Within the last few weeks, we have seen dramatic shifts in the business world. Supply chains have been impacted by changes to production and distribution; foot traffic has significantly, if not altogether, dropped for many non-essential stores; and a much larger portion of the population are working remotely. Although many organizations are still adjusting, the reality of what will seemingly be the new normal is settling in.
Most businesses have addressed the immediate concerns of protecting people and ensuring business continuity. While the resulting measures may evolve over the course of the pandemic, leaders’ focus will begin moving towards the next wave of upcoming challenges. Given current consumer behaviour, we believe the next phase of obstacles will be centered around product assortment, inventory allocation and the acceleration of online fulfillment.
As discretionary spending plummets, the need for product assortment diminishes. At this point in the crisis, consumers are stockpiling food and supplies and they are less concerned about product features, benefits or variation. Based on the demand for these products, companies should prioritize product lines and items to reduce overproducing slow moving inventory. Rededicating materials and manufacturing lines can also help offset production lag. One key consideration will be ensuring the quality of finished goods, especially with changes to lines and production plans.
With growing anxiety around catching the virus, consumers are minimizing unnecessary trips outside of their homes. Stores are seeing shifts in channel sales, with online spending growing 10%-30%. The demand for both buy-online-pick-up-in-store and delivery has also spiked, which has retailers considering capacity constraints. To help meet this surge, retailers should consider shipping from stores to mitigate stock-outs at online distribution centers. It may also be worthwhile for manufacturers to prioritize product sizes and packaging that is better suited for online channels. Regardless of strategy, success will still fall on the shoulders of your forecasting abilities to help determine appropriate inventory allocation across your channels.
While many companies already have some type of online sales channel, not all categories have found success through eCommerce. However, the COVID-19 pandemic is accelerating both the need for and traction of shopping online. In the absence of physical experience, online and mobile experiences are growing in importance. Companies that proactively adopt digital commerce tools to build out their offering will be better positioned to handle the current market shift, as well as other future disruptions.
This global crisis is still continuing to unfold, but one thing seems to be clearer and clearer each day: we are moving towards a new normative state. The approaches, processes and systems that worked yesterday may not yield the same value or results tomorrow. In order to move forward and ensure continued success, we must question our assumptions, challenge our methods, and incessantly look for opportunities to improve.
Want to learn how your business can solve some of these challenges? Let us show you how. Schedule a call with our team today.