- These are hints and tips that can support business planning for re-opening
- There is no blueprint for what will happen to demand, even as we see countries reopening the effects and cultures can be vastly different across the globe. Learning quickly and failing fast is the only way to navigate this.
- Do NOT flood stores with stock, keep stock as high in the supply chain as possible.
A new market
The biggest thing that Retailers want now is confidence and assurance. Unfortunately, these are the things that will be taken away in the post lockdown markets. Some consultancies are saying that we have seen this before in recessions; we haven’t.
The entire foundations of Retail have been shaken and we are entering a huge period of transformation. There is no blueprint and there are no silver bullets. Those that do not act or continue to act in the ways they always have – will fail.
This requires a mindset shift and a willingness to relearn what we have known for the last 20 years.
Fast learning forecasts are crucial
Despite the very real dangers, there is hope.
When stores reopen after the lockdowns are lifted, there isn’t a way to forward predict demand – until you start to see the trading patterns. This means that forecasts need to be built using data science to factor in the latest views of demand daily.
If you are an international business, you will see these trends take different forms and shapes in different cultures. We know that in China, the return for Retail has been incredibly sluggish, with many people still choosing to stay at home more and shop less. In the UK, we know there has been a huge economic interruption with many people having pay reduced or cut. At the same time, there is slight cultural defiance in many Western countries with demand swelling slightly with people wanting to return to normality.
The truth is there are many variables. The product you are selling, the culture of the market and the economic stimulus provided by the government are all but some of the factors. Not only is it impossible to predict in advance, but it will also change over time too.
Creating a data science-driven forecast that learns from each days passing trade, is the only way to accurately respond to post lockdown demand. The mindset of all Retailers and their teams needs to adjust from one of cautious, optimised decision making to that of crisis management. To quote Voltaire; “perfect is the enemy of good”. In times of crisis, the chances of wayward precision increase dramatically. It is OK to get things wrong in pursuit of the right answers.
To do nothing will be catastrophic, this is the only piece of advice that can be guaranteed.
Act quick, fail fast and learn faster.
Re-opening Action Plans
1. Don’t flood stores with stock
This is the most important tip. Once the stock has made its way down the channels, it is very hard and costly to get it back. Its important at this stage to take the most pessimistic attitude for demand and then be proven wrong. The reality is that most stores will be overstocked and if a clothing retailer its probably the wrong stock too. Don’t make that situation worse. In the early stages, it is better to not have something available than have so much stock your store colleagues can’t find product, and you prevent the future product from launching correctly.
Keep the stock as high in the supply chain as possible, so you can react to sending it to the channel/store that has the highest opportunity and propensity to sell that product.
2, Change the mindset from planning to reacting
This flips the retailer handbook on its head. In times like this, it is impossible to plan. It becomes about having the quickest reactions possible. Lean supply chains and executives who make quick decisions will win in these early phases post-lockdown. You will waste a lot of time and effort, and then likely get your plans completely wrong if you try too hard to operate in the same ways you always have. There will come a time to flip back into long term planning, but for now, being reactionary is important.
3. Use propensities, not absolutes
In line with ditching your well-made plans, dealing in absolute numbers also becomes meaningless. Instead, you need to get used to talking about propensities. It no longer matters whether you are putting £2m or £2.5m into a markdown. The devil is in the detail of working out which stores are better at selling markdown than others and then building up to see what a sensible amount of stock for those stores to hold.
4. Optimise Promotions and Markdowns
In the post-lockdown world, nearly every retailer that has closed will have a stock problem. They will also have a demand problem. The reality is that the whole market will be looking to promote and markdown product to help ease these problems. Make sure that when you do, they are optimised. The efficiency of every sale has never been so important. We have helped many businesses optimise their promotions and markdowns to maximise ROI, and now more than ever it will be crucial.
5. Clean up your messaging
In stores your messaging needs to be accurate and effective, using every aspect of pricing psychology to ensure the best results. But also, online needs to act as an extension of your store presence and any missing images, poor descriptions and broken links will only serve to lose valuable sales. We have a DSA service where we scrape your site and share all of these issues in an easy to read format that you can crack on fixing right away. It is heart-breaking to see missed opportunities over something so easy to fix.
There is a lack of clarity for everyone in the current climate. No one knows the lasting impact it will have, nor when it will be over. This could usher in a new normal for Retail that no one has ever seen before. Retail is used to taking its lumps. Whether it’s the decline of the high street or battling the likes of Amazon. The good news is the people and the businesses are some of the toughest in the world.
We need to stick together, learn quickly, fail fast and try our best.
Author: Tom Owen