To use the word ‘unprecedented’ truly underplays the impact that Covid-19 has had on the retail sector. As nations grappled with the impact of the virus, global factory closures caused a ripple effect across an expansive supply chain network, quickly leading to disruption across the world.
While it’s true the sector has had mixed fortunes, in which supermarkets, home improvement and ecommerce may be struggling to meet demand, others have seen demand fall off a cliff and are struggling to survive. As numbers from the Office of National Statistics show, in 2020 retailers suffered the largest year-on-year fall on record as sales dropped by 1.9 percent compared with 2019. On the other hand, self-isolation and social distancing fueled the surge of e-commerce, which in turn forced many vendors to improve or build their digital capabilities from scratch overnight.
With many of the shifts in our shopping and consumption behavior being structural and permanent, how can help retailers ensure they remain resilient?
The balance of trade between brick and mortar and online avenues will never return to 2019 levels. Consumers who have enjoyed the benefits of grocery delivery through necessity are unlikely to step back for example. According to McKinsey’s research into consumer trends in the Covid-19 era, shoppers have accelerated online deliveries and digital adoption at a 10-years-in-8-weeks rate.
Necessity is a powerful enabler of change, and the retail sector has embraced automation through the supply chain to varying degrees especially in the hypercompetitive supermarket space. Many supply chains met the challenges and held intact, aside from irrational consumer behavior and some specific areas where demand spiked. However, over the decades, the workload automation and scheduling technology landscape has evolved around disconnected layers.
Indeed, automation is a critical consideration, especially across these traditionally operational silos. One of the shifts caused by Covid is that the employees who would usually be there to connect the gaps between different automation functions and solutions are now working remotely. With the lack of a unified approach, siloed processes and processes that had flaws in them to begin with are being and have been revealed. Businesses need to run with greater agility and ability to respond to changes; waiting until overnight to start automation is too late. For instance, swift inventory restocking and scheduling is vital when orders are changing hourly.
Today, retailers need to have a more detailed and accurate view of what’s selling, movement of stocks and margins. Unfortunately, some organizations still rely on manual copying and entering data to produce reports on key business functions. This approach not only takes much more valuable time and creates the risk of potential errors but also leaves employees with repetitive and unimaginative tasks.
In light of this turmoil, having a modern automation system in place is vital. Organizations can respond in real time and make sure that the business processes are able to handle many of these situations, without being dependent on a human involvement to make decisions or to correct errors. Automation connects these processes and systems to remove dependencies on manual intervention and handover for services.
It is fair to say that not all of the retail sector had been as successful at driving that level of automation and transformation. Those that survive can no longer rely on footfall and instant gratification as a way to match the price and convenience of online. With more companies investing in e-commerce solutions and saturating the market, customers will have a wider choice of what, where and how they buy. What it means for the industry is that retailers will now have to ensure seamless customer experience to stand out from and survive against competitors.
Any retailer today needs to be able to harness the information and data it has about its customers. This data will determine the forecasting, buying, logistics, marketing and promotions activities in near real time. Having valuable insights on customers’ needs also helps in providing a superior buying experience. In fact, in today’s online market, the lack of friction of moving to another supplier sets the bar high for seamless customer experience. If a shopper faces any issues with a particular vendor, such as low supply or backorders, slow refund process and errors in address on an order, it is easy to switch to another retailer. Being unable to deliver great experience on time, puts businesses at risks of losing competitive edge and income.
Moreover, real-time data provides enterprises with timely information so that they can make more informed decisions and support mission-critical applications such as just-in-time supply chain management. Therefore, instead of waiting for pre-scheduled action to take place or employee’s manual intervention, processes can be completed earlier. For instance, if something unpredictable happens during the weekend reporting process, companies equipped with automated solutions would be able to keep all of the customer touchpoints running. This circumvents potential disruption to the overall business’ operation.
That being said, not relying on human input for certain tasks does not mean employees cease to be the vital component in an organization, in fact it’s quite the contrary. When implemented, experience shows that automation takes over repetitive tasks that do not develop individual skills or add value to the business, taking work out of the operation of the business not the workers. With freed up time, staff can focus on the creative and strategic challenges.
IT needs to begin monitoring customer value metrics in addition to operational KPIs to understand impacts on service delivery and customer experience. If retailers address those issues, resilience is a by-product of the automation, which was successful for many retailers throughout given lockdown periods.
It is difficult to predict the exact future ahead of retailers. However, automation, particularly for back office operations, is the invisible heartbeat of daily business activities that can help achieve resilience. Organizations that process purchases, maintain inventory, track customers and send out invoices all depend on it.
Furthermore, with increasingly competitive market of online shopping, customers will also become more demanding. Ensuring seamless experience from adding items to the virtual basket to easily trackable journey of the parcel is no longer optional. Every retailer needs to be able to harvest the data they have about customers to better cater to the growing demands. Embracing automation can help future-proof a business ahead of further challenges on the horizon.
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Neil Kinson, Chief of Staff, Redwood Software