With many segments of retail having dealt with store closings and furloughs, the retail sector has been hit hard. In many ways, the coronavirus has only magnified and accelerated the massive transformation going on in the retail industry.
As those retailers face difficult questions related to safely and profitably resuming operations, here are seven actions retailers can take now.
For a more exhaustive list of actions that applies to businesses of all industries, download the 7 Actions Businesses Need to Take Now white paper and register for one of NetSuite’s Virtual Events Series.
Do A Business Model Assessment for Ecommerce, Omnichannel and ‘Contactless’ Options
The grocery sector has received a lot of attention for a huge uptick in ecommerce orders for both curbside pickup and delivery, but retailers of all types and sizes have plans to offer order pickup as part of their phased re-opening. Buy online and pickup in store (BOPIS) has been around for some time, and it’s not just big-box retailers and grocery chains offering these options. With some department stores filing bankruptcy, local businesses may have an opportunity to earn some of that wallet-share.
Small businesses have been able to adapt and embrace an omnichannel approach in order to meet shifting buying behaviors. Real-time inventory at the store level, order information and ecommerce must be unified to execute BOPIS, and the pickup process should be optimized for speed while providing a positive customer service experience.
Even before the effects of COVID-19, ecommerce sales grew 14.9% in 2019 compared to 13.6% in 2018. And that growth will continue in a big way. Customers we’ve spoken to in retail categories like furniture, food and outdoor recreation have seen a spike in online sales ranging from 200-800%. Opportunities are emerging in ecommerce as well. As Amazon has prioritized household, sanitization and medical goods, customers are becoming frustrated with delays. This presents a unique time to win back ecommerce customers who have strayed.
Getting an ecommerce solution in place doesn’t have to take months and hundreds of thousands of dollars either; consider solutions that utilize leading best practices and are unified with order and customer data from all your channels. Getting up and running in a month or less is possible with the right technology partner.
Assess Health, Safety, Legal Conditions for Reopening Physical Stores
As state and local governments begin to lift shelter-in-place orders, many retailers are legally allowed to open their doors again. But will shoppers return to brick-and-mortar stores in the same numbers they did pre-pandemic? Many will likely remain uneasy about going to crowded places for some time, and still others may be hurting financially from the crisis.
Whether local jurisdictions require specific safety measures or not, retailers need to consider implementing policies that prioritize both shoppers’ and employees’ health, following the lead of essential retailers that have already been doing so. These may include providing masks and/or gloves to employees, installing plexiglass shields at checkout, limiting the customer capacity in stores and regulating the direction of foot traffic through the aisles using signage.
Frequent disinfection and cleaning are critical, as well. Paul Laredo, CEO of commercial janitorial company iNX, recommends businesses hire a porter to clean their space throughout the day.
“If your objective is to try to minimize exposure, then you’ve got to make sure that throughout the day as people are pushing open the restroom door, as people are touching countertops, that those things are constantly being cleaned and wiped down . . . as long as you have personnel there,” Laredo said.
It may make sense to operate on limited store hours during early phases of reopening in order to control overhead. Some retailers will offer “appointment” shopping in order to deliver a safe yet engaging experience. Taking clear precautions will only improve your customers’ confidence in your brand. Ensure your customers are aware of the safety measures you’re taking to reduce any fear they may have of returning to shop in your store.
Any modifications to store operating hours and any local limitations on capacity will impact the workforce. Many retailers will need to reallocate staff from in-store positions to back-office functions to assist with ecommerce fulfilment. If foot traffic is slow and there are multiple store locations, one option is to use one store as a packing center and the others for pickup rather than staffing all locations with store associates.
Some employees may be “at-risk” or have caretaker obligations that impact their ability to return to work, so plans should be drawn up for those scenarios, as well. Be sure to stay up to date on Centers for Disease Control and Prevention (CDC) and Occupational Safety and Health Administration (OSHA) and state guidelines.
Conduct a Financial Check
Assessing your cash flow and the operating costs associated with reopening some or all of your physical locations will be absolutely critical. It may make sense to operate on limited store hours during early phases of reopening in order to control overhead. Staggering return to work dates and splitting shifts will also likely benefit many retailers from a cash flow perspective while helping keep employees healthy.
For those who have stores or warehouses spanning multiple locations with varying regulations and expiring shelter-in-place dates, real-time visibility into inventory will also be imperative so they can reallocate inventory as needed.
“Literally every dollar that we can conserve, we are [conserving]. We’ve got a finance team that’s been working 24/7 on this and other people just pitching in,” Alton Lane President and co-founder Colin Hunter said. “I spent a few hours this morning looking line by line again through our budget, like ‘Alright, what else can we pull back, shift?’”
Get even leaner on inventory, scrutinize metrics like turnover and fill rate, and consider all avenues to liquidating stock. If you’ve had to furlough or layoff workforce, take a hard look at how that may impact your ability to drive revenue and adjust accordingly. Once those initial determinations have been made, it may be time to look at some of the more creative business loans available, like loans using customer invoices as collateral that might be attractive to smaller retailers unable to get the same favorable terms from suppliers as their larger counterparts. Alternatively, a business might be able to use invoice factoring, which involves selling its receivable invoices outright, expecting 70-85% of the value.
Do Scenario Planning for Supply Chain, Inventory, and Demand
Reopening will require taking stock of the state of your suppliers and inventory. Are the vendors you’ve historically worked with operating as normal? If there are limitations in availability or delays in distribution, you’ll need to plan for multiple scenarios. Those may include finding new suppliers or opting for different products. Determining the right amount of inventory based on changes in demand will also be important – are you able to model based on 25% or 50% of typical traffic, for instance?
“I would rather plan more conservatively our [financial] projections through the rest of the year and be pleasantly surprised that things open up sooner or that things rush back faster than the opposite,” Hunter said. “So we set things up where we adjust our models multiple times a week based on actuals, what we’re seeing or what we’re reading.”
On the flip side, retailers with excess inventory may be able to sell it to distribution partners in order to generate some cash. Inventory management, planning and purchasing will need to be closely evaluated to determine the adjustments needed based on shifts in consumer buying behavior.
Emphasize Customer Retention and Acquisition
Focusing on digital channels to establish and maintain strong customer relationships will be an important factor for success. Staying true to brand values and delivering a compelling experience at all stages of the buying cycle will be the key to securing customer loyalty and profitability. Your message shouldn’t be solely focused on converting a sale, but should convey your company’s mission and provide value to attract new potential customers and stay top-of-mind in between purchases.
Alton Lane sent handwritten notes and other messages to customers to simply check in on customers during a difficult time. It also launched a contest for a $4,000 closet overhaul, donating $2 to Feeding America for every entry.
Retailers of all sizes will need to embrace social media, SMS marketing and email marketing in addition to ecommerce in order to stay connected with their customers. Streaming video services like Instagram and Facebook Live are popular platforms for how-to, product care or lifestyle content. Consumers care about the social values behind the brands they engage with and purchase from, so be sure to highlight initiatives your company has taken to support the community.
Luxury handbag company Hammitt turned its Los Angeles showroom into a broadcasting studio for Facebook and Instagram livestreams and virtual trunk shows. These broadcasts not only highlighted new products but included interviews with everyone from boutique owners to charity partners to TV hosts. It’s also offering customers 30-minute styling appointments via Zoom.
“The hardest thing about this was people are so used to doing things a certain way,” Hammitt CEO Tony Drockton said. “But if you just open the mind, it’s like, ‘Wait a second, there’s so many more ways to do business that weren’t being used because you didn’t have to.’ What I decided early was we wouldn’t fight this, instead we’d lean in hard and figure out where the opportunities were.”
Communicate early and often about any new or prioritized channels via email marketing and social media. If you’re new to selling online, select an ecommerce solution provider that can help you build a great online shopping experience and has the expertise to guide you in SEO best practices. That will ensure new and existing customers can easily find your website.
Evaluate Packaging and Pricing
For most retail categories, spending has decreased and is expected to remain lower at least for the short-term. In order to generate sales, many retailers are discounting at Black Friday/Cyber Monday rates. Rather than simply cutting prices, consider bundling value-adds to increase loyalty while protecting margins and customer lifetime value. If you’ve established your brand’s values, your customers will be more likely to remain loyal and purchase from you when they’re able.
“I think the biggest mistake any brand or company made in March was to just throw up a sale, discount product,” Drockton said. “I think certain companies maybe thought they had to do that, but I think if they would’ve waited like we did, they would’ve seen a much bigger amount of support on the other side of the pandemic. During [the height of] a pandemic, nobody wanted to be sold, I think, but people did want to support and they wanted to connect.”
Align your Team
Lastly, make sure that all parts of your organization are aligned and focused. While it’s impossible to eliminate all uncertainty about the future, be sure to communicate with your employees clearly and frequently about your strategy, tactics and objectives. For team members who are customer-facing, make sure they are comfortable with the message you’ve established regarding your brand’s approach and the policies in place.
The retail industry will need to continue to be agile and prepared to adapt as the situation and consumer priorities evolve, as there will no doubt be several phases to retail’s reopening.