Defining a Profitable and Resilient Path Forward in Retail
The retail industry is at an inflection point. COVID-19 has shuttered factories worldwide, disrupted global supply chains, and stalled physical retail. With production reduced and overall demand significantly down, companies have to create demand for their products in the face of changing resources and a shifting global landscape. While the supply side can be managed by retailers that identify alternative supplies and production sites, changes in demand are harder to influence as customer sentiment is difficult to affect. In order to reopen, retailers are also faced with the logistical challenges of bringing back furloughed employees and resuming operations at malls across the country. And, once the stores are open, it is still uncertain how quickly customers will reembrace in-store shopping.
Retailers must prepare for the future by navigating the immediate disruption and fostering long-term resiliency through strategic planning and implementation of transformation initiatives.
Within the retail industry, food and non-food retailers are facing different challenges due to the roles they play in consumers’ lives. Food retailers have experienced a spike in demand, witnessing in March their highest levels of growth in almost 20 years, despite supply chain disruptions, complexities in store operations (e.g., how often and how to clean stores), and staffing issues. Non-food retailers have borne the brunt of the shock, as demand and liquidity continue to plummet. In March alone, sales were down 51% for apparel and accessory stores.¹
To maintain business continuity and resiliency, non-food retailers must proactively deal with the immediate turmoil and prepare for what the new normal will bring. The magnitude of the current disruption, which is high for most retailers, and the core health of the business will dictate the extent and speed at which change must be implemented. Companies that navigate the immediate disruption, near-term planning and transition period, and long-term transformation will come out ahead.
This guide provides a structured approach, with priorities and action items, to help retail CFOs and other leaders preserve profitability and maximize stakeholder value in the post-pandemic operating environment. It is a companion piece to our flagship guide, The Next: Defining Your Path Forward.