It’s never a dull moment for retailers. As they begin to land on their feet and steady themselves from COVID-19-related shutdowns and downturns, the holiday season is quickly approaching — and with it, many uncertainties tied to the future of their businesses.
According to data from real estate firm Cushman & Wakefield, upwards of 7,500 stores are expected to close this year, following record-high close rates in 2019. For the businesses that have been able to survive, the holiday season will undoubtedly look very different than previous years. To protect their bottom line, and ensure a successful holiday season, they must pivot their business strategies and take steps in new and bold ways.
Revisit the Supply Chain
To optimize supply chains, ensure that inventory is properly stocked for the upcoming season, and mitigate likely disruptions, retailers will need to add and diversify vendors and distributors. Given that consumers will likely continue to shop online in higher volumes, U.S. retailers will likely face a long backlog of shipments over the next few months. Retailers need to have a backup if products are delayed, or even out of stock, to maintain customer satisfaction levels. One way to prevent this is to source inventory locally and regionally, thus reducing shipping delays to meet consumer demand during the busy season.
One incredibly smart move made by some retailers this season has been building close ties with supply-chain partners that aren’t overly reliant on serving big chains. This strategy minimizes the chance of a delayed or lost shipment, and enables retailers to fully oversee their inventory. Other steps retailers are taking to enhance supply chains include:
Distribution Defines the Experience
As the need for e-commerce systems continues to increase, the focus becomes more than just inventory of products that consumers want; the shopping experience has now extended to the distribution of these products as well. The importance of distribution in the retail sector is only growing, as more companies promise customers next- or two-day shipping on most items.
Consumers see the entire experience, from product availability through selection and delivery, as the responsibility of the retailer, even if a distribution intermediary is part of the experience. This requires retailers to have much closer relationships with those who distribute their products, giving them greater control over the delivery and distribution of items. If a product doesn’t arrive on time, retailers can no longer blame the shipping or trucking company, because they’re responsible for every aspect within the end-to-end retail experience.
E-Commerce Continues to Skyrocket
While e-commerce was already gaining market share, COVID-19 has solidified that trend as the future of retail, given consumers’ growing dependence on online shopping for both convenience and safety. Once a necessity, in-person shopping is now viewed as more of a hassle for many consumers. As a result, one in every two shoppers now does 75% of their shopping online, and 44% of shoppers plan to shop more online this year than last. Not only do safety concerns trump the convenience of having an item immediately, many delivery services now guarantee next-day arrival, cutting the shipping delays that were once associated with e-commerce.
In terms of the holidays, the traditional bustle that used to surround shopping will be less of a draw into local retailers this year, if it’s possible at all. Many retailers will need to prepare for new capacity limits and enforce rules around face coverings, even though they’re expected to see a dramatic loss in brick-and-mortar shopping altogether. Local retailers are investing more time and money into e-commerce capabilities to combat this, as well as to retain some of the revenue otherwise lost to larger online competitors this holiday season.
Leverage the Amazon Effect
At-home delivery is only one factor in the “convenience” equation. If delivery speed is an issue, at-home same-day delivery by local retailers can be cost-effective, and creates a competitive advantage over online-only retailers whose deliveries can take days or weeks. This is where local retailers and mom-and-pop shops can shine.
While companies like Amazon can offer a wider array of products, non-store retailers typically only offer same-day delivery in large metro areas, and only on a limited selection of products. That leaves a huge gap for smaller local retailers to fill. Buy online/pick up in store (BOPIS) and curbside also offer same-day convenience without shipping and delivery costs. This will be integral to the success of a business during the socially distant holiday shopping season.
Additionally, local retailers don’t have to absorb the cost of reverse logistics, such as return shipping. Returns at local retailers are typically more convenient due to:
It goes without saying that the upcoming holiday season will be anything but normal. It’s hard to envision exactly how the season will pan out for retailers, much as it’s hard to predict any aspect of 2020. However, even before COVID-19, the retail space was changing rapidly, and retailers were having to turn to technology and an optimized supply chain to keep up with the trends. The successful retailers will be the ones who are investing in technology — like the cloud — to optimize their supply chains, ensure distribution and delivery speed, and offer the reliance that big e-commerce retailers cannot.
Jennifer Schulze is vice president of product marketing at Epicor Software.
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