It seems incredible that barely a month ago, retail’s focus continued to be around how to embrace the change being brought about by the digital revolution. And then came COVID-19 which hit China in January and then in a matter of weeks swept through Asia to Europe and the Americas connecting all countries of the world.
Retailing around the world has found itself right at the heart of this global crisis. Great swathes of the industry have been forced to close stores and many thousands if not millions of people have either lost their jobs permanently or temporarily.
E-commerce has seen unimaginable growth figures matched only by what has happened in the food and pharmacy retail sectors. Panic buying around the world emptied shelves and supply chains have struggled to keep-up despite no lack of product availability. Retailing has had to learn and adapt with incredible speed and skill to fulfill its enhanced role in literally feeding populations.
The World Retail Congress (WRC) launched this first issue, a regular, global round-up of experiences and reports from retailers, retail advisors and commentators. The publication is a collection of open and honest accounts from a vast range of retailers sharing how they coped or are coping with the COVID-19 pandemic and how it affected their customers and employees. This crisis has completely ripped-up the retail playbook and as one WRC contributor says – it is going to make everyone think hard about how retail can recover from this and indeed what it may even look like in the near future.
WRC will be producing an updated collection of global reports every two to three weeks to not only give the retail community a firsthand insight into how retail around the world is meeting the immediate challenges, but we will also begin those vital and essential discussions about the future shape of the industry. It also underlines how vital role retail plays in national economies right down to the smallest communities. The report contains many of the cases which retailers have implemented, developed and funded that go way beyond their normal commercial role in order to help.
Titled as ‘Week 1’, the report consists of articles and analysis by global experts on different segments of retail undergoing the epidemic crisis. Apart from these, there are opinion pieces on how different countries are dealing with the challenges.
Thinking Beyond The Short Term by Boris Planer: As the industry continues to gauge the impact of the COVID-19 outbreak on everything from the economy, the job market and consumer confidence, down to retail spending, retailers and brands are working hard to make sense of early data and evidence, so they can define short term measures to respond to fast-changing consumer behaviours. Retailers around the world have been great at taking first steps in March to manage in-store demand, protect employee and shopper safety, safeguard supply chains and provide support to the communities.
E-commerce, and especially market-leading e-commerce platforms like Amazon, Alibaba, JD.com and Flipkart with their advanced logistics and fulfilment capabilities, will emerge as winners. In the Western hemisphere, Amazon is revealing itself as part of a safety-critical national infrastructure, which could trigger some political regulation going forward. On a wider note, governments might also consider the need to de-consolidate food markets. Retailers and brands will seek to shorten their supply chains, in order to hedge themselves against future political shocks. Retailers will review their store concepts to make them more flexible and crisis-proof. (Click to Read More)
Harnessing the Benefits of This New Normal by Tom Charlick and Katherine Fiander: Evidence from China and Italy indicates that we can expect a 20-30 percent reduction in consumer spend as this crisis continues, but the challenge is hugely variable across the sector. For some the challenge has been dealing with ‘surge’ demand, and for others it has been coping with the complete loss of channels to market.
In the face of these acute pressures, we have rapidly seen retailer playbooks thrown out the window. The majority of retailers have spent their first 10 days fire-fighting, rapidly adjusting to external developments, deploying business continuity programmes, and moving to a mode of rapid cash preservation. But as a short-term (medium-term) norm becomes clear, senior executives are now starting to ask sensible questions about the long-term implications of this crisis on the market and their business. (Click to Read More)
SPAR International by Tobias Wasmuht: SPAR has internationally been focusing on key areas, working in close collaboration with an emergency response team from around the globe on data dissemination, joint purchasing and dialogue with regulatory bodies. The speed of communication based on learning’s from countries where COVID-19 first made its presence felt has been key for SPAR Partners coming to grips with the pandemic. By working together, SPAR Partners have been able to rapidly adapt the learnings to suit their market conditions. Additionally, and key to maintaining visibility of the global impacts of COVID-19, is the continual liaison with international industry analysts to maintain full visibility on supply and purchasing trends as well as anticipated legislative changes. SPAR International is centrally sourcing essential resources.
