How Will the Retail Industry Respond to the Coronavirus Pandemic?
Gautham Vadakkepatt and Ricardo Belmar share 5 predictions
Now in the midst of a global pandemic, the retail industry is becoming increasingly disrupted as governments, businesses and consumers are taking major precautions to slow the spread of the novel coronavirus.
This week major U.S. cities like New York City and Los Angeles closed all restaurants for dining-in, as well as all movie theaters, fitness centers and sporting arenas.
Several businesses, including L Brands, American Eagle, Nordstrom, Abercrombie & Fitch and Ulta have even withdrawn their earnings outlook for 2020 due to the heightened uncertainty relating to the potential impacts of COVID-19.
To help us make sense of the shakeup, RETHINK Retail Editor in Chief Julia Raymond spoke with Gautham Vadakkepatt, Assistant Professor of Marketing and Retail Innovation Center Director at George Mason University, and Retail Thought Leader Ricardo Belmar.
1. Development of shorter supply chains:
To reduce the risk of supply chain disruptions, Vadakkepatt told RETHINK that we can expect to see more regional and localized supply chains popping up in the months to come.
“This change will be an opportunity for new players to enter the market,” he said.
2. Expansion of fulfillment services, including micro fulfillment:
“Organizations like Shopify might have an opportunity to expand fulfillment service offerings, Belmar predicted. “We might see more warehouse-like locations and distribution centers pop-up to be able to move things closer to people.”
3. New use cases for robotics and AI technologies to modify retail operations:
“It’s not going to be a matter of, I’m putting in this ‘just walk out’ technology because I want to reduce labor,” Belmar said. “I’m putting it in for different reasons and I still have the labor, but now they’re going to do other things that are equally important that didn’t exist before because we weren’t worried about human contact.”
4. Growth of services and gig economy:
Belmar told RETHINK he believes transportation services like Uber and Lyft will begin to deliver things rather than people.
“Delivery services like DoorDash and Grubhub will grow, along with the number of “ghost kitchens” designed for delivery only,” he said.
5. Innovation and formation of new companies:
Retailers formed during a recession, or retailers who survive a recession, will be more in tune with customer needs, making them more engaged and nimble, Vadakkepatt told RETHINK.
“There is research showing that companies formed during a recession have longer survival probability than companies formed during a ‘boom and bust’ period because when resources are constrained, people tend to think through things more effectively,” he said.
Necessity is the mother of invention. Right now, retailers have a unique opportunity to improve their pick up and delivery options as well as nurture their community through true, authentic engagement and acts of service.
“The survival of retail depends on building a community,” Vadakkepatt explained. If retailers adjust the way they’re doing business right now to focus more on community engagement or service, when the current situation changes they will reap the benefits of people coming out in the herds to their stores because they built a loyal community.”
To read the full Q&A with Gautham Vadakkepatt and Ricardo Belmar visit: https://www.rethink.industries/article/qa-covid-19s-impact-on-retail/.