CSA Exclusive: How businesses should reimagine their ops in response to COVID-19
Chain Store Age recently spoke with David Holme, founder and CEO of Exigent Group, about how retailers can adapt — online and in store — to the changes and challenges being wrought by the COVID-19 pandemic.
As consumer buying habits continue to shift, COVID-19 has forced businesses to go digital. How will this digital transformation impact services/products moving forward?
The typical processes for merchandise and inventory are no longer the same. Companies are now sitting on loads of inventory and have no way to sell due to closures. Now they are looking for ways to get these products online in a timely manner.
As consumer buying habits shift online, businesses need to reimagine everything moving forward. Companies must explore virtual options that will appeal to consumers. Grocers will need to streamline digital strategies and delivery services and online retailers and the beauty industry must discover and offer new technology, such as body scanners that recommend sizes and reduce returns or facial technology that can match shades of makeup or recommend products. All companies will be required to adjust their services/products based on how they project consumer demand to shift.
The reality is, businesses that have been gradually investing in digital commerce sales tools will more than likely adapt to this new, digital-first economy more swiftly and businesses that have not will be greatly disrupted. This is a critical point. Quite often a business that goes digital tries to simply adopt its current ways of working and not redesign a process with the customer in mind.
Consider how many retailers have started providing at-home deliveries. The process (of ordering and paying) is mostly complicated and not user friendly. Conversely, the online retailers (and intermediaries like Uber Eats) have developed their platforms with the end-user in mind.
We expect to see more ‘traditional’ businesses engaging with the online platforms to learn from and possibly collaborate with them. Achieving more comprehensive supply chain visibility is now a top priority. Monitoring and reporting on product supply, movement and interruptions will need to improve.
Also, we expect to see massive growth in the adoption of customer satisfaction and approval tools. It will become easier to track the user experience, their likes/dislikes when engaging with a business and their likelihood to return to the specific store or brand. The ability to use customer feedback data will allow the early adopters to outperform their competitors in our view.
How can physical stores best position themselves going forward in this changing environment? What challenges will they face along the way?
While digital transformation may be the main topic in today’s society, nothing beats the in-store experience brick and mortar stores provide. Even as the shelter-in-place directive continues, we see numerous consumers missing those in-store, personalized experiences. As soon as this ban is lifted, consumers will want unique experiences. Physical stores should be focused on creating one-of-a-kind events, experiences and brand associations — which help create unforgettable memories and build brand loyalty.
Alternatively, companies must prioritize virtual technology and mobile in the future to remain competitive. Apple is a good example of an in-store experience that will withstand the new retail environment of the future. While they have an optimized online shopping portal, the amount of value that a customer receives in-store will still draw customers. Consider the new user training sessions, tips-and-tricks workshops and extensive availability of test products to be used.
Physical stores would do well to engage with and learn from the success of online retailers (their tech, user experience, feedback loops, etc.) rather than try and replicate their systems in a digital channel.
Why is it important that businesses prioritize their contractual and legal obligations during this time?
Businesses should not just rely on their legal operations, but rather prioritize them. Companies must understand their contractual realities. Some contracts will have a variety of exit options often called “force majeure.” What we’re seeing is an uptick in “contract discovery” of these clauses and related clauses such as performance clauses, payment terms, etc. It’s critical for businesses to have a full picture, much of which can be done on an automated basis, to understand contractual terms and obligations to make an informed decision.
The unfortunate reality is that businesses will be confronted with the economic impact of the current COVID-19 crisis after the actual epidemic has been contained. This means that conditions could remain in a state of relative flux for a long time, and it is absolutely critical for a business to understand its risk portfolio. What is the commercial impact of supplier failures? What is the continuity/mitigation plan? Knowing what’s in your contracts will make the process a little bit less stressful.
As companies look to ramp up their virtual product offerings, integration and relationships with suppliers are bound to change, resulting in businesses revamping their contracts. How can technology such as AI assist in making this process easier?
Business contracts are distributed across many repositories and locations making them difficult - or rather impossible - to sort. This inaccessibility makes the task of managing contracts complicated, leading to a risk of losing out on important business opportunities. Fortunately, contract discovery can be automated with technologies such as AI - especially with tools like Scarlett by Exigent which can identify the clauses in seconds to give a full commercial picture.
AI can convert unstructured contract documents into structured enterprise data, turning contract management from a simple document management process to a live, strategy-making machine. Through these AI-based tools, information is aggregated and used to review and enhance performance, as well as predict business risks and outcomes.
AI contract management tools can also look for patterns around words searched to give them meaning in context. These solutions can uncover relevant phrases, sentences, and paragraphs in a document that would otherwise not be discoverable and deliver results in just milliseconds. This leads to faster answers, reducing the risks associated with not having a central repository and eliminating missed documents and time-consuming manual searches for relevant information.
How might processes and contracts be changed by the pandemic even after the crisis finally passes and how can businesses future proof themselves?
Contracts and processes will be solely dependent on how companies readjust their products and services moving forward. As we dive deeper into the world of digital transformation, consumer preferences will drive how supply is delivered. We can expect many types of contracts (for example real estate, employment, and goods/services agreements) to change in line with the new normal of remote working for example.
The knee-jerk reaction is going to be that businesses try to remove all risk from their contracts (and their counterparties will be trying to do the same). This is simply not commercially sustainable. A business that genuinely wants to grow stronger after the epidemic has normalized will have to understand their risk appetite and find suppliers, providers, and investors that can do the same. COVID-19 may bring about a greater sense of contracting equality than we’ve experienced in the past.