10th Nov, 2020
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Hey Retailers! Remember January, when everything was still normal. Leading behemoths were sitting on long tables, with shiny glasses in hands for welcoming the year with great hopes.
The happiness was short-lived, soon it frayed as the world descended into new lows because of Covid-19. The scrooge is still worsening and doesn’t seem to wind down. Surely, it is a time of tumult for the retail industry as buying is going through hibernation because of self-isolating customers and
Not all news is grim!
Smart retailers are successfully navigating through the choppy waters with a laser-focussed strategy, right tooling, and technical know-how. For instance, online grocer Ocado streamlined its supply chain to deal with sudden peaks in demand. Early in April, the online grocer sensed tough times ahead and issued an apology for the upcoming delays in deliveries. Ocado streamlined its supply chain with better analytics.
These measures helped Ocado in improving profit margins by 27%.
Similar to Ocado, there are many hard-fought battles covering enduring lessons of Retail success. Retailers can employ these methods and ensure continuing and lasting success amid mounting Covid-19 challenges.
Retailers Need to Break the Moulds and bring-in Reinforcements
Covid-19 has not only pummelled sales but also altered buying behaviour. There is a tectonic shift in people’s spending patterns. US customers are spending more grocery. Whereas Asian customers are spending less on travel and more on luxury goods. In Australia, customers are spending their savings on alcohol, hardware, garden supplies, etc. Value for money was never so important as it is today.
This resonates in McKinsey & Company’s recent report as well. The report shows that 75% of shoppers in America have moved away from brands for value and convenience reasons. The report concludes that the shift in this pattern is going to continue for a while.
In the APAC region, IDC observed substantial reduction in footfalls and rationalization towards essentials & home personal care products. Discretionary spending doomed luxury and fashion brands to an all time low.
Customers are taking public health & hygiene more seriously than ever now. They are going to continue the social distancing norms and retailers need to rethink retail accordingly.
Retailers need to run a bulldozer on the Business as Usual (BAU) mentality and reengineer their services as per changing market shifts. As a part of the constructive destruction, they should digitize every nook and cranny of their stores. More importantly, they should seriously study the shelf data and customer buying patterns. They need to have complete understanding of the market, shop, and supply chain.
How Can Retailers Make Good of the Loss? And what are the different retail solutions worth considering? Let’s find out
Kick Start the Holiday Season Now
Starting the festive season early is a key winning imperative. By displaying deals earlier, retailers can excite shoppers and scale the supply chain for the season. Leading retail analysts believe that by starting the big sale events early, retailers can predict customer’s buying behaviour in a better way. They can use promotions to push items that have been ignored by customers since the time they hunkered down.
By starting early, retailers can predict the footfall and reduce queues outside the shop. This will also help them in following the social distancing norms as fewer people will be allowed inside the shop at one time.
Tips for Preparation
- Fixing time-slots (i.e., senior hours, private shopping) for consumers most vulnerable to COVID-19 to ensure that fewer people are in stores.
- Making temporary sitting arrangements like tables or tents in front of stores.
- Offering flexible fulfilment options by selling and managing inventory across multiple platforms.
- Shifting inventory mix considering the demand & supply of goods
- Restocking the sold goods and replenishing the inventory on time
Accelerate Analytics-led Automation for the big-picture thinking
The demand for retail analytics solution and automation was already rising in the retail industry but the pandemic will further bolster its usage. The current retail reliance on AI & Automation is still is still in infancy.
Analytics led automation is not a necessity anymore for retailers, it has become a quintessential business need. It now also means cohesive machine learning components that can be leveraged across the organization for optimised inventory and store management. These components can be put forward to solve the problems which they tackle on daily basis.
Modern-day retailers are fusing analytics and automation for avoiding strength zapping & costly errors and improving their efficiency levels.
H&M has already spurred the investment in AI-led technologies. The Swedish retailer is running studies on the purchase trends and buying habits of customers. The retailer is establishing correlations between what is being clicked and what is being purchased. Without retail AI retailers might end up flying their plane in the mist and that too without proper navigation tools.
Retailers should have a well-thought-out strategy to timely forecast customer buying preference and act on the buying signals. To do this smoothly, In the next phase, they should consider AI-led personalization. AI enabled personalization and recommendation engine can significantly bolster the online shopping experience of customers.
Retail Industry experts believe that 70% of a salesperson’s role goes into research to understand what is working and what is not. Retailers can simplify this part with machine learning and bot-design led activities. Here, AI can be integrated with traditional point-of-sale data for enabling more profitable discussions between manufacturers and retailers.
They can delist items not selling well and place more profitable things on shelf. Fusing the sales and in-store data could help teams in understanding supply chain issues and quickly restoking items which frequently go out-of-stocks.
Why some boutiques are crammed with buyers while others are empty in crowded malls?
Blockbuster retailers take actions on buying signals and design the store around them.
- Their inventory is based on intelligence and not gut based.
