Action from Chaos

Retailers and the Pandemic Economy

Retail is in a state of economic upheaval. The pandemic continues to force retail stores to close to signaling an unprecedented disruption of commerce. For some sectors and geographies business is booming, for others, survival. At first glance, the economy is chaotic, a random state of disorder and irregularity.  But in chaos, there is opportunity. Now is the time to think strategically, find order in chaos, and take action.  

All Retailers Need An Online Presence...And Even Some Manufacturers

In response to the economic conditions, a lot of retailers are delaying IT projects to save money and are taking this time to re-think their IT strategy.  One of those priorities is their online presence. I have had retail clients that were thinking about creating an online commerce capability. The ones that will survive are acting on that thought now. All retailers will go digital either through their own online shops or by using relevant platforms such as Amazon. The good news? If you are behind the curve on creating an online presence, it is a lot easier now because there are many cloud-based applications to get you up and running in a relatively short time. The opportunity is to “leapfrog,” avoiding the missteps and cost of early adopters who used early versions or built it themselves. Secure eCommerce applications abound that can offer a substantial step forward to an on-line presence.

Manufacturers that lost their distribution channels through the lockdown of retail stores are now contacting us because they want to go ‘online’ and reach out to consumers directly.

However, the move to online commerce needs to give careful consideration to security. Again, this is an opportunity to skip the pain of early adopters. Newer cloud solutions are  better armed to deal with online security issues and cybercrimes such as debit/credit card fraud, data breaches, DDoS attacks, hacking, phishing, ransomware, dark cloud attacks, etc. Much has been learned over the last few years. Cloud operators have become more experienced working with security agencies and law enforcement officials to detect, mitigate, and keep cyber threats at bay.

Supply Chains Will Change...Again

The coronavirus economy has put supply chains in chaos from both the perspective of the retailer and manufacturers. Broken supply chains will force retailers and manufactures to lower the dependency on ‘far away workbenches’ like China for the production of consumer goods. Savvy retailers will want to control their brand ecosystem even more tightly to ensure brand compliance and the ability to deliver their products. I am reminded of a retail trend from the past, nearshore supply chain, transferring work to companies that are geographically closer offering potential efficiencies and cost savings.  I believe supply chains will no longer be one way and simple,  but rather multiple and complex. Retailers and manufacturers may even adopt a more hybrid strategy, where the same product could be produced in different factories, combining offshore and nearshore.  The future is a fluidity of the “border” between retailer and supplier.

The Cloud a Bright Spot for Action

The cloud is a bright spot in surviving the chaos of the coronavirus economy.

Efficiency. The Cloud allows for greater collaboration because it gives your business the ability to communicate and share data more easily than traditional on-premise tools. A great example of this is in the supply chain. With the cloud, you can securely share your supply chain information across multiple locations with internal and external collaborators.

Rapid scalability. As demand rises, many companies will keep up with growth by using multiple systems. Some retailers running on traditional web-hosted platforms experienced delays and downtime due to their inability to handle the traffic surge. On the other hand, cloud-hosting platforms, are highly scalable and flexible, protecting businesses of all sizes from disruption.

Another area to consider is business continuity. Cloud solutions can help drive business continuity because it allows for the consolidation and coordination of data. Cloud solutions come equipped with features like data backup, disaster recovery, and business continuity management. For many retailers, this has ensured continued business operations during the current economic chaos.

While remote work existed even before the rise of cloud computing and the coronavirus outbreak, it was rife with inefficiencies and technical difficulties. Fortunately, cloud applications have evolved, allowing relatively seamless remote work. During the shutdown, many retailers could continue without interruption as employees could log in from home and work. There are cloud-based solutions for a range of jobs:  accounting, back-office tasks, writing and editing, engineering, online marketing, web designing, consulting, or other jobs. As always, it is important to have a reasonable set of business and technical requirements to help choose from the variety of available solutions.

Small changes now, can lead to huge returns in the future much like the “buttterfly” effect of chaos theory, a butterfly flapping its wings in China can create a hurricane in Texas. One thing is clear, retailers need to deal with this pandemic with a combination of strategy and tactics. Step one, where possible, migrate to reliable on-line platforms. To do this quickly, retailers need to consider moving to the cloud.


By Klaus Sentker, Senior Partner and Chairman of the Board Retail Consult