Retailers, are you ready for the New Normal?
Image Credit: Anna Shvets
Top 4 Key Approaches for Retailers to better prepare for the “New Normal”
Due to the impact of COVID-19, consumer needs and preferences are changing faster than ever. This has made retailers’ tasks even more challenging as they are adjusting to the new normal and at the same time bolstering profits while keeping pace with the ever-changing needs of consumers.
Leading retailers around the world have deployed modern technologies and grounded themselves to the fundamentals to better cope with these uncertain times. We are seeing leading retailers taking four key approaches to better prepare themselves for the new normal.
1. Adopting AI & advanced ML algorithms for more accurate forecast:
Ensuring the right products and the right quantity of those products are replenished in the right channel is fundamental to succeed with changing consumer preferences. Forecasting techniques and algorithms that rely purely on internal historical data no longer reflect today’s far more challenging environment. The basket size and product mix that consumers are buying during pandemic have drastically changed. For example, they visit stores less frequently, they buy products in bulk, they cook more at home, they are exploring contactless shopping and contactless delivery methods, and they have shifted to digital channels and digital technologies to adjust to the new normal.
Some retailers are far ahead and some are starting to gather, clean, and explore internal and external data to get a holistic view of the key influencing factors to help make accurate predictions of demand forecast, reduce stock-out situations, and adjust the size of inventory to optimize space, labour, and capital investment. Matured and technologically savvy retailers have adopted advanced analytics capabilities and tools to better plan their pricing, promotions, and assortment every day for each channel, such as, brick-and-mortar channel, online channel, social and 3rd party marketplaces. Some retailers are improving forecast granularity by adjusting their forecast to hourly, or in minutes for time-sensitive categories, such as ready-to-eat meals, meat, seafood, and deli products.
2. Optimizing store layout and shelf display:
Many local authorities around the world are following stricter measures to curb the spread of COVID-19 by putting social distancing rules in place, and mandating to wear a face-mask while shopping for essential items. As part of these measures, retailers may have to adjust their store layout, and shelf display based on fluctuation of consumer footfall throughout the day, and the flow of their shopping journey within the brick-and-mortar stores.
Leading retailers are using Integrated Planogram and AI-based Computer Vision technologies to manage their assortment and sales-volume variations combining with projected sales and targeted frequency of shelf replenishment. This helps reduce over stocking of shelves, avoid stock-out situations, keep the displays attractive and shopping journey to comply with the local authorities’ requirements.
3. Deliver personalization & improve customer engagement:
There is no doubt that consumer behaviours including their preferences, and life-style choices have dramatically changed due to the impact of COVID-19. To succeed in this situation, retailers must understand what are customers buying, which channel are they relying on, and what time and location do they prefer products to be picked-up or dropped-off. Moreover, retailers must tap into their social graphs to understand the behaviours and interests of their target audience. Retailers must collate these two critical data points from internal and external sources, to better predict next best offer, deliver personalized price & promotion, and offer product recommendation.
This will help retailers maintain long lasting relationship with their customers, build brand loyalty and customer advocacy to run a sustainable business. They can achieve this through modern data platform which will help them breakdown data silos from their internal applications, and bring in external data to recognize and predict a new pattern, while seamlessly sharing the data across the organization to deliver unforgettable experiences to their customers.
4. Improving communication & collaboration key stakeholders:
When COVID-19 was declared a pandemic there was an immediate impact on the supply chain where consumers started to panic buy which resulted in overstocking of essential items. This has put a lot of strain on replenishment, order fulfilment, and customer deliveries. It is necessary for retailers to rethink and digitize their supply chain to create agility, resiliency, and real time visibility into end-to-end supply chain network. Having a constant communication and collaboration with key stakeholders internally, for example marketing, procurement, supply chain, and externally with suppliers, 3rd party logistics services companies is key to restocking the products both in-store and in-warehouse, and customer deliveries in a timely manner.
We are seeing retailers who have prior investment in communication and collaboration technologies going through this transition in a smoother manner. These technologies can help retailers develop a stronger communication methods between key stakeholders and avoiding lengthy email chains that go back and forth or avoid attaching large files on emails to internal stakeholders and suppliers when collaborating on specific project or task. Retailers can chat, do voice & video calls, and set up meetings with internal stakeholders and suppliers, collaborate on important files to avoid any miscommunication and misinterpretations.
In summary, different retailers are trying different strategies to shape up the new normal. One of the reasons being every retail format and niches are unique in their own way. However, in general we are seeing these four common themes that retailers are focusing the most and investing their resources to define and shape their new normal. Ultimately, the goal for any retailers are to give consumers more of what (goods & service) they want, when (delivery time) they want, and where (delivery location) that they want, while maintain sustainable business and healthy profit margins.