Three retail lessons of COVID-19
As the COVID-19 pandemic hits the one-year mark, retailers can look back to find guidance on how to move forward.
COVID-19 continues, but with vaccinations picking up speed, things finally appear to be going in the right direction. Nobody can say exactly when the “new normal” of post-pandemic retail will arrive or what it will entail, but the following three lessons the industry has learned over the past year will surely apply.
The three rules of inventory – location, location, location
Sudden surges in consumer demand for paper and antibacterial products left retailers scrambling to find this inventory in the early days of the pandemic. Social unrest and extreme weather events have also created unforeseeable supply chain shortages and disruptions.
Ultimately, inventory success is measured by the same metric as real estate – location is everything. Unless retailers know where inventory is in real or close to real time, having it serves them little purpose. Many retailers are adopting machine learning technology to enable fast response and adjustment to inventory shocks that predictive algorithms cannot forecast.
However, retailers should also invest in location-tracking technologies, such as RFID, automated barcode scanning, and/or computer vision, that can quickly and accurately identify the position and volume of inventory, regardless of unexpected demand fluctuations.
Say goodbye to channels (for real this time)
Ever since “omnichannel” first reared its head as an industry buzzword about 10 years ago, pundits have been predicting the end of distinctly separated physical and digital channels in retail. While the lines between channels have blurred since then, silos have still remained (at least on the back end).
COVID-19 is proving the catalyst that is finally banishing the concept of firmly defined channels from retail. Now known by phrases such as “phygital” and “headless commerce,” the emerging retail model is dependent upon customers being able to pull merchandise from any point and fulfill and pay for it at any other point. A perfect example is the veritable explosion of BOPIS and curbside pickup offerings that has occurred since March 2020.
In addition, many retailers are pursuing more innovative omnichannel offerings, such as autonomous delivery robots and vehicles, as well as contactless pickup lockers.
Cash is no longer king, long live cash
Concerns over the (very remote) possibility of virus transmission from handling cash, combined with increases in digital shopping, have knocked cash from its traditional position as king of retail payment. However, cash hasn’t pulled a Harry and Meghan just yet – it is still a part of retail payment royalty.
According to data from FIS, cash payments in the U.S. made up $1 trillion of in-store payments in 2020, down roughly 29% from $1.4 trillion in 2019. By 2024, FIS expects cash to account for less than 10% of in-store payments in the U.S.
With annual U.S. in-store payments averaging around $5 trillion, less than 10% still equals close to $500 billion, hardly chump change. Retailers in verticals that specialize in lower-ticket, impulse purchases (such as convenience and fast food) will probably see cash represent larger portion of their sales. And according to the FDIC, more than 5% of U.S. households (over 7 million households) are unbanked. This all means cash will be less important post-pandemic, but not unimportant.
