Retailing in a COVID World
The unprecedented impact of COVID 19 has brought forth dramatic changes in the way we live and work. It has injected uncertainty into the macro environment and the new normal continues to impact most industries, including retail. The sector has been going through significant disruptions over the past few months such as increasing concerns towards the health and safety of employees, the slowdown in manufacturing, travel restrictions, and limited movement of goods induced by the nation-wide lockdown. While the Governments, at the center and state level, have initiated the phased unlocking of the economy, in the changed normal, some of these disruptions continued and are likely to stay.
The impact of these hurdles is evident in the retail sector and reflect in its performance since the onset of the pandemic. As per the IDC report on the ‘Impact of COVID-19 on the retail industry’ the outbreak has had a significant impact on consumer behavior, product demand, and retail stores, manufacturing plants, and logistics services availability. Fashion, furniture, and electronics retailers were hit hardest as consumers avoided discretionary purchases in favor of stocking up on food and household supplies. Grocers fared relatively well, but at a higher cost of operations; however, they are also motivated to be better prepared for the omni-channel shopper and responsiveness to demand shifts.
Even amidst all the adversities, Indian retailers have tried and are trying to mitigate the impact of these multitude of challenges. The concerted effort put forth by the industry includes managing gaps in consumer demand, ensuring liquidity, mitigating supply chain disruptions, management of store operations while ensuring social distancing, proper hygiene and compliance with Government norms. As the economy opens up, albeit gradually, a rise in demand from consumers can be expected, which could lead to positive market sentiments.
Digital-first tech-savvy millennials are reshaping consumption trends, specifically how consumers discover, evaluate and purchase products. A report by Google India and Boston Consulting Group suggests that by 2023, the use of internet by shoppers during the entire purchase cycle, from researching to buying, will impact 63% of consumer durables sold in India. These projections – in all likelihood – are bound to go upwards given the expedited surge in online transactions post COVID-19.
In order to acclimatise to the ‘next new’, strengthening the network of omni-channels, trade partners and distributors is a must for companies to build resilience and sustain their business momentum. For instance – brands can bring together e-commerce and existing distributor networks to ensure uninterrupted operations. It is also important to tailor the product offering – using data analytics – to provide a wide variety of consumer appliances for buyers to choose from. This level of customization not only draws customers’ attention but also keeps them engaged for upcoming product launches. As per a survey conducted by Nielsen, 28% respondents in 12 Indian cities states that they were open to the idea of buying a home appliance despite financial constraints. With work-from-home becoming a norm, consumers are buying products that add to the comfort level and aid them with household chores. This has also led to an increase in demand for connected home appliances. This change in customer buying preference has also helped boost the sale of automated and voice-controlled household appliances. The surge in demand for household items including, auto clean chimneys, water purifiers, dishwasher, vacuum cleaner, washing machine, among others also can be attributed to families desiring a higher level of comfort at home.
Demand for ergonomic furniture for the home is also on the rise due to the uptake in online classes and virtual learning modules. Makeshift workstations are likely to give way to more reliable and productive desk areas creating higher demand in the segment.A recent report by Morgan Stanley estimated the immediate impact of COVID-19 will likely fade in a few months, but it could significantly alter the dynamics of India's digital economy. COVID has also led more consumers to cross the perceived chasm between offline and online buying when it comes to selecting furniture for their homes – indicating growing trust in the online discovery of products.
The upcoming festive season is an opportunity for home appliance makers and furniture manufacturers to drive their sales and bridge customer’s shopping experience by following the new market trends. To tap into the evolved consumer mindset, all aforementioned aspects should be considered especially the use of the e-commerce platform as a priority. The recent move to the digital space and the pent-up demand will certainly help the retail industry in the coming months.
Every business crisis disrupts the status quo and pushes companies out of their comfort zone. However, it also offers opportunities to reinvent business models to make them fitter and more accustomed to the new world. While preparing for the resilience strategies, retail companies need to go back to the drawing board and evaluate their modus operandi. This way they can not only iron out inefficiencies but also reorient the business to be future-proof and drive sustained growth.
