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Retail’s safe return: Preparing for the rebound

Image of woman jumping with shopping bags against colourful mural.
Image of woman jumping with shopping bags against colourful mural.
Photo by Harry Cunningham on Unsplash

2020 is proving to be one of the most challenging years on record for Australian retailers, with most having to close their stores to help in the fight against the spread of COVID-19. Now the big topic is recovery and ensuring they are able to react to a new retail landscape and changed consumer behaviour.

Not all restrictions will be lifted everywhere at once, so retailers that are ready to respond quickly and flexibly and leverage opportunities will have an advantage. Change will happen gradually, and retailers need to be ready for all possible scenarios with the right flexibility built into their operations.

Here are four things retailers can do now to get prepared:

1. Undertake a stocktake

Few Aussie retailers have radio frequency identification (RFID) and therefore don’t necessarily know what stock is sitting where – store level inventory is a massive issue. There is seasonal stock sitting in closed stores all over Australia. Retailers can use the time now to stocktake and make sure they know what they have and where. The next step is to think about what they want to do with it. Does it go on sale through a discount site? Is it donated to those in need? Is it boxed up and brought out next winter? Can you sell it online? 

2. Evaluate your supply chain

For many retailers COVID-19 has completely broken their supply chains. Has stock arrived that was ordered and already paid for? If Australian retailers are relying on stock from Asia, can they still secure it? If the supply chain is coming from North America and Europe, that’s going to remain broken for a while – retailers need to work out what they’re going to do. Air freight is broken, so can you get stock needed to reopen? Retailers need to analyse suppliers and identify potential supply disruptions, both now and into the future. Retailers will need to increase safety stock on products from ‘at risk’ suppliers, identify and onboard alternate suppliers and think about setting them up as drop ship vendors.

3. Rethink your store operations

Retailers need to focus on how they’re going to encourage customers to come into store and win their trust once the restrictions are lifted.  Identify ways you can limit person-to-person contact in stores andtake cues from the essential stores that are still operating. For example, set up social distancing in checkout lines, one-way aisles, contactless payments, contactless in-store pickup, curbside pickup, and identify any signage you will need to support these measures and make customers and employees feel safe. Remember, consumers have become used to shopping at stores with these measures in place. It may take time before they’re comfortable shopping without them.

4. Be flexible with pick up

Research suggests that humans take on average two months to form a new habit. Confined to their homes and social distancing for a long period of time means some shopper habits formed during lockdown will stick. Expect online sales to continue to increase. For some demographics when restrictions begin to lift, they will immediately flood into stores they trust. A great example of this is Hermes recording its best trading day ever in China recently after restrictions in Wuhan ended. But other people will still be cautious for a longer period and reluctant to go to big shopping centres. Just because restrictions may ease in certain geographies or for certain types of stores, doesn’t mean there will be an immediate influx of shoppers.

Some shoppers may prefer to deal with retailers as they do with Uber Eats – drop and go, contact free, with curbside, direct to door and deliveries to lockers increasing in Australia. Retailers will need to rethink how they manage click and collect. In the past, the strategy was to put the click and collect collection point at the back of the store, so that shoppers were encouraged to walk through the store and  browse other items on the way, but this may have to change. For the next few months, retailers may need to consider giving shoppers alternatives to coming in store to collect. We’ve already seen Supercheap Auto and BCF stores offering their online customers the option to pick up purchases without leaving their cars and Kmart turning some of their stores into warehouses so they can fulfil orders and pick and pack. If your technology isn’t flexible enough to allow this, then now is the time to try and solve this, so in the future you can be more resilient to any changing market condition. How individual retailers will be impacted will have a large part to do with how badly their customer base has been impacted by financial losses and decreased income.

What COVID-19 has taught us is that retailers must have the right systems in place to be able to respond quickly to customer’s changing demands and behaviours. Flexibility is key to a successful rebound and the growth of the retail sector in Australia.

Graham Jackson is CEO of Fluent Commerce.

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