I recently read a Harvard Business School article which was published in 2009 during the last global recession which was caused by subprime housing collapse. The study reviewed which businesses failed and which won in past recessions. As I read further, it amazed me that much of what had been discovered still goes largely ignored by businesses today, until now.
According to the article, only 9% of businesses flourish post recession and they have two major things in common:
Create Operational Efficiencies: Not through layoffs but by taking off the rose-tinted glasses, removing the ego, and taking a firm hard look at their people, processes and technologies.
Invest in your Customers: They took a long term view to invest in their customers and their people.
So, has the COVID-19 Pandemic been a transformational wake-up call for retail, with multiple shots in the arm, and a serious kick up the back-side? Yes.
Drawing on the situation with the COVID-19 pandemic today, has this been enough of a transformational wake-up call for retail? I think yes.
What will change and How can Retailers plan?
To start, let’s break down these factors to explore what will change and how retailers can start thinking about their futures again.
- Automate: In past recessions, the cost of shipping rose by 5-10% once the economy recovered. One way to manage these increased costs is to look at automation. Automation can be feared for obvious reasons, not to mention, it’s hard to do and harder to scale. Finding clever ways to automate processes in your supply chain that are mundane for workers, will allow retailers to gain efficiencies, drive costs down, and put people to work on innovation and change. A side benefit here is that talent shortages are not new to retailers. By offering talent something fun, purposeful and cool to work on, will help you to differentiate your offering.
- Visibility: What started as a massive shortage of goods from the first mile, led to panic buying in the last mile. Systems used by retailers to manage the first, middle and last miles are typically a mixed bag of legacy and manual processes, with no single view or visibility into the current state. Retailers should think about modernising their supply chain and investing in technology that can provide that insight to help plan or adapt quickly when future disasters hit.
- Own your brand: To further expand on this point. Retailers have an opportunity to own their brand, end to end. With more people likely to shop online when this pandemic ends, retailers need to consider the brand experience their customers are receiving. Do they really own the brand experience, or offload this to multiple technology partners and carriers to manage? Those that own their brand, end to end, will build mass loyalty.
- Communicate: Something that I have taken as a positive from this crisis is the increase in communication and connection I am having, not only with my colleagues but my friends and family. The communication we are receiving as consumers from retailers has improved immeasurably in a mere matter of days. This is something that will continue to differentiate the 9% from the rest. In bad times and good, people want the truth, and they want clear and constant information. Without this, there is no possibility of connecting with your customers.
- Speed, Convenience, Cost: Getting the right mixture of the Amazon recipe of speed, convenience and cost will help retailers thrive in the post COVID-19 era. Focus too much on cost, you will sacrifice speed. Focus too much on convenience, you sacrifice cost. Combined with the above subjects, retailers can be successful.
- Data: Finally, retailers need to bring this altogether, into a place and take insights from it. Without the data, and access to work with it, retailers are shooting in the dark.
Until the day we can pick up where we left off and resume our daily norm, there is a lot of mindset shifting and honest reflection that can be done by us all. Retailers are in a unique position that has been forced upon them to change, and by following age-old recommendations, can be successful in the post COVID-19 era.
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