Craig Summers, UK managing director at Manhattan Associates examines how the retail industry is shifting to meet the demands of consumers amidst the growing coronavirus crisis.
In this new COVID-19 world, the safest course of action is to replace in-person activities with online alternatives. We are seeing this happen first-hand in the retail world as consumers are being asked to stay home and a significant amount of traditional, bricks-and-mortar shopping is temporarily being shifted online.
The virus has also led to an unexpected surge in requests for relatively new fulfilment methods like home delivery and kerbside pickup.
With a highly publicised call for hundreds of thousands of warehouse and delivery workers, it is evident that retail, wholesale and manufacturing are rallying to the call of this consumer-driven shift in demand.
E-commerce is the fastest growing segment of retail. According to forecasts by Retail Economics, online sales are expected to reach 53% of all purchases in the UK by 2028.
However, it could well be that the COVID-19 pandemic has further accelerated that shift and with it, the need for technologies that allow retailers to maximise online opportunities in the most efficient, environmentally friendly and cost-effective way.
Balancing People And Technology
E-commerce is certainly on the up, even in countries with traditional hesitance about online buying. However, many brands are still working through the technology needed to make true omnichannel commerce work.
There can be as many as ten steps required when fulfilling an e-commerce order: from receiving and confirming the customer order; to pick lists being sent to the warehouse and operatives finding the items; orders being packed and dispatched; and finally, delivery, receipt of order and even potential returns.
This is a labour-intensive process and recent announcements regarding the increases in retail hiring simply serves to give further weight to this point.
The proliferation of e-commerce may well represent a 'coming of age' moment for store-based fulfilment. However, the question remains: do retailers have the systems in place to effectively manage online and in-store fulfilment in a seamless and effective manner?
A Long-Term Picture Evolving
If the COVID-19 pandemic goes on for months and consumers come to rely on e-commerce for their day-to-day shopping, this might have a long-term impact on the balance between online and physical sales.
Anyone who has moved to ordering grocery shopping online can attest to the ease and time saved by the process and it only takes a few weeks to form a habit.
With lockdown measures now in place for what looks like the foreseeable future, e-commerce is rapidly becoming the norm. Nevertheless, retailers must still look ahead to a post-COVID-19 future: will consumers return to retail stores in the summer? Will the 2028 date be parachuted forward?
Or, will there possibly be a double bounce that sees shoppers return to the high-street in their masses once curfews are removed? All these are questions for retailers to consider in the coming months.
The consumer behavioural shift, accelerated by the virus in only a few months has surely cemented the business case for an expansion of hybrid fulfilment methods that blend e-commerce and store resources – and these in turn will help retail to pivot, scale, adjust and respond when things return to normal.
While many retailers have been watching their e-commerce business grow, global events have taken the fastest growing part of retail and put it on steroids. What was growing quickly is now growing incredibly quickly, and what was changing rapidly is now changing at breakneck speed.
Companies that show agility and embrace change in this new world are going to be the ones who are most successful. Effective e-commerce and hybrid fulfilment methods will play an important role in weathering the current storm, and will help propel the retail industry forward after we go back to business as usual.
© 2020 ESM – European Supermarket Magazine – your source for the latest retail news. Article by Craig Summers, Manhattan Associates. Click subscribe to sign up to ESM: The European Supermarket Magazine.