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KNOWLEDGE HUB

With consumers staying home and avoiding public places, the coronavirus is driving the retail sector online. Many retailers that rely on footfall have been forced to close in an attempt to slow the spread of the virus, meaning that having an online presence or operating an omnichannel approach has become a bastion of success across the sector. Indeed, a survey of more than 2,200 marketers in the UK, found a 71% predict an increase in ecommerce as a result of coronavirus.

It is expected that the food and groceries sector will benefit most from the dramatic lift in ecommerce caused by the pandemic. Yet for the majority, this uptick in demand is little cause for celebration. In fact, just last week, UK supermarkets issued a joint statement saying that “those with online delivery and click-and-collect services are running them at full capacity”, with online grocery delivery slots now sold out for the next three weeks at least.

Such is the demand for shopping online that many retailers have been forced to recruit more staff to help. For example, UK retailer Morrisons has announced it will create an extra 3,500 jobs to help deal with the demand arising from coronavirus, whilst Amazon plans to hire an extra 100,000 workers in the US and raise pay rates to deal with huge demand as consumers avoid shops and turn online. In a recent statement, the technology firm said that it needs an unprecedented amount of labour to cope with current demand and is willing to pay more to attract enough staff to cover the shortfall.

So, against this backdrop, what are the long-term implications for the retail sector change as a result of the coronavirus? Chris Walton, a leading expert in omnichannel retailing and founder of the Omni Talk blog believes the pandemic will create a domino effect throughout the industry, wider than simply increasing ecommerce. “The coronavirus will begin to knock down the various barriers to change that have held almost everyone in the retail industry back over the past few decades.” He said

“One by one, new innovations will take hold until retail’s future looks quite different from the world everyone knew as recently as last Valentine’s Day. Some of the impacts are already taking shape, while others are still years away.” He continued.

Three innovations set to redefine retail, pushing it into a sector driven by digital technology include; checkout-free retail, automated supply chains and redefinition of the concept of ‘stores’.

Checkout-free retail – Most retailers have erected plexiglass shields – designed to block virus-containing droplets – released by coughing, sneezing and speaking – at their checkouts to protect consumers and staff from the coronavirus. This small change is likely to ignite an emerging trend that will change how we buy products.

‘Checkout-free retail’ includes innovations such as mobile scan-and-go infrastructure whereby the customer scans a barcode as they enter a store, collects the items needed and walks out as a scanner system accounts for the purchases. This setup means consumers don’t have to interact with human beings at all.

It was an area that has been attracting interest from retailers prior to the outbreak yet demand for this technology is likely to soar as a result of changing customer preferences. For example, Amazon has already opened 20 plus Amazon Go installations throughout the U.S. offering this checkout-free experience and there are reports of additional stores in London in development and plans to license its Amazon Go technology to other retailers bringing it mainstream.

Automated Supply Chains – As workers get sick, or their production sites close due to government enforcements, the number of products entering global value chains will soon be lower than usual. As Walton explains; “If coronavirus hits a tipping point of no return, then supply chains could shut down or at least back up, making it difficult for people to get the products they need to survive.”

The key to avoiding a stall in a supply chain is finding solutions that rely less on human capability. This means pulling robotics downstream, using machines to help fulfil grocery pickup-up orders within stores, or performing operations such as cleaning or restocking, or, using drones and autonomous vehicles as delivery drivers. Using machine in place of humans could lift productivity and efficiency, and free workers to focus on tasks machines are not able to do – such as deploying customer service or problem shooting challenges. It also protects the industry from future pandemics, or a resurgence of the coronavirus that could force workers back inside their homes.

Redefining the concept of ‘stores’ – The conventional definition around the word “store” or “shop” has been evolving for years. The coronavirus is likely to speed up this paradigm shift so that a “store” is no longer a place to shop, but instead, a means through which a customer can purchase anywhere and at any time.

A glimpse of how life may end up was seen at the beginning of social distancing policies across the world. For example, Kroger, the USA’s largest supermarket brand was the first to announce a pickup-only store for click-and-collect orders, whilst Starbucks made all of its stores take away only and pharmacy Walgreens converted 7,300 pharmacy drive-thru windows in the U.S. for grocery pickup. Each of these retailers saw the importance of rapidly redefining how consumers accessed their products and developed a method that allowed demand to be answered and social distancing, maintained.

For retail experts, this evolution is not new. It is the development of a concept that has long been in the pipeline. For example, in a study conducted in October 2019, before the coronavirus emerged, more than 40% of shoppers saidbuy online, pickup in store’ (BOPIS) is the most valuable aspect of retail shopping. In the future, retailers will take this concept further, reducing the need to stand in line at kiosks or choose products from the shelves. The ‘BOPIT’ – or buy online, pick up in tower – is the use of intelligent vending machines that allow brands and merchants to reach customers in a new way. With 24/7 access and no service desk queues, pickup towers can retrieve orders in less than 30 seconds with minimal human interaction. Customers order online through ecommerce platforms and then retrieve their products by entering PIN numbers or using a QR or bar code displayed on their phone. Both Walmart and Canadian Tire have already invested in 16-foot tall ‘tower’ units that hold up to 250 orders. Testing of this system is in progress and if successful, its likely other ecommerce platforms will take a similar approach.

The coronavirus is causing uncertainty in almost every industry and serves as a stark reminder that preparedness is the best guard against unknown risks. If the retail industry is able to use the global pandemic as an opportunity to redefine itself, it would end up better prepared to cope with other economic or social shocks that may appear in the future.

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