals and businesses alike There has been a sharp decrease in sales and revenues in most of the industries while few industries have seen growth.
Nonetheless, this is a challenging time as it has put the life of employees in danger along with destroying livelihoods and economies in many countries.
Retailers, however, are more than passionate to provide necessary commodities to their consumers while taking care of the health and welfare of the societies they are serving.
In order to minimize the short-term impacts of the shortage due to the crisis, retailers are doing their best to timely move goods to store shelves and at customer’s doorsteps by providing delivery services.
This is done by making rapid response capacities and speeding up the supply chain processes.
Consequently, retailers have taken instant actions to minimize the impact of challenges brought by COVID-19 for shoppers, workers, and related businesses.
Changing Consumer spending trends during this challenging time
Retailers have started facing supply chain issues due to the drastic shift in consumer behavior and increased health restrictions that have limited operations.
There has been a noticeable shift in the spending pattern. Sales of consumers items such as food and personal care products have increased, while the demand for commodities like clothing and furniture has declined.
Shift In Shopping Patterns
According to the survey recording data of 1073 respondents from the US, consumers intend to increase spending on groceries by more than 10 percent and decrease spending on discretionary items like quick-service restaurants, restaurants, footwear, apparel, jewelry, accessories, Furnishings and appliances.
Since more and more people are at home, they are buying groceries and personal care items online. Many online stores are making profits by putting sales.
Internet services have also come up with great internet packages since a good internet connection is one of the biggest needs of time at the moment. For example, AT&T internet packages allow you to stream, shop, surf, and play without a pause or a glitch, at reasonable prices.
When it comes to quick-service restaurants, there will be a decrease of more than 40 percent in consumer spending. It comes as no surprise that the spending on restaurants will go down by approximately 80 percent.
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Spending on footwear is likely to go down by around 60 percent while apparel will go down by little more than 60 percent. Consumer spending on Jewelry, Accessories, Furnishings, and appliances will be reduced by around 60 percent.
The Retail Roundabout
Mckinsey also analyzed retail traffic in major cities of the US between February 19th and March 20th.
The results further confirmed the trend mentioned above as there was an increase in the visits towards grocery stores while a drastic decrease in movie theatres, malls, and restaurant websites.
For this same period, there has been a spike in downloads of delivery apps for grocery retailers and they went up by 100 to 200 percent.
Retail business systems were not prepared for such exponential growth in demand but they can still adjust their operations to help fulfill this increased demand for grocery shoppers while acknowledging the decrease in demand for discretionary goods and preparing supplies accordingly.
Some urgent actions that retailers can take to help shoppers are as follows:
It is advised to retailers selling Food, drug, and mass (FDM) categories, to prioritize securing instant and dependable supply. Following steps can be taken to achieve this:
First Things First
When you buy a new cable TV service like Direct TV, for example, it is important to start with basics and learn to program the DirectTV remote first before proceeding on watching shows. This will make your experience smoother.
Similarly, retailers should prioritize their activities. Focus on providing the necessary products that are in high demand, learn the patterns, and decrease the number of non-necessary items.
This will make it easy for suppliers to process orders instantly and provide inventory faster. Moreover, retailers can relax payment terms as well for suppliers. This will ensure the availability of products on the shelf and increase replacement velocity.
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Retailers should also rearrange staff and divert them to online orders. Staff working with less demanding categories like clothing can be provided with basic training and can be utilized in the food category to better facilitate shoppers.
Furthermore, meeting frequently with suppliers (virtually) to discuss stats will lead to better communication and transparency.
There is a considerable drop in demand for goods like apparel, footwear, appliances, and furnishings as these are considered non-essential commodities.
Retailers selling non-essential commodities are facing tough times due to the downward trend in demand.
In this difficult time, securing cash is very important and in order to do so, retailers need not incentivize on-time deliveries, postpone credit extensions and consider doing business with those suppliers who have cash reserves.
It is also important to provide timely feedback to suppliers regarding the demand of certain inventory so that they can purchase raw materials accordingly.
If situations get tougher, retailers should consider postponing or delaying the orders. This, however, will create difficulties for suppliers.
Safety and Security
On the safety and security side, retailers should ensure hygiene and social distancing as much as possible.
They should increase the use of technology. Several retailers are already promoting self-checkouts, reducing payments by cash, setting products in shelves either before or after shopping hours and instructing delivery teams to drop customer orders at doorsteps instead of handing it to them or going in houses.
Apart from this, retailers need to promote social distancing and isolation for affected employees.
Some retailers are already allowing paid sick leaves, free testing and work from home for affected employees.
Companies are also increasing staff capacity and especially creating backups for essential staff. Companies like Amazon are also raising minimum wages to attract more workers.
Other retailers are making positive examples for employees and customers. Alibaba, the biggest Chinese e-commerce store, is sending essential coronavirus related medical equipment to other countries.
Some retailers are setting separate shopping hours for elderly to make it easier for them to shop while some stores are providing free food and other essential items to deserving people in nearby communities.
Summing It Up
As it can be seen that the COVID-19 has speed up social changes and technical adaptabilities e.g. increase in employees working from home, spike in online shopping, tech-inspired payment options and the hunt for local suppliers.