- They are laser-focused on strategic market placement, assortment, alignment with market requirement, SKU performance and index information.
- They plan everything ranging from sourcing, assortment, inventory replenishment, planogram, new campaign launch with data science.
- They work on actionable insights on micro-marketing products and services.
- They reward customers and build long-term relations with them.
Set up an On-Demand A-Lister Workforce
Retailers need to hammer the workforce as per the new normal to safely withstand the potential future losses. They must evaluate the staffing needs as the shopping patterns are shifting at every turn.
Smart retailers have successfully transitioned their workforce into a nimble on-demand gig economy workforce. They can now scale their workforce up or down considering the demand and supply. This unique advantage is allowing them to shift the workforce towards the stream of sales opportunities. The workload is being balanced by adding more hourly pay as incentives.
This doesn’t mean that retail enterprises should hire seasonal workforce haphazardly. While shifting to seasonal workforce mode, enterprises should have a strategy beforehand. Enterprises should have clear understanding of the traits, skills, job role demands etc., to ensure more sales closures. Studies claim that there is a low correlation (generally, less than 25%) between interview predictions and job.
Staffing in Retail is now Research Based
- Amazon unlocked beat mode staffing to intensify packaging tasks for the Prime Day. To speed packages the organization has 175000 delivery workers.
- Walmart is staffing 20,000 seasonal employees at its centres. The retailer has already 500,000 employees.
- Target is hiring 130,000 seasonal workers for its distribution centres and stores.
Setting up a team of Legions: What all it takes?
- Outline the overall requirements instead of regular skill-set.
- Overhaul a list of tasks and operations which the salesperson will handle on the floor. Look for a technical expertise and problem-solving prowess and go beyond the verbiage in resume.
- Minor differences between job roles & expectations can negatively impact the business outcome. There is no need to hire a highly qualified person for a normal role. Just hire the right person for the right role.
- Refer more outreach channels to increase Access to widest possible talent pool.
- Explore multiple channels and move beyond recruitment agencies or general advertisements.
Simultaneously, it is important to upskill the sales army as per the emerging market trends and requirements. Research proves that 63% of sales managers spend less than 11% of their time in coaching their employees. Managers should involve active conversations with their teams to understand what is working and what is not.
Modern-day sales force should be trained more on market understanding and tooling to ensure that they never miss out on closing opportunities. A legion like sales team separates high performing enterprises from the low performing ones.
Give the Skills & Training the Team Needs
- Provide the training and tools required to outperform
- Interwire training and leading to get winning results
- Cross-juggle their roles to ensure that they are not star-struck
- Share real-world examples for faster closures
- Measure the success in an ongoing basis
Prioritize Low ticket Items
Covid-19 has brought a sea change in the buying behaviour of customers. Many customers only purchased lower ticket items while following the stay at home orders. An exponential growth was noticed in the splurge of critical White goods’ like Home appliances, ACs, microwaves, refrigerators, etc.
Electronic device, i.e., smartphones, tablets, laptops, and Wi-Fi routers sales saw a massive demand which were necessary for working remotely. There was also a sharp increase in the demand of television sets for content consumption through OTT platforms. Low ticket items are going to be highly rewarding and retailers should focus on pushing them.
Create Virtual Experience
Drive Virtual Retail
When customers prioritize self-isolation, retailers need to advance tech-centric offerings through shoppable content, AR options, digital one-on-one consults, and curbside pickup. Engaging shoppers with live set merchandising, leading insights, and expertise can enhance shopping experiences and create top of the mind brand recall. Creating immersive and captivating experiences is existential need and compromising them can become a business reducing error for retailers.
A customer’s journey should be at the heart of the vision of retailers. For sustainable future, retailers should change their business models as per the way their customers want.
A strong integration between digital and mobile checkouts and orchestration of retail technologies can speed up the path to purchase and significantly improve customer journey.
Smart Retailers are able to create Instagram moments, testing store rollout response and making changes until they find a satisfying answer.
They are using AI, ML or the of 3D holographic techniques create a wow effects.
They are stirring up the virtual retail magic with convenience, simplicity and speed.
Breakthrough Retails: What are the benefits of using retail solutions? A smouldering question that today’s retail sector faces.
Successful retailers are able to stimulate interest and influence their decisions in a fraction of seconds. They are leveraging intelligence to stir up the merchandizing magic. Good merchandizing in-return is broadening the scope of customer journey. Surely, it is a new non-negotiable in the retail world.
Covid-19 is not only roiling retail supply chains but also catalysing innovation in parallel. It has sparked constructive destruction in the retail sector. The industry has witnessed decades of innovation in just few months.
Buying patterns went through a sea change when customers went on hiatus. Laggard retailers were the hardest hit, their offline stores witnessed saw reduced footfalls.
Continuing with BAU mentality can do more harm than the good. Sustainable Success in the new norm demands adaptability and resilience. Retailers will need a transformative vision to make good of the loses sets themselves on the path towards recovery.