Strategies for Retailers Against Effects of Coronavirus?
The COVID-19 doesn’t need to spread over the planet to do damage – its secondary effect has already covered the globe: fear. Fear can’t be seen under a microscope – but, it’s all-too visible in the up-and-down spasms of The Dow Jones Industrial Average. How will COVID-19 effect the world of retail: the August selling season, and the holidays?
As of this writing, we can speculate that August is a good bet to suffer – however, the Fed has lowered rates; and will likely continue to do so. The virus has spread, despite travel restrictions. Much is riding on when Chinese factories will be running at full capacity- and getting us back to a stable supply chain. In New York City I don’t see much of a decrease of people on the street, but I expect that to change quickly. More companies will allow their employees to work from home. As consumers are weary to appear in public, the virus will be another boon to Internet retail. Interestingly, the panic to find cleaning supplies and flu medicines brought people to their feet and did the opposite- brick and mortar store shelves were emptied overnight, like the good old-fashioned Black Friday promotions used to do. It will be interesting to see if 2 Day delivery can be maintained, I suppose it won’t in certain areas.
Given the current state of the supply chain, retailers will have to leverage even more of the resources of its vendor base to manage inventory. Suppliers are already compelled to vigilantly monitor local sales and inventory, forecast, replenish and perform more robust demographic and geographic analyses. Essentially, vendors must know the retail business better than the buyer does! Enhanced Retail Solutions provides retailers and suppliers services to turn their inventory faster, forecast more accurately and provide deeper visibility to sales. Just as the CDC and the NRF are preparing for a pandemic, retailers and suppliers can inoculate their business against the secondary effects of COVID-19. Here are some strategies Enhanced Retail Solutions’ clients will implement to weather the volatility:
- Increase POS Trend Tracking
Within your reporting and analysis discipline, shorten the window on POS trend tracking. Even in quiet times, we strongly recommend that vendors review this data on a weekly basis. Where data is available, do it on a daily basis – rethink how long you usually wait to call something a trend. Then adjust forecasts based on necessity.
- Decrease Store Weeks of Supply Models
A time of retail crisis is not the time to allocate precious resources to non-essential sku’s or stores. This requires a prioritization of inventory – a critical strategy when sales are down. Now is the time to institute a Vendor Managed Inventory program. ERS makes it easy for suppliers to monitor store level ROS and inventory levels. The data enables changes to weekly allocations, as needed. The virus may affect only select markets -non-effected markets could see increases; and effected areas could see decreases.
- Increase Wholesale Weeks of Supply Models
This may run counter to management’s thinking, but this strategy makes up for lost sales. It will compensate for the pent-up demand that comes from widened lead times in countries that are impacted by the virus. We advise our clients to prioritize the essential sku’s.
- Clarify Clusters
Stores in a particular cluster can be found in geographically adjacent local markets, but more often they are not. The key to the concept of clustering is demographics. Should COVID-19 effect the retail world, it will be essential to know a cluster in depth. Vendors know who their customers are – they create the goods consumers buy and need. Too often however, retailers don’t have the time to discern a particular market.
- Open Minds and Lines of Communication
To weather the secondary effects of COVID-19, buyers and suppliers will need to be in constant contact. That’s the key step in implementing these strategies. They are in this together! We empower them to step inside each other’s shoes and become partners on inventory strategy.
Hopefully, the COVID-19 crisis will soon be averted. We’re an innovative species – technology has made our lives richer. Whatever comes to pass, the science of retail is our business. Enhanced Retail Solutions keeps business healthy and thriving. Contact us today to learn more.