As we attempt to learn from what has and hasn’t worked in other countries, our economy is suffering in a variety of ways. Perhaps hardest hit has been the already-struggling bricks and mortar retail sector, only a very few segments of which are considered essential services and most of which have been mandated to close indefinitely in an attempt to reduce the spread of COVID-19.
According to Gartner, Inc., retail chief supply chain officers (CSCOs) should follow three best practices to mitigate disruptions and revenue reductions caused by the novel coronavirus. The goal is to combine an effective near-term response to the impact of COVID-19 across the end-to-end supply chain with a clear plan that positions organizations for success as the economy recovers.
“The global outbreak of COVID-19 is creating a very dynamic environment in retail supply chains,” said Thomas O’Connor, senior director analyst with the Gartner Supply Chain practice. “Demand is shifting from physical stores to online channels as consumers seek to avoid public places due to fear of infection or government restrictions. Whether you’re a CSCO dealing with increased or declining demand — this is a unique challenge for everyone.”
Gartner has identified three actions retail CSCOs can undertake to mitigate initial disruption and set up their business for future success.
Leverage Available Data
CSCOs can use available data, whether internal or external, from the markets first impacted, including China, Italy and South Korea as they look to forecast consumer responses to the virus. For example, there was a clear peak in sales during the week beginning March 1, 2020, when many Italians were ordered to self-quarantine. In the same week sales were reportedly 81% higher than the comparative week in 2019.
“We can see the same surge in groceries and household staples in other markets,” Mr. O’Connor said. However, other product categories such as apparel reported severe losses. Gartner also expects a negative impact of COVID-19 on seasonal sales periods, such as Easter and — later in the year — back to school.
Work Closely with Suppliers
Many retailers that source from China already experience challenges caused by constrained raw material as well as limited availability of goods. As the virus spreads, similar situations are already occurring on a global scale.
For retail CSCOs, prioritization is key. They must know where demand increases are taking form and work to meet that demand. CSCOs should work closely with suppliers to focus on smaller pack sizes to ensure a broader array of products, so consumers have access to high-demand products, and investigate the setup of temporary distribution facilities to support replenishment.
Run a Smart Workforce
When it comes to the workforce, retail supply chains face two issues. On the one hand, the dynamic demand environment necessitates large increases or decreases in workers required. On the other hand, no organization is immune against COVID-19 itself. Sick employees must stay home; stores, warehouses or other facilities might be closed due to quarantine restrictions.
“This is a time for creativity and care. Employees who aren’t needed in shops at the moment can, for example, deliver products to online shoppers or work from home in customer support. CSCOs who can’t sustain their workforce could also reach out to businesses with increased demand and try to temporarily redeploy staff. However, the most important thing is to ensure the safety of every member of the workforce, be it by providing protective equipment or guaranteeing paid leave in case of an infection,” Mr. O’Connor concluded.
Gartner clients can learn more in the report “Retailers Seek to Mitigate Disruption From COVID-19 and Identify Emerging Opportunities.” There is also a collection of complimentary Gartner research and webinars to help organizations respond, manage and prepare for the rapid spread and global impact of COVID-19.