Sometimes it’s hard to remember the business issues we were facing before Covid 19. In the retail sector, many brick and mortar stores were struggling to stay afloat. With the pandemic, the situation became worse, and now as we look to reopening retail stores, the psychological effects on consumers of re-entering stores and the associated anxiety means an uncertain future for retail.
Like every public location, increased cleaning protocols are ensuring that we are likely in the cleanest environment of our lifetime. Stores and offices have changed and improved the overnight cleaning practices, implemented new cleaning procedures throughout the day, provided physical barriers between people and delineated spacing on the floor where necessary. But that may not be enough to bring back concerned customers.
According to KPMG, there are five focus areas for retail executives to better manage the process.
Manage demand fluctuations
Depending on the market you serve, you may have all stores open, some stores open in certain markets yet closed in others, or an online only presence. To position yourself for the future you need to analyze your demand changes over the past few months. Has there been an increase in online ordering? Are different products spiking than you would normally see? If you have reopened stores, how does traffic and buying compare to the same time last year? The ability to predict and manage demand has never been more important.
Shore up cash reserves
By now you have likely poured over the books to understand your cash position. With more companies experiencing a decrease in demand than an increase, your focus is on cash flow and cash reserves in order to meet payroll and pay bills. The government stimulus is helping many small businesses keep their lights on. And some companies have looked to renegotiate rent to avoid defaulting. Without knowing how long the impact on demand is going to last, it’s important to closely review your current and predicted liquidity profile. If necessary, talk to lenders to restructure loans or amend financial covenants to improve your position for working capital and short-term cash forecasts.
Employee health is paramount. Without employees, you can’t operate brick and mortar locations as they come into contact with hundreds of customers everyday. The new reality means updating your crisis communications plan to address different situations. It also means considering new processes for day-to-day operations that keep employees protected from the spread of germs.
Consider long-term supply challenges
Grocery stores have seen the impact of supply chain disruptions due to panic buying. However, nearly every retail chain is going to see the impact as they reopen. For the clothing industry, the Summer season has been cut short from a buying perspective. When stores closed in March, the Spring apparel was just arriving. And as they reopen, they have three-month old inventory on the floor and they may or may not be able to get current season shipments in short order as the manufacturers were closed as well. When you consider the uncertain demand over the coming months combined with inventory warehousing variations, it’s important to communicate with key suppliers to assess their risks, identify any indirect exposures, and create contingency plans.
Speak with customers
If you haven’t already, now is the time for the CMO to lead the move towards a Customer Experience (CX) go-to-market approach. The impact of the pandemic is going to change how we shop for years to come. We don’t know what this is going to mean for the customer relationship. What do they expect before they return to brick and mortar shopping? How is your brand listening to them and engaging with them through your website, on social channels, through email, and on the phone. In this environment, shoring up the customer relationship is just as important as shoring up the bottom line.
If you have questions about the future of the retail industry or have executive hiring needs to support your retail leadership team as we move into uncharted territory, send us a note, and our team of retail executive recruiters has a depth and breadth of experience to help you during these uncertain times.