How retailers can turn the coronavirus crisis into opportunity

Dylan Brown
by Dylan Brown

With many countries taking a firm stance to prevent coronavirus from spreading, the number of retailers announcing plans to shut up shop is growing by the day – Nike, Urban Outfitters, Nordstrom, Calvin Klein, Sephora and Abercrombie and Fitch are the latest to announce closure plans.

… and the waiting game begins.

Well, that’s not entirely true – there are some steps retailers can take to build stronger relationships with their customers and make the most out of an awful situation.

Bain & Company’s Situational Threat Report Index, which combines official data with its own modeling, suggests leadership teams “should be focused on activating first-level contingency procedures, such as mitigating health threats to their workers, restricting nonessential travel to avoid stranding employees in quarantine, reviewing and even deferring nonstrategic investments, and planning for a three-month recession.”

Here are some initiatives retailers should impose to keep their store associates and customers safe, build stronger relationships with customers and turn the coronavirus crisis into an opportunity for innovation:

Lessons from China: Retailers need to act fast

In a matter of mere months, the coronavirus pandemic has made its way from Wuhan to mainland China, and is now tearing its way through the rest of the world.

While China’s retail sector and economy has been hard hit by the virus, as the number of confirmed cases and deaths per day continues to decrease, there is talk of the economy returning to normal in the coming weeks.

Raymond Yeung, the chief economist for greater China at the Australian banking group, ANZ, told the Financial Times that economic activity in China will likely return to normal by the second week of April as strict measures to reduce the spread of coronavirus are eased.

For instance, Apple has now reopened 38 of its 42 stores in Mainland China after a month of closure – although the technology retailer is now closing all stores outside of China.

As we’re currently seeing taking place across the globe, when coronavirus first hit China, grocers were struck by wave after wave of panic buying, as people stocked up items with a long shelf life. For other non-food sectors, sales plummeted as consumers avoided shopping malls and commercial centers.

Then, as shops started to close, the demand for contactless delivery methods became a necessity for those that remained open.

The demand for online channels accelerated rapidly, particularly delivery and in-store collection of items – but meeting those demands proved challenging.

For many retailers, the impact on China’s retail market has been unscalable. Adidas warned sales in the first quarter of its financial year would drop as much as €1bn in Greater China alone, and around €100m in Japan and South Korea, the Guardian reported. As the global sportswear brand makes approximately a third of its sales in Asia and relies heavily on its local factories in the region, the fall in revenue could wipe between €400m and €500m from its operating profit.

Safety first: Protect your employees and customers

Most brands enjoy the attention that comes with having a strong brick-and-mortar presence, yet with great power comes great responsibility. Retailers that don’t follow the precautions and health guidelines recommended by the authorities could face a strong backlash in public support.

That’s why the key priority should be to keep your consumers and employees safe. Retailers can do this in a number of practical ways; sending store associates home if they feel unwell, and implementing screening tests, as some employees will insist they are fine.

Another important initiative is to implement contactless service options wherever possible, such as self-checkout systems, and equipping employees with sanitary or personal protection equipment such as disinfecting wipes, gloves or masks, and encouraging them to wash their hands frequently.

It’s also vital that stores carry out deep-cleaning on commonly touched surfaces in stores, as well as elevators and toilets, and that they communicate these standards with customers and store associates to put them at ease.

For stores that do remain open, or when stores do eventually reopen, leadership teams should prepare for labor shortages and implement back-up plans. Bain & Company’s partner and leader of the firm’s Global Retail practice, Marc-André Kamel, advises head office and store associates to adopt a “red and blue team” approach, which involves splitting core functions into two teams that can go into the office or store only every other day, or are segregated within the office. This way if someone gets sick on the “red team,” the “blue team” can still function while the other is quarantined.

The time for innovation is now

As consumers are encouraged to self-isolate or significantly reduce their trips out in public areas, they have changed the way they shop, too, According to a US study by First Insight, 44% of consumers have allowed coronavirus to impact their purchasing decisions and 35% said the coronavirus is impacting where and how they shop – and this number will no doubt increase in the following few weeks/months.

While many retailers are understandably struggling to cope with the new set of challenges posed by coronavirus, others are thriving. Video conferencing platforms like Zoom are high in demand, online-only supermarket Ocado is the busiest it’s ever been, video streaming sites like Netflix and Amazon Prime are experiencing high traffic, and disinfectant companies like Reckitt Benkiser are, perhaps unsurprisingly, struggling to keep up with demand.

And a number of retailers are identifying simple ways where they can adjust their offering to meet the needs of coronavirus weary consumers, such as Deliveroo. The food delivery service said it will enable contactless delivery, allowing customers to have their orders dropped off at their doors without making contact with drivers.

Luxury goods company, LVMH, recently announced it will use its perfume production lines to manufacture hand sanitizers and deliver them free of charge to health authorities to prevent the virus from spreading.

Retailers should seek to scale their existing online offering and expand in-store collection for online orders where appropriate. They should also consider external partnerships to accelerate online deliveries, as workforce shortages could easily become a barrier.

In a new report advising retailers how to cope during the coronavirus crisis, PwC says retailers should utilize data analytics to identify the build-up of inventory caused by the lack of consumption and develop responsive and customized solutions. For instance, if the customer group is a younger audience, retailers/consumer goods companies can promote using live streaming combined with e-commerce to encourage online ordering.

Retailers need to offer remote phone and video support

While retailers are starting to close their stores and branches, the demand for expert advice and support still exists – and one of the best ways to achieve this is through offering remote telephone and video support.

For instance, retail banks NatWest and RBS enable customers to schedule appointments with video bankers over the phone or video, which in turn enables bankers to schedule future appointments for preferred dates and times through a calendar interface. The video banking appointment scheduling software, provided by Qudini, sends confirmation and reminder text and email messages to ensure customers know when their appointment will take place.

Coronavirus will no doubt have a huge impact on the profit margins of retailers over the weeks and months to come, but they must act now to ensure their customers have access to the support they need by investing in their digital offerings.

For more information on video and phone appointment scheduling software, book a demo with one of our consultants today.

X

Thank you!

A member of our team will be in touch.