Toolio’s first prediction about the retail landscape post Covid-19 looks at the increasingly complex planning environment retailers will face and explains why they will need to embrace technology to manage this. You can see the rest of our post-Covid predictions here.
As the old industry quote goes “retail is detail.” Because of Covid, the details have multiplied, becoming more complex and harder to predict. In the new landscape there will be no margin for error.
Retailers will face planning related challenges in three general phases: reopening, recovering and readjusting to the new norm. While each of these phases will pose different types of challenges, they will have lasting impacts on planning processes, teams and the technology we use.
First, retailers will face challenges around reopening stores and operations in a rapidly changing environment. In addition to all of the challenges around creating a safe and socially-distanced store, retailers will have to respond to a complex and varying store opening schedule across different states and countries around the globe, suppressed and unpredictable customer demand, and the possibility of future store closures if we experience more waves of infection. All this unpredictability adds additional complexity to an already fragile state of operations with a hefty stock of spring and summer inventory, drained cash balances and reduced demand from wholesale and off-price channels.
Interesting playbooks (see examples here and here) are emerging on how to best plan around these uncertainties. However, the reality is that nobody has all the answers and the best plan is to have the tools that give you the ability to learn and adapt in real time. Retailers will have to create updated merchandise plans, re-forecast inventory flows and play out different scenarios on a daily basis.
The second phase of challenges will come around predicting demand over the next 6 to 12 months. Normally, retailers pour over historical data to understand patterns and layer in current trend analysis. However, both of these data sources are called to question in the new macro environment. Most certainly, last year’s numbers are no longer a guide for this year. Figuring out what is a trend, a blip or everlasting change will also be very difficult to decipher in the near term.
The right answers will be hard to find, but the fundamentals are the same. When looking at historical data, understanding the true success factors of past seasons and products will be even more critical. And when chasing current trends it's more crucial than ever to match supply with demand and then pivot to the next trend. Data will continue to guide decisions, and retailers will need automated systems to analyze data at various levels in real time to gain actionable insights.
Finally, the retailers that make it through to the other side of the tunnel will be navigating a new normal. Most of the pre-crisis trends will be fast forwarded by a decade, if not more. In the post-Covid world, ecommerce will make up a much larger share of the overall transactions, and retailers will need stronger e-commerce operations with built in redundancies and omnichannel fulfillment capabilities (i.e curbside pickup). This will require true omnichannel management and planning capabilities. Siloed retail planning organizations will be a thing of the past.
Omnichannel planning will come with its own set of complexities, with store demand stemming from web traffic in addition to foot traffic, more complicated logistics operations and more organizational stakeholders for decisions. Planning organizations will have to make more complex decisions, with reduced time on hand, less manpower and remote workforces. This will require merchants and planners to implement technologies that can help streamline their planning process, enable faster data analysis and decision making, and facilitate remote collaboration.
As the saying goes, “in the midst of every crisis, lies great opportunity.” For far too many years, retailers have relied on manual workflows, error-prone spreadsheets and gut feeling to make decisions on their most important asset: inventory.
This crisis creates an opportunity and a necessity, to embrace retail planning technologies in order to make data-driven decisions that account for many scenarios efficiently and effectively. We predict that in the post-Covid world, the retail planning landscape will be more automated, digital and tech-enabled.
Our next prediction talks about the rise of seasonless assortments. You can see all of our post-Covid retail predictions here.
Looking for more?
Toolio is building the technology and know-how to manage this transformation. If you want to learn more about how technology can help you navigate increasing planning complexities, request a demo of Toolio.