The second wave of Covid-19 in India is seeing businesses scrambling to limit the direct impact of the pandemic on employees and customers, by bringing in efforts to limit the spread of the virus. As governments try to implement measures like lockdowns, it is common knowledge how businesses across the world have been affected by the pandemic. The retail industry, however, had already begun seeing signs of trouble, with declining consumer demand and the threat from online and discount models much earlier.
The first wave had already shown us the widespread collapse in both supply and demand which meant that retailers were faced with the conundrum of being able to respond flexibly to these diametrically opposite challenges in an agile manner. The need for adapting their operations and commercial decision making to rapidly reflect the new reality became pressing and just when the industry was gaining a semblance of functionality and normalcy - the second wave struck - bringing with it a new series of challenges.
Taking a look at segments that according to us are seeing pivotal disruptions during the second wave, here are our observations regarding 4 key challenges being faced by the retail sector currently:
Inventory Planning: While the demand pattern of customers has become quite erratic in current times owing to the economic turbulence, another major concern for retailers is increased supply uncertainty. Pressing questions being faced by retailers currently include, whether their supply funnel will be able to fulfil requirements, should they place small orders for many items or should large orders be placed for small numbers of items etc. Apart from this, considerations like should the order are placed to single vendors or would de-risking and sourcing from multiple vendors would be a better choice has arisen as well.
Service Delivery Control and Discipline in Online Marketplaces: As the pandemic has shifted people indoors and online, the e-commerce industry has seen a boom. While on one hand brands are experiencing an increase in their online orders, on the other hand, there are added challenges of having to deal with unauthorised sellers in the marketplace listings. This becomes an area of concern especially because unauthorised sellers are offering aggressive discounting and even counterfeit products in certain cases, which only increases competition.
Customers Postponing or Trading Down Their Purchases: Maintaining price points on high-end products has become especially challenging, as due to the current ambiguous situations, customers are either postponing their purchases or opting for low-end products.
Maintaining Price Velocity and Handling Customer Disconnect: Looking at the sheer scope of online marketplace sales, brands have to now maintain their presence across multiple channels. Owing to the fact that brands are now getting a bulk of their online sales through marketplaces, there is a loss in direct connection with customers. Most brands are not able to pinpoint customer level behaviour changes - decrease in the frequency of purchase, lost customer, trade down, shrinkage in spread across different categories, etc. To gain sales, with limited customer insights, brands are relying more on discounts and promotions, which accelerates the commoditization of their products.
With state governments imposing mini lockdowns, the retail industry except for essential items has begun causing disruptions again. Owing to this, the fact remains that prolonged and extended lockdowns can end up impacting customer sentiment, which in turn impacts the industry, supply chain and overall economy considerably. While according to economists, the impact of the second wave on the economy is not going to be as harsh as last year, deeming it to result in a "short-term negative economic shock”. The reluctance to spend on non-essential items has lowered demand in a lot of segments and for the retail industry and it is becoming quite difficult to sail through these tough times
There is a strong need for solutions that can help brands in formulating the right prices for their products, meeting the market needs, understanding customer behavioural patterns and every single transaction. With the help of our AI-powered solutions and predictive analytics, businesses can get accurate forecasts for any situation, along with recommendations for future course of action via leveraging prescriptive analytics, to usher in changes required for today's omnichannel world.
While the long-term social and economic impact of the Covid-19 virus is still to be seen, smart retailers are thinking about all the scenarios and planning accordingly for the long haul. Leveraging analytics, retailers now need to make hard decisions regarding investments and activities that are mission-critical and can deliver rapid value. At the end of the day in order to navigate this complex situation, a well-managed response is the need of the hour. By investing in the right solutions, retailers can also utilise this opportunity to outperform their competitors that are less agile, and lay the foundation of a more resilient and nimble business model for the future that can guarantee success.