Getting back to business takes on a whole new meaning in the wake of COVID-19
When stores reopen — whenever that is — getting back to business will be both a welcome relief and a challenge for the executives in charge of keeping stores in stock with relevant merchandise.
Among the first issues they will have to deal with are empty racks and shelves. Many chose to cancel purchases when faced with extended store closures. The issues connected to this will also affect future seasons. A return to normalcy will not be instantaneous.
Retailers can forget simply trying to drive worried consumers to stores to spend their limited discretionary income. The key winter/spring months that would have been used to liquidate 2019 seasonal purchases are gone. Drastic markdowns will be needed. Those dollars generated will be crucial to paying for future inventory needs.
Forecasting is about to become a much more complicated process. It is true of the upcoming Christmas selling season as well as for the equivalent period next year matching with the current shutdown.
I would anticipate most if not all retailers will have an extremely conservative re-forecasted holiday sales plan. Their revenue has already been decimated for the first half of 2020, so their cash flow will not allow for anything else. It’s likely that 2020 holiday comp sales will have the largest decline in recent memory. The same ultra-conservative sales plan will almost certainly bleed over into the first half of next year.
One of the new, new normal processes that we will likely see is retailers shortening the time to market from concept to consumer. This will mitigate some of the negative effects of not having historical data for the months that stores remain closed.
Shortening the process will enable retailers to react more quickly to sudden changes. And this applies to the entire product lifecycle management. It should enable faster design, prototyping and approval, more diversified geographical location of manufacturing, and result in more reliance on faster albeit more expensive shipping methods.
Jack Feinstein, a merchandise planning and inventory management expert, and Robin Issacsohn, a consultant specializing in merchandise planning, business analytics, and inventory management infrastructure, contributed to this article.
DISCUSSION QUESTIONS: How do you expect retailers to mitigate some of the negative impacts of not having historical data for the months that stores have been closed? How effective do you expect most retailers to be in reducing the time to market from concept to consumer?