The impact of the global pandemic on the retail industry

As nations across the globe grapple with the pandemic, the second COVID wave has left India shocked and devastated. While the country struggles to get back to a sense of normalcy, entire sectors have been impacted in unprecedented ways.

The onset of the pandemic led to a surge in e-commerce and accelerated digital transformation, creating a paradigm shift in consumer behavior towards shopping online for both essential and non-essential categories. This shifting landscape made it imperative for businesses across all industries to reimagine, adapt and deliver a seamless customer experience both physically and digitally. And with that come both challenges and opportunities for key stakeholders in the retail sector.

Changes in consumer behavior
As per the 2020 McKinsey report ~96% of consumers have adopted new shopping behaviors while 60% are expected to shift to online shopping leading up to the festive season and continue doing so beyond the pandemic. The aftereffects of uncertainty have been an accelerant with the growth of ecommerce and doorstep fulfilment.

Due to unprecedented scenarios and uncertainty with extended lockdowns, consumers have been forced to buy in bulk which gives rise to financial as well as stocking constraints. With online deliveries becoming the norm in stipulated time slots and on a quota system, consumers must plan-ahead to reduce as many touch-exchanges as possible. While many local governing bodies are only allowing deliveries of essentials even via e-commerce, consumers are facing issues with ordering and making choices based on available resources. In part, causing consumers to shift to retailers who guarantee availability and timely delivery of products and goods.

With physical interactions severely curtailed both at work and socially, and with financial uncertainties impacting a large proportion of the population, categories that are driven by impulse and discretionary spending have been impacted, perhaps to an extent only temporarily.

Impact on manufacturers and retailers
As most Indians have started shopping online rather than stepping outside their homes, the Indian ecommerce sector has increased. With the demand for certain goods peaking, manufacturers have had to make a call to ramp up production for certain priority product categories, at the same time decreasing the production of other products in tandem. Manufacturers who were able to scale-up the production and distribution in an agile manner have been able to sustain themselves. Another area of concern for both manufacturers and retailers are whether they should employ new resources and extend the line of services or focus on improving current sales funnels.

For categories that are driven by discretionary spending, brand-owners need a focused marketing approach along with production planning, including flexible manufacturing options and new and exciting launches and campaigns across all media.

With people the backbone of the retail sector, efforts to ensure last mile delivery that minimizes the risk of multiple touch exchanges is seen as a priority. Empowering last mile delivery handlers with proper education and awareness about health and hygiene practices as an SOP for their own safety is of paramount importance.

How can retailers and manufacturers cope with the existing crisis?

Building more resilient supply chains
The cost of retaining relevant, multiple supply locations must be seen more as the cost of de-risking operations and business continuity, rather than redundancy or inefficiency. In a recent Gartner survey, only 21% of respondents stated that they have a highly resilient network today, meaning good visibility and the agility to shift sourcing, and manufacturing and distribution activities around fairly rapidly. Strategies should include multi-sourcing; nearshoring; platform, product, and plant harmonization; manufacturing network diversification; inventory and capacity buffers and an emphasis on ecosystem partnerships. Building a resilient and sustainable supply chain comes at a cost but the cost of doing nothing is also significant.

Short-term v/s long-term planning
Due to an upsurge in demand for certain products, manufacturers have had to take the tough decision to hire new teams as they upskill the existing workforce as well as invest in newer technology and machinery. The same decisions should be taken when it comes to consumer mapping, current market trends and essential demand versus supply. The short-term goals should complement the long-term goals.

Marketing strategies and planning requires flexibility and focus to ensure retention and the growth of a loyal consumer base particularly for categories impacted adversely by the pandemic.

Scaling up with agile processes
The fastest to the finish line will reach the podium and the rest will be mere names on the board. Manufacturers and retailers should have the agility to scale-up production, logistics and in-store processes and prove their mettle in terms of getting things done. In the current environment an average buyer visits the store far less frequently and is sensitive to time spent in-store. They also prefer players who have ready availability and a guarantee to deliver products on a timely basis. Capturing this way of thinking is therefore critical to ensuring one’s place in the market today. This will entail faster planning, flexibility, trained manpower and technological prowess across the value chain.

Reimagined distribution and fulfilment
With zero-contact deliveries currently adopted by almost all logistic partners, ensuring safe and secure last-mile delivery is of the utmost importance. In a consumer buying cycle, the point of delivery is a key area that allows for feedback about the products and services. Delivery experiences are extremely crucial consumer touchpoints, which can make or break the retailer’s reputation.

Leveraging tech
Shoppers have access to more information now, thanks to the internet being available 24 hours a day. Retailers can stay ahead of the game by empowering their customers with digital experiences that influence and supplement their decision-making process. Some of the key variables to look at include personalization, digital payments, and in-app enhancements for customers. Noteworthy examples include Amazon using drones to deliver products and Aisle441 being used to allow shoppers to see a map that shows them the aisle they are buying from. Data driven insights can help retailers mitigate risk and plan for the buying season.

Dynamic in-store execution
Retailers with the most efficient in-store execution offering a dynamic shopping experience will survive and win. This will entail an energized, tech-enabled environment with trained in-store expert teams, either sourced internally or from execution partners. Combined with technology that will make operations and processes time and cost efficient, and shopper engagement fulfilling and profitable.

In conclusion, a digital first today for an offline-first tomorrow:
With the times that we are living in, the approach to have a clear digital focus will be of utmost importance. The retail marketing strategies will have to effortlessly blend physical touch points such as in-store visibilities and brand ambassadors with cutting edge digital technologies that will educate and engage shoppers and convert them into brand consumers.

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