Whether it's AI or cashless, the new round of changes will be far more consequential for retail. Image Credit: Gulf News

Retailers don’t have the luxury of focusing solely on the short-term impact of COVID-19. Many of the changes the industry is implementing to counter the effects of the pandemic will become permanent.

We’ve started to refer to these types of pandemic-related industry changes as “The 3 Waves”, spanning from the immediate changes that ensured stability in the earliest days to more long-term, strategic changes that will become institutionalized.

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First wave

This started when the US economy shut down in early March and had an obvious impact on all retailers. Stability and continuity became the primary focal points.

Retailers were forced to throw as many resources as possible into maintaining operations. This meant optimizing labor hours in ways that minimized costs, ensured customer demands could reasonably be met, and maintained employee health and safety.

While declining performance is the expectation, successful retailers found ways to stay afloat in the earliest days of the pandemic – such as offering curbside delivery and selling meal prep kits - and shifted toward the next phase where new ways of working and engaging customers started to become the norm.

Second wave

When operations stabilized following the efforts in Wave 1, essential retailers were able to focus on institutionalizing new ways to engage customers with online and in-store experiences.

Everything from directional flow lines to special store hours for immuno-compromised customers, plexiglass dividers to prevent contact, new cleaning regiments, and increased support for curbside pickup have created a new retail normal. In an effort to provide a safe environment for shoppers and store associates, retail leaders have made efforts to get people in and out of stores as quickly as possible, while also limiting the number of people allowed in the store at any given time.

Even when the pandemic quiets down, retailers will still take precautions to maximize the health and safety of customers and employees in stores, corporate offices and on warehouse floors. The efforts being made to address new trends in consumer behavior will become mainstays of the adjusted customer experience.

Things like ‘buy online, pick up instore’ (BOPIS) with curbside pickup options, contactless purchases, and increased integration between digital and physical experiences will become standard means of engaging with customers.

The ability to scale up digital capabilities to support these initiatives and meet evolving customer demands will be critical to business success.

Third wave

At some level, the long-term transformation should occur simultaneously with Wave 2. While there’s no one-size-fits-all way to adapt, there are certain strategies that will become essential to rebuilding viable retail businesses.

Product sourcing

When demand for certain nondiscretionary products spiked as COVID-19 broke, it became clear that supply chains weren’t agile enough to adjust quickly to keep up with demand. Part of the problem is that many retailers haven’t diversified their product sources to a point where shortages at the backend don’t impact customers.

Retailers need to find ways to balance profitability with product sourcing diversification, by identifying the regions that will help them limit travel costs, inspection costs, and lead times. It won’t happen overnight - but making data-driven decisions about where to source products will unlock long-term value for retailers, even in the wake of devastating external forces.

Rebuilding retail won’t just be about working back to the pre-2020 status quo. Rather, the future of the industry depends largely on retailers’ ability to prioritize operational transformation to take advantage of new solutions to balance employee health and safety, improve customer experience, and maintain profitability.

Intelligent automation

Retailers will implement more automation solutions to help maximize shopper and employee safety, keep up with consumer demands, and manage both fulfillment and instore operations. Food, drug, and mass-merchandise (FD&M) retailers in particular are expected to capitalize on automation investments for both the front and back of stores to help meet post-crisis needs.

One thing that the pandemic has made clear is that the majority of supply chains and operational procedures weren’t designed to maximize flexibility. Consumer behavior changed so rapidly that retailers weren’t able to adapt without service suffering at least to some extent.

Going beyond prescriptive automation to embrace intelligent automation will make it easier to streamline end-to-end processes.

The combination of artificial intelligence (AI) and robotics can bring data-driven approaches to supplier quality, merchandising, distribution, logistics, and fulfillment, giving retail leaders the insights necessary to maximize value capture. Instead of reacting to external forces and rapid changes in consumer behavior, intelligent automation creates opportunities to operate more proactively.

Last mile

Retailers have been under pressure to improve e-commerce and logistics capabilities for years. However, the pandemic has magnified even small issues in e-commerce operations as retailers have seen a massive spike in home delivery requests. Enabling and optimizing last-mile delivery will be critical to satisfying customer expectations, reducing marginal costs and improving overall efficiencies.

There are a few tactics that can help retailers optimize last-mile delivery, including:

• Providing flexible delivery options based on delivery method and location as well as consumer need.

• Creating a collaborative network with suppliers to maximize visibility on the back-end.

• Leveraging brick-and-mortar stores as fulfillment centers to minimize shipping costs and delivery times by locating products as close to the end customer as possible.

• Using technology to maximize the value of delivery routes by serving more customers in the same amount of time.

Mark Thomson is Director of Retail and Hospitality Solutions at Zebra Technologies.