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You are here: Home / Business Intelligence & Analytics / COVID-19 vs. Retail: How Has the Industry Shifted?

COVID-19 vs. Retail: How Has the Industry Shifted?

The Impact of COVID-19 on the Retail Industry

07/10/2020

Like every other business industry, the retail sector has been drastically impacted by ongoing coronavirus pandemic.

In response to rapidly changing uncertainties surrounding COVID-19 and government guidelines, retailers are bracing themselves for near-term and long-term adverse effects along with the anticipated permanent changes to the business. Retailers are adjusting everything from their business models, to shopping hours, to even, in extreme cases, closing their retail outlets temporarily to reduce the spread of the virus.

As sales of essential and medical goods rise and sales of non-essential items such as luggage and briefcases plummet, retailers are looking closely at all major parts of the business and strategies that govern them. To respond to the massive behavioural shift across the customer base, retailers are also looking at their omnichannel strategy to retain their loyal consumer base and/or helping vulnerable parts of society with essential goods to enhance their brand value and image.

At eClerx, our goal is to take a look at the impact of COVID-19 pandemic induced lockdown and the response from the industry and try to paint a picture of what the future might look like as we begin to come out of the lockdown.

RETAIL SUPPLY CHAIN

The major fallouts of this global pandemic are the travel restrictions and lockdowns. This has led to the disruption of international supply chains, suspension of business operations, and a significant decline in revenues.

According to recent data from Dun and Bradstreet, 51,000 companies have Tier 1 suppliers, and an additional 5 million companies have Tier 2 suppliers from impacted regions of China. Due to these supplier disruptions, coupled with lockdown policies, retailers are facing inventory depletion as consumers stock-up to avoid trips out of their homes.

In addition to supply chain disruptions, retailers are also struggling to keep up with growing online orders, leading to some retailers, such as UK-based Next, temporarily closing their online stores.

On the other hand, another major UK retailer, Waitrose, has accelerated a 5-month digitisation business plan and achieved its goals within just four weeks. They have added more Click and Collect stores along with a new delivery depot and an additional fleet of delivery vans to cater to a 50% increase in online orders. As evidenced by this, the current scenario is presenting a golden opportunity for retailers to ramp-up their digital operations and improve last-mile delivery within their geography. This will not only help businesses stay afloat, but also gain brand value to leverage when the scenario improves.

RETAIL DEMAND

Supply chain disruptions are just one part of the retail puzzle. Another casualty of this virus-hit economy is demand, as across all major economies, workforces are being forced to stay at home. However, though non-essential item retailers have been forced to shut their shops, grocers and supermarkets continue to experience superlative demand for essential items.

Retail sectors, such as clothing and luxury goods, which generally sell high margin products, have been impacted by closed shops. This has led to huge financial losses for fashion retailers that will result in a significant recovery period. One of our clients, a major UK-based retailer, had to close its non-essential divisions and has seen a decline in revenues to the tune of 70-80%.

However, there are a few sectors like personal care in which products such as vitamins and pain relief medicines, as well as stock-able items such as frozen food items, drinks, water, toilet paper, and other personal hygiene products, have seen a huge surge in demand.

This sudden change in consumer demand for certain categories may reverse when lockdowns are eased across geographies, though. In the short-term, retailers will experience a huge surge in demand for non-essential items, such as clothes and beauty products. This will give retailers a chance to clear the stock that they may have piled-up due to store closures. However, they may need to incentivize customers to walk out into their stores as most of their competitors will begin to run money-off or loyalty offers as soon as they are allowed to open. In the medium to long-term, consumer demands will depend on the responses of various governments to future peaks in virus-related cases. But in any case, consumers will be reluctant to go out and maintain social distancing when they do for a long time, thus fewer high street shopping trips. To mitigate the impact of the lockdown in the short-medium term, Retailers should increase their dedicated shelf space/product share in these categories to capitalize on the growing demand. Retailers should also try to redistribute their budgets and increase the product share in the positively impacted categories to capitalise on the growing demand (viz. Household cleaning and DIY, Gardening, and Home Improvements).

CONSUMER BEHAVIOUR & EXPERIENCE

In response to the constantly evolving guidelines from governments across the globe, consumer behaviour is also undergoing constant evolution. As consumers adapt to changing circumstances, the experience that retailers provide must also adapt to the evolving needs in the market.

And yet, other retailers are struggling to remain relevant. These firms must adopt new, digital methods of collecting market share and brand visibility.

To cope with the crowded digital market space, a noticeable upsurge in brands are focusing on social media for marketing and are increasingly liaising with influencers to increase brand exposure and association as the market sees a significant uptick in the dwell time on such platforms.

As for the in-store experience, brands are increasingly making it worthwhile for customers to step inside a store by making the physical experience safer through social distancing measures and a reduction in the usage of contact payments and loyalty cards. For example, Tesco, M&S, and Superdrug have all stopped using physical loyalty cards and are actively encouraging contactless payments. Supermarkets have also installed physical barriers and distancing markers both inside and outside their stores.

ROAD to RECOVERY – POST LOCKDOWN

In the medium-term, as lockdown guidelines begin to lift or relax, we expect the general mood in the market to be celebratory, though concerns around social distancing will persist. Upon lockdown retraction, several sectors will likely see an immediate boon. For example, various brands within the food meal solutions and at-home celebration markets will experience an increase in activity. However, others, such as the fitness market, can be expected to plateau or trend downwards as many people will already have equipment and fitness solutions at home. To grow, fashion retail might have to pivot more to comfort and in-home categories.

As we come to terms with the new normal, the economic impact of COVID is expected to elicit recessionary consumer behaviour. We may see recessionary market dynamics (as during 2008-2012), as when incomes are squeezed, market spend will become increasingly more value-led. Customers can be expected to buy into more cost-effective products, change retailers, and buy heavily into promotions. We expect to see a significant shift to online consumption with older shoppers (as noted in China recently), which presents a huge opportunity for brands as their online market share increases. There will be a continued shift towards consumers favouring local businesses, and this will put a lot of stress on most of the retail giants as the competition from local wholesalers seeking to remain in business increases. However, there is an opportunity for big retailers to collaborate with local businesses and create new supply chains to stabilise operations and overcome this hurdle.

Due to COVID, the gradual shifts that were happening over time have accelerated and resulted in more immediate behaviour changes. With all of us forced to stay at home and social distance, there has been an unprecedented adoption of technologies and digitisation of products and services across the board. We will navigate through a new normal of extended travel restrictions, social distancing, economic crisis, and damaged trust in the hygiene of people and products. These shifts in consumer behaviour will give birth to new customer segments, which businesses will need to understand and cater to. This will be a unique opportunity for brands to innovate and create new products and services to meet the evolving needs these new consumer segments bring. Brands will also have to make their marketing budgets more dynamic as there will be increasingly mounting pressure to be more targeted and personalized as physical presence becomes a luxury in the future. However, it can be expected that the online retail platform will be able to provide a better/similar shopping experience to current in-store offerings. As a result, the in-store experience will need to evolve and greatly reduce in presence to accommodate the evolving market paradigm. Overall, in the long-term, the uncertainty around the future will mean businesses will be forced to plan for multiple scenarios as behaviour may not return to what it was before this crisis.

Contact us today, to check if you’re tracking
the impact of this pandemic on your business
accurately, and to make your business strategy
future proof.

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Author