The new reality for retailers: 5 strategies as businesses reopen
Retailers should assess new technology, supply chain impacts and more
INSIGHT ARTICLE |
The COVID-19 pandemic has hit the retail industry particularly hard, and it may forever change the way many retailers operate. As the economy begins to reopen, retailers require a plan for accommodating new expectations for shopping and working environments. Here are five reopening strategies that retailers should consider as they prepare for their new reality.
1. Technology adaptation and adoption
Adapting your business to reach customers through new channels will be key to maintaining a strong consumer base. Even when physical stores reopen, many consumers may still be more comfortable shopping online. To continue to reach these customers, retailers need to optimize various technology platforms (e-commerce, mobile applications, call centers) to sell their products and services. More customers are buying online and then picking up in store or getting items shipped, or doing curbside and contactless pickups. Consumers who do return to brick-and-mortar stores will still expect other options that may necessitate the adoption of new technology, such as self-checkouts, scan and go (via mobile application) and contactless payment (via radio-frequency identification or near field communication).
What to do now
- Build an online presence, if you do not have one already.
- Leverage applications to automate scheduling of delivery, curbside pickup, appointments and waiting lists.
- Begin implementing technology within stores that will minimize contact.
- Leverage omnichannel and loyalty programs to enhance the customer experience and cultivate a seamless shopping experience.
- Do not overlook security implications. Cybersecurity attacks are on the rise, and retailers cannot let their guard down in the flurry of adopting new technology.
2. Store reopening
Reestablishing consumer and employee confidence will be essential in helping individuals feel comfortable returning to stores. Opening a store prematurely, without a strong strategy in place, can drive consumers elsewhere and put both consumers and employees at risk. This strategy should articulate the physical, administrative and procedural safeguards being put in place to protect consumers and employees, while also supporting revenue streams. Communicating this strategy to consumers and employees alike will help establish trust and accountability. It can also provide a competitive advantage over other retailers who have not taken such precautions.
What to do now
- Designate a role to monitor federal, state and local guidelines for reopening requirements.
- Establish requirements to accommodate social distancing, deep cleaning, new delivery/pickup options, and/or special shopping hours (for seniors, health care workers, etc.).
- Determine whether masks, gloves and other protections are required or optional, and develop a policy to address individuals who do not comply.
- Revisit your human resources and employee management strategy regarding sick leave, travel, work from home options for corporate employees, as well as other benefits.
- Reassess your marketing strategy to potentially pivot to other sales channels.
- Communicate the strategy clearly to employees and consumers, and assure them the company is monitoring the situation closely.
3. Physical store accommodations
Many retailers will need to reenvision the physical layout of their stores to accommodate new safety requirements. Redesigning a store can be costly, but there are low cost options to facilitate social distancing, such as one-way aisles, staggering guests in line, installing antibacterial dispensers and wipes, and implementing Plexiglas barriers.
Frictionless checkouts are ideal, but retailers who cannot adopt those processes still need a procedure for sanitizing high-touch devices such as point-of-sale (POS) systems. In the Payment Card Industry (PCI) council’s guidance on sanitizing POS devices, they recommend following vendor guidelines for cleaning these devices, as applying chemicals directly can damage them, and using plastic overlays can increase the risk of skimming attacks or device tampering.
Reviewing the physical design of the store also presents an opportunity to review lease contracts to determine whether the current situation best fits the retailer’s needs.
What to do now
- Review the physical layout of all facilities to determine opportunities to accommodate social distancing.
- Provide clear instructions to consumers and employees on how to navigate throughout the store.
- Plan for regular deep cleanings.
4. Compliance implications
Changes to business processes will almost certainly affect status with compliance requirements. While compliance enforcement has been relaxed temporarily, it will likely return in full force. Taking a proactive approach now will avoid a headache later on. Key compliance drivers within the retail industry include, but are not limited to:
PCI: With the shift in payment processes, many retailers have no choice but to embrace new payment channels. Brick-and-mortar stores may now be accepting credit cards online, over the phone, via mobile applications and even through the mail. This may expand (or in some cases, even reduce) the scope for PCI and change how an organization attests to its compliance.
Privacy: To facilitate contactless delivery, pickup, or shopping wait lists, retailers may now be collecting additional information from their customers, such as name, phone number, address, email, geolocation data and more. This is personal data that may be subject to privacy regulations such as the General Data Protection Regulation (GDPR), the California Consumer Privacy Act (CCPA) and other state privacy laws.
Food and Drug Administration: For grocers and convenience stores, FDA guidelines will need to be monitored closely to ensure food and drug safety requirements are being met as retailers adopt new processes.
Tax law: Contracting with a third-party delivery service, expanding the e-commerce presence or delivering goods over state lines affects a retailer’s state nexus footprint for income, sales and use taxes. In response to states implementing Wayfair legislation and increasing audit activity to boost revenue, state tax compliance and planning is crucial.
Stimulus funding and Paycheck Protection Program: These programs can help retailers recover financially, but eligibility and loan forgiveness is contingent upon meeting certain stipulations.
What to do now:
- As a rule of thumb, strive to collect only the minimum data necessary to complete the business transaction. Less data generally means less exposure and less compliance risk.
- Apply for applicable loans and stimulus funding.
- Document your activities as you go. Strive to keep network diagrams, data flow diagrams, policies and procedures reflective of new processes, technologies and sources of data collection.
- Update privacy policies on all applicable platforms (website, mobile applications, etc.). Businesses can collect whatever personal data they need, as long as they disclose to consumers what they do with that data (the categories of data collected, purpose of collection, whether the data is shared with or sold to any third parties, consumers’ rights to that data). Updating privacy policies generally requires minimal effort but is one of the fundamental components of maintaining compliance with privacy laws.
5. Supply chain
Supply chain disruption is a reality facing almost all retailers currently. These disruptions trickle down to the consumer, as retailers face issues with order fulfillment and shipping delays. Addressing this problem will require transparency and creativity. Retailers will need to ensure they fully understand their role within both the digital and physical supply chain. They will also need to think creatively and look for alternative methods to align supply and demand. Digital transformation, supply chain automation, smart contracts and even blockchain are within the realm of possibility for many retailers, and they offer benefits that will extend well beyond the COVID-19 pandemic, if implemented properly.
What to do now:
- Make sure you understand and document your reliance on suppliers, vendors, manufacturers and distributors.
- Determine how revising business processes (e.g., moving more processes online) may affect your supply chain.
- Consider whether there are additional customers/uses for your product and service in alternative demand channels.
- Identify whether alternative suppliers and vendors are needed.
- Review and reassess (if needed) inventory levels.
- Communicate new shipping times to customers.
- If stores are still closed, leverage in-store stock to fulfill orders.
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