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The Pandemic Lockdown: A Dubious Anniversary

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A little over two years ago, California became the first state in the US to issue a mandatory stay-at-home order as an emergency response to the global COVID-19 pandemic. Other states and countries soon followed. At the time, we all thought that it would be an 8-week lockdown. But like so much else related to the pandemic, initial assessments were wildly off the mark.

I’m thinking about this dubious anniversary because like everyone, we’re returning to “normal” living. I attended an indoor rock concert over the weekend, and there wasn’t a face mask to be seen (in fact, the attendees seemed a little too determined to party and have a good time). On Sunday morning, we went down to the closest mall to pick up some Easter gifts for the grandkids, and you’d never know that (1) consumers frequently shop online instead of a store, (2) that there have been ongoing and severe supply chain issues, and (3) that there was ever a pandemic. By noon the place was jammed. Although this may not how it is everywhere, it is certainly the case in my neck of the woods.

But those things did happen! We at RSR have been saying since mid-2020 that the pandemic has been an accelerator for changes that were already beginning in the retail industry. Things that we thought would take 3-5 years to happen, happened in 1-2 years. For example, the entire retail industry thought that omnichannel fulfillment (particularly buy-online-pickup-instore, or BOPIS) was a nice-to-have, not an essential capability. And hardly anyone was talking about buy-online-pickup-curbside.

You get the picture: the pandemic changed a lot in business and society, and particularly in the retail ecosystem. It’s good to take stock of just how much has changed. And so, to get some perspective on that, I decided to look at what we were writing about in the weeks just prior to the lockdown.

Here’s a taste:

In January 2020, RSR partner Paula Rosenblum had to go out and find a new refrigerator. She had a lousy experience with a retailer that claimed to be focused on an excellent customer experience. Oops! Partner Steve Rowen and I went to the big NRF event in New York City, and we reported that “whether related to the customer facing side (hyper personalization), demand planning (the ability to model demand, using market, competitive, and environmental factors, in addition to past sales), supply chain (positioning inventory for complex fulfillment strategies), or D/C and store operations (robotics), AI technologies have found their way into solutions that are intended to address the new business reality.”

In February 2020, Steve Rowen announced that based on what we had seen at the NRF event, we were launching a new study on BOPIS (we had no idea how timely this would turn out to be!). Steve offered this rosy assessment: “BORIS & BOPIS are a shining opportunity for profitability in the Amazon-dominated world.” Paula commented on the results of a “state of the Retail Supply Chain” study we had conducted at the end of 2019. In another example of understatement, she pointed out that, “nimbleness should be the word of the day. Complacency is the enemy.” For my part, I worried out loud that “fewer days-of-supply in the supply chain <creates> less of a buffer against sudden disruptions.” Oops again!

In March 2020, Steve expressed a concern that “many retailers still see robotics as a hammer looking for a nail (at least in stores) …”. I was writing about next-generation forecasting, in the context of new AI-enabled solutions available: “It’s a perfectly timed meeting of a need and available solutions.” Although COVID was still happening “somewhere else”, Paula warned that “sooner or later, we can expect to see economic impact trickling down to consumers. Retailers and suppliers will likely seek other, more expensive sources of goods and consumers will see price increases at the register”. And while commenting on Burlington Coat’s decision at the time to abandon eCommerce, Paula offered this up: “I hope … that this pandemic is short-lived. We haven’t seen the peak yet, that I know. Let’s hope we get there quickly.”

On March 19, California issued its lockdown mandate. A shudder went through the entire retail industry. And the pandemic wasn’t short-lived; retailers had to move very quickly to meet the sudden shift in consumer demands for goods and services. By July 2020, team RSR was focused on how the pandemic had shaken the retail business model to its foundations. In July 2020, I commented that, “…it’s entirely likely that we’ll be living in a state of continuous disruption for some time to come… the world economy still has to deal with an increasingly fractious global trade environment, weakened economies, political and social disruption, and the big cloud of global warming just over the horizon. What that means is that businesses everywhere (not just retailers) have got to get focused on redesigning their go-to-market strategies around agile responsiveness to rapidly changing conditions, and then figure out how to do that efficiently.”

While that comment was offered almost 2 years ago, that’s exactly where the retail industry is now – whether that was apparent at the mall last Sunday or not. The good news is that retailers generally had a great year in 2021. They did what they had to do to keep up with changes in consumer buying behaviors, managing through a messy supply chain crisis, as well as challenges with an unhappy workforce, and still managed to deliver good 4Q results.

Now retailers need to keep the pressure on themselves to make permanent all the pandemic-temporary changes they made to their internal processes, optimizing them, and supporting them with the technologies that are available now. Whether the industry realized what they were getting into in 2020 or not, we are in the midst of an industry-wide transformation. The pandemic only made it clear that we didn’t have any time to waste.

Newsletter Articles April 5, 2022
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