COVID-19 has destroyed the fun of shopping –visiting our local stores or taking the family to a favorite restaurant is currently not possible, and a visit to the supermarket has been transformed from a pleasant part of life to a high-risk activity. Going to the shops is now a high-risk necessity. Gone are the days of a visit to a Shopping Mall – browsing the shops, looking at new products and planning purchases – we will all be avoiding social contact as much as possible, wearing protective gear for months to come, and getting what we need, as safely and as quickly as possible.
What are they actions retailers, small, medium or large, need to take now to manage the current situation and to get fit for a very different new reality?
- Manage Risk – and Be Seen to Do So
- Everyone in outlets and stores needs to be briefed and repeatedly reminded that human interaction leaves then open to infection – serving staff, cashiers, shelf stackers, warehousemen. These staff need protective equipment and routines and time to perform the necessary hand washing – and may well also need expert help to manage the stress!
- Transmission from surfaces, presumably including carton and plastic packaging, is a factor that needs to be considered with people checking and verifying deliveries being particularly at risk. Retailers operators should be looking wherever possible to insist on delivery by pallet and avoid products being handled by hand. Can delivery notes be moved to electronic acknowledgement?
- Consumers need to be reassured that outlets are taking precautions. Big outlets will be obliged to implement Govt instructions, but some have already been ahead of the game in implementation. Smaller outlets need as a bare minimum to have all staff in masks and gloves, and to put in surface sanitation routines for door handles, counter surfaces and PIN pads.
- Retailers need to ask now if they are going to continue to accept cash payments – taking cash has obvious risks.
- Ban Salesmen from suppliers and merchandisers from your premises – these people represent a risk to your staff and customers. Switch to ordering by ‘phone and email.
- Get a Home Delivery Capability and more
- Only operators who have a Home Delivery capability are generating cash-flow, and cash is going to king in the coming months. Currently demand is vastly exceeding demand not just in Mauritius, but in every market in the World. Whilst may take time to build the full suite of website, on-line transactions and planned delivery systems the key restrictive element now is delivery capacity. Even starting a delivery service with limited coverage is going to allow you to capture cashflow.
- There is a need for retailers to react fast In current circumstances. With retail outlets being seen as high transmission risk places, Govt may limit access to retail outlets post lockdown and push for key suppliers to move to a B2C home delivery system, bypassing retailers. Hence the need to ramp up fast Home Delivery and Pre-order / Collect systems.
- Some restaurant chains are now operating Home Delivery, but managing demand v capacity is a huge challenge. Planning just how to configure the delivery operation, and ramping up scale gradually is important, to meet customer expectations and limit frustration.
- A clever tactic might be to look at partnership or alliance with organizations and companies who already have a distribution capability. Who is partnering with the big courier services, the gas distributors, even the tobacco and drinks operators? They have existing fleets and know the ropes. Those retailers or other operators (importers, manufacturers and distributors) who tap into these networks will be able to move significantly more volume, do more transactions and benefit commercially.
- Every retail outlet is going to need to be geared to take credit and debit cards, money transfers such as Juice And My Money or is going to lose a high proportion of business – what has been to date a convenience factor has become a key element in determining where to purchase. Are you demanding, and getting the right support from your bank?
- Start building data bases with not just contact names and addresses but with customer preferences so that you can do push marketing to target clients – whilst respecting Data Protection rules. And building a database is fine, but having someone who can analyze and formulate the push marketing offers is essential
- Rationalize your Product Ranges
- Now is the time to look at the number of items that you carry on your shelves and menus. Carry out an ABC analysis and determine what are your fast moving, and hopefully profit generating products is for so many retailers. Be ruthless – cut out the slow- moving SKUs which choke stock turn and take up shelf space.
- Put in true category management systems where you analyze what are the driver products and get them positioned to maximize revenue
- Look to eliminating the small suppliers and move to a maximum of 2 suppliers by category – in the future consumers will be looking for value for money and be less interested in brands.
- Rethink your Business Model
- Study the advantages of moving to consolidated supply from a limited number of suppliers rather than operating with a complex matrix or look to move to direct sourcing for main product lines.
- Rethink how you generate orders – can you partner with other organizations to drive traffic and order capture. Remember all operators will be scrambling for less money as we pass the peak of COVID-19 and confront the inevitable recession -disposable income is going to be down for years to come
- Analyze what square meterage you are really going to need as you face a market with markedly less purchasing power and a decided aversion to visiting Retail outlets often.
- Take this opportunity to cull less profitable outlets and pare back staff requirements to the minimum.
- Think Consumer
Innovation focused on the consumer will be the key in the next decade. My predictions are:
- The Retail Universe will shrink fast – many smaller operators will cease trading. In grocery the swing from Traditional Trade to Modern Trade will accelerate fast. For all retailers B2C volumes will increase, as potential customers avoid social contact.
- On-line shopping and home delivery will be an essential for commercial survival, but purchases from overseas retailers will also increase fast…
- Shopping Malls will struggle to attract customers and retailers – and there will be many closed premises as less footfall renders rental of premium space unprofitable.
Discounters and cut price operators will see strong growth as consumers chase after Value for Money (VFM) rather than choosing established but more expensive brands.
- Retailers will need to be strongly differentiated with value added offers such as own Credit Card and Loyalty schemes linked together and repeated special offers, home delivery / click and collect facilities.
- Medium sized retailers will struggle to survive and will either consolidate to make new groupings or go to the wall, lacking cash to invest in innovation and delivery services.
- Cash and Carry style operations will see significant growth as consumers buy in bulk.
- Consumers will want reassurance on the hygiene and safety of both retail outlets and home delivery services – this will be a key element in communication.
- Consumers will be looking for reassurance on products they select – ISO certification and local laboratory testing will be an increasingly important factor.