In Uncharted Waters, Retailers Must Be Ready For Change
The industry has been abuzz with conversations about the store for several years. The question: How do we make/keep stores relevant? Some retailers acted, others spent a lot of breath on the topic, with not a lot of action to be seen.
Now, as they say, “Stuff’s getting real.” Can retailers respond? The times have changed, and now, COVID-19 has driven the need for store change onto center stage. Can technology help? We believe it can.
Back in January, under the assumption that store formats were going to change in any case, Workday commissioned us to do a benchmark report on the state of corporate budgeting, planning, process changes workforce needs and results analysis. The presumption was that since store formats were changing, it would be good to get a sense of how quickly retailers could respond.
The results initially seemed to tell us that responsiveness was “good enough.” It turns out that the responsiveness is no longer adequate. The economy is going to re-open sometime in the next month or so (depending on the state and country), and nothing is surer than change. Nothing about this has been or will be gradual. It’s coming like a piano flying out of a 20th floor window.
On a most baseline level, retail and hospitality will have some new processes to contend with for the foreseeable future. Distance requirements in-store, potentially limiting the number of shoppers that can enter at a time (which of course leads us to distance requirements OUTSIDE the store as well). Masks and gloves for everyone.
Stores with essential services have gotten a head start on these new processes, with companies like Walmart, Target, Costco, Publix, Whole Foods Market and others implementing them. Others, like restaurants and pool supply stores so far don’t even allow people picking up orders to enter the facility. Tables are set up outside where people can pick up and pay for their purchases. But what happens later?
This leads us to the question at hand: are your business budgeting, planning, process monitoring and workforce evaluation technologies nimble enough to support the changes you will have to go through? Presuming you have the cash for continuing operations, can you continue on through not just one, but a series of “new normals?”
With chains starting to declare bankruptcy (Neiman-Marcus announced its intention to declare on April 20, and 24 Hour Fitness is “exploring its options”) there is a certain urgency around trying models that customers will feel safe to enter, and then adjusting those models as time goes by. Until a working vaccine is found and becomes ubiquitous, we can expect “flares” to happen in different parts of the country. People are chaffing at the bit of social isolation in the US and are doing less-than-intelligent things to express their displeasure. This promises new breeding grounds for an insanely contagious virus.
All this goes back to the question: Are you ready to be really nimble? Look at it this way. Amazon was our “prime example” of nimbleness. No one can say the company has performed flawlessly during the first phase of the pandemic. In fact, I can say that Walmart.com has been far more responsive and better with their in-stock position. After all, the company has thousands of these “store things” that it can use for fulfillment or customer in-store purchases. It may have to think about the last mile, but it certainly has optimized “all the other miles.”
If Amazon had trouble adapting, what will happen to you? If you are forced to reconfigure your selling floor and/or checkout stations, can you do it? How long will it take you to figure out new processes required? How long to implement them? And how long to move beyond squeaky wheel syndrome to determining what’s working?
All this is by way of saying that it may well be time to think about improving those processes that will support new formats. Yes, it may require buying some software. Of course, that’s a tough ask. But it’s an easier ask than “Are you ready to declare bankruptcy?”
I’ve talked about the need for retailers to move beyond “retail time” to “consumer time” for years. Now it’s time to move faster than that into and out of “COVID time.” It’s hard to believe that on February 24 I was at a conference, and 10 days later, I declared myself on lockdown, where I remain. While that seems like a lifetime ago, in fact, it’s barely two months! Most of our respondents said it takes them 1-3 months to get new processes in place. Well, that’s not going to work anymore.
Those years of postponing new technology solutions because the IT group can “make it work” are behind us now. We need real speed. The alternative is losing control of your destiny. Think about it.