The COVID-19 situation has taken a pandemic form. WHO reported that almost every country in the world has been affected by this deadly virus. Social distancing and quarantining have isolated people inside their houses. Countries had to enforce lockdown of non-essential activities which has directly hit the retail sector on a global scale. The retail sector traditionally involved selling merchandise to the customers through the brick and mortar stores. Due to the restrictions on movement and interaction between individuals, the conventional stores had to close down temporarily, severely affecting their sales. Both experts and retail owners are pondering what will happen in the post-COVID-19 scenario.
China is one stage ahead of the rest of the world in the COVID-19 situation. Accordingly, several trends related to retail have started developing from it along with other countries around the world. There is an indication of a shift in several aspects of the retail. These trends are bound to reshape the retail industry as we know it now.
We understand the changes to take place on three frontiers. These include the rise of experiential retail, the growth of Omnichannel sale platforms, and the modification of the supply chain; all towards sustaining in the post-COVID-19 scenario. Conventional stores will have to adapt as per these trends to survive and do better in the coming times. Let’s understand these changes one by one.
The rise of experiential retail.
The traditional brick and mortar shops will get replaced by experiential retail. In the pre-COVID-19 scenario, due to the availability of online retail, a large number of customers chose e-stores over the retail stores. To bring back buyers, the store owners had to reinvent their traditional stores into places where customers could use, feel and understand the products of a company. These stores primarily involve the customer towards using and understanding a product before buying it.
“The COVID-19 situation has forced customers to use e-retail stores for their needs. The shoppers who once went to the brick and mortar stores are also required to purchase through the electronic mode”.
It is expected that a big part of these buyers will continue to remain loyal to online shopping once the pandemic restrictions are lifted. To attract them back to the shops, the stores will need to modify themselves towards experiential retail.
Experiential retail has known to increase the customer footfall, procure feedback and business leads, address the customer needs and build a loyal clientele. The idea of ‘engaging the customers’, alluring them with product use and engaging them with in-store activities is set to replace the conventional stores in the post-COVID-19 picture. Experiential retail allows the buyers to use a product helping them decide its usage in their lives before procuring it.
Experiential retail requires the use of an original concept to engage the customers, use innovative interactions that are local to the buyers and customize them as per the factors like age, gender, height and weight of the shoppers. Implementing experiential retail requires extensive use of technology to create an audio-video extravaganza for the buyers. The use of present-day tools is expected to help these modernized retail stores increase customer footfall and boost sales.
Modified supply chain:
The COVID-19 situation led to panic buying among buyers straining the existing supply chain.
“As per a survey in March 2020, about 75% of companies reported a disrupted supply chain due to the corona virus pandemic”.
A majority of the companies also admitted to a lack of a backup plan in case of supply chain failures that trail back to China. This is important as China contributes to 17 to 20 percent of the global GDP. All sectors involving procurement, manufacturing, and distribution have been hit by corona virus which originated from China.
This is about to change as countries and companies are striving to make their supply chain independent of its reliance on China. The French finance minister, for instance, has directed its companies to re-evaluate their supply chain dependency on China and other Asian countries. This will certainly influence the retail sector as well. Businesses are implementing digitized supply chains and improving them with the help of tools like Artificial Intelligence, IoT, Cloud Computing and Big Data.
Another evolution in the supply chain would be the Direct to Customer model. It is the direct sale of merchandise by the manufacturer to the buyer. It will involve e-retail and a modified supply chain to suit the direct home delivery of the products. Several companies, during the COVID-19 situation, are running successfully using the DTC model and are expected to continue doing well long after the pandemic is over.
“Partnering with supply chain service providers also seem to be the new norm. Alibaba, for instance, is partnering with Cainiao Network to deliver goods within 24 inside China and within 72 hours to the rest of the world. This will reduce the delays in the supply chain improving customer satisfaction and increase returning customers”.
The increase of Omni-directional sales for retailers:
The retail sector along with experiential sales will have to focus on Omni-directional trade to increase their profit margins during the post-COVID-19 scenario. This will include online sales, buy online pay at the store (BOPIS) and buy at the store and collect at-home systems. These additional methods will increase the store-customer interaction, increasing the chances of sale of store merchandise.
Omni-directional sales can further be boosted through digital marketing and merchandise personalization for the customers. Understanding the potential for Omni-directional sales, retailers have started investing in the concept. Bed Bath and Beyond Inc, for instance, have invested $250 million towards Omni-directional operations for 2020 and ahead.
It has also planned to convert 25% of its closed stores in the US and Canada region into regional fulfillment centers allowing for quick delivery of products locally. These regional fulfillment centers will account for 44% of all daily orders. They have also seen a 90% growth in the net online sales during the first three weeks of April 2020 indicating the potential of online sales along other channels for sale.
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