As the first country to implement decisive measures to reduce the spread of the virus, China offers key learnings on dealing with the COVID-19 outbreak. SPAR Partners in China have successfully continued to serve customers amid measures by the authorities that had a dramatic impact on business operations, making their strategies valuable learnings as the outbreak continues to affect other regions. (Click to Read More)
Walgreens Boots Alliance by Alex Gourlay: Walgreens BootsAlliance (WBA) has been on the front line of the coronavirus epidemic. Within their supply chains, they adapted quickly to restrictions on direct exports from China, Hong Kong and India, leaning on their supplier networks to find alternate sourcing. We increased inventory in seasonal illness medications – fever and cough/cold remedies – and have kept these items well-stocked. In categories depleted by panic-buying, they have worked with manufacturing partners around the clock to accelerate production, and have increased delivery frequency to stores with our fleets and in partnership with FedEx, setting company records in amount of volume moved in some essential categories. (Click to Read More)
Lessons from China by Brad Burgess and Ella Kidron, JD.com: With the epidemic outbreak just prior to Chinese New Year, JD took immediate action to organise a team dedicated to ensuring business would continue while coming together to fight COVID-19.
Richard Liu, Chairman and CEO of JD.com, introduced this recently during the company’s earnings call on March 2nd, “In addition to ensuring timely supply and delivery of daily necessities for unmet needs, JD Logistics opened a dedicated channel for relief materials across the country to assist Wuhan.”
JD’s supply chain – recently recognised by China’s State Council as setting the supply chain standard for China’s “new infrastructure” – was called upon by the Hubei provincial government to build a supply chain management platform, bringing much needed emergency supplies to the people at the epicentre of the crisis. (Click to Read More)
China & Hong Kong by Susan Sams, The Lane Crawford Joyce Group: Mainland China and Hong Kong were part of the first wave of COVID-19 but over the past three months the response from the Central government in Beijing, the municipal governments throughout the mainland, and the Hong Kong SAR Government, have varied and the mainland and Hong Kong are now at different stages of the outbreak cycle. A deep analysis of how challenges and difficulties were dealt in this time period. (Click to Read More)
India by B.S. Nagesh, Shoppers Stop Limited: Modern retail contributes about 15 percent of the total business whereas most of the consumption is happening through the traditional retailers. In the food and grocery category traditional retailers (‘Mom and Pop Shops’ called Kiranas) contribute to 95 percent of the total retail business.
The Government of India (GOI) declared a total lockdown for three weeks starting midnight of March 24 except for essential services. The food retailers and Kiranas are all braving it up to keep their stores open to keep the kitchens going for 1.3 billion Indians. The action was well appreciated by most Indians from a health perspective, however being an unprecedented move most of the small businesses do not have a means or a process to tide over this situation.
As April 2, 2020, the country has not reached the community spread situation and we believe the next two weeks are critical for assessing the impact of COVID-19 on India.
In these circumstances the GOI has announced two packages:
– To help the poor and give them relief during these trying times.
– To give relief to individuals, SME’s and businesses for payments of EMI and moratorium for loans etc.
The country and the whole retail industry are still waiting for an economic package which can give relief to small businessmen and retailers so that they get support for payment of wages, rental etc. As of today, there is also uncertainty in terms of lease rental payments while in a shutdown situation and also once it opens up.
Lastly the whole industry is very worried about its financial health that very few have thought of how to manage the situation when the lockdown is removed, and the businesses open up for customers. (Click to Read More)
Saudi Arabia by Muwaffaq M Jamal: With limited mobility, the shifting of shopping started taking place to digital but that is still not converting the volume of consumer spending that happened in the brick and mortar channels. The estimated requirement for drivers to deliver online orders is above 40,000 drivers. With that in play, retailers are scrambling to meet the customer needs. The priority is taking place at food retail as there is no panic buying thus far. This is naturally the period that precedes Ramadan and the full market goes through a massive growth of food retail. With Ramadan less than three weeks away, the pressures witnessed by the food grocery retailers are within acceptable trends.
On the other hand, fashion retail is experiencing a complete wipe out. The priority today, like everywhere else in the world, is clearly not for fashion. The drop in sales for the fashion retail sector is in the region of 90%. Very little fashion retail sales are taking place online which comprises the existing 10 percent driven by the closure of malls. (Click to read more)
The European Experience by Christian Verschueren, Eurocommerce: The last month has not been easy for retailers worldwide, and Europe is no exception. Individual governments have imposed strict controls on movements, with multiple impacts on our sector. Countries closing borders have meant massive delays for lorries carrying vital products, drivers reluctant to leave their home countries for fear of not being let back in, and freight prices rising. Retail workers in border regions could not get to work on the other side of the frontier. EU leaders have promptly agreed a set of guidelines including ‘green lanes’ for lorries at borders, and the situation has eased since then.
But demand is a real problem. On the one hand, the closure of many non-food shops has meant no sales and a real threat of as many as 50 percent of those affected never opening again, and those allowed to open seeing footfall and sales reduced by up to 80 percent. (Click to read more)
The report also has similar analysis from Denmark, France, Germany, Italy, Russia, Spain, United Kingdom, Australia, Latin America and United States.