The retail industry is no stranger to disruption. The growth in popularity of ecommerce, rising concerns over sustainability, and innovative new market entrants have been shaking up the traditional bricks and mortar approach for years. Many well-known brands which once ruled the high street have seen a sharp decline or disappeared entirely, while others are fighting to reinvent themselves for today’s ever-demanding consumers. The need to fail fast, rapidly identify issues, and make quicker, more effective retail decisions has never been greater.
Despite the turbulent status quo, what many retailers weren’t prepared for was a global pandemic. Within a matter of weeks, COVID-19 caused widespread disruption across the retail supply chain. The virus forced the closure of physical stores, warehouses, and factories, caused spikes in demand for certain products, and created an unprecedented fall in demand for others. Fashion retailers quickly became burdened with masses of unsold seasonal stock, real estate costs for shops they couldn’t trade from, and supplier orders they no longer needed fulfilling. Specialty retailers faced a similar issue, with a drop in consumer income reducing expenditure on luxuries. Grocers faced the opposite problem, trying to deal with a surge in demand, a shift in purchasing habits, staff self-isolating due to sickness, and the need to foot the bill of increased hygiene and safety practices in stores.
In this situation, even the most hardened of retailers faced a predicament. What will be the impact of the worst-case scenario on the bottom line? How can we cut costs? What’s the most effective way of shifting this backlog of stock? What happens if we can’t get hold of this particular line item or range? Do we have enough staff to cope with increased demand? Can our logistics network cope with more online orders?
Such questions exist even at the best of retail times, but in crisis mode, they are exacerbated. In this kind of situation, decisions need to be made quickly, based on an accurate picture of what’s going on across the business. The results of these swift actions then need to be analyzed so that tweaks can be made to deliver the most effective response possible given the circumstances. Mistakes will be made, but these mistakes need to be identified, learned from, and rectified quickly. To effectively judge the situation and improve your position you need to fail fast and often, using up-to-date insights to make informed decisions on what to do next.
Unfortunately for many retailers there’s no simple way to do this. Lengthy, manual data consolidation from multiple sources and systems means that by the time information is pulled together it’s already out of date. A simple report which takes days, or even weeks, to produce is not much use when the situation is changing daily, making it possible to fail fast but not recognize or respond to the resulting issues in time.
What is needed in these circumstances is complete transparency of the business so that performance can be reviewed quickly, plans can be adjusted rapidly, and the impact of different scenarios can be simulated. Data must be centralized from across the business to provide an accurate foundation for all analyses, plans, and forecasts, enabling users to perform all of these activities, and see their impact across the organization, in real time.
For example, if all physical stores are closed, what is the knock-on effect on revenue, stock storage costs, and staff requirements? If a supplier goes bust and can’t fulfil an order, what’s the impact of shifting to another supplier which charges slightly more per unit? If X% of staff are off sick in the warehouse, what’s the impact on productivity rates? The true impact of such scenarios can only be understood through an integrated business planning and analysis approach which provides complete transparency of every activity and enables users to evaluate model outcomes by simulating their effect. With instant visibility of the expected outcome of any strategy or change, an informed decision can quickly be made.
Some retailers are already aware of the need to upgrade their approach and will be spurred on in their change journey by the Coronavirus pandemic. Others have already driven digital transformation across their processes, and for them, agile working is second-nature. Plans, forecasts, and analyses are already performed in a much more agile way, enabling them to react quicker when the unimaginable happens. Take a look at the case of leading fashion retailer Puma, which has, using the Board decision-making platform, integrated processes from target setting to execution. The platform has created alignment across all departments and enabled Puma to respond quickly to market changes while reducing purchasing costs.
COVID-19 will eventually pass, but there will be a lasting change in the retail industry. Those who have embraced digital transformation will continue to benefit from a faster, more integrated way of working and the ability to respond to ‘fail fast’ situations, helping them serve customers more effectively in whatever retail climate they face. Those that haven’t face a gloomier outlook, and in such a competitive market, survival really is down to the fittest.
Find out how the Board decision-making platform is helping leading retailers to transform their approach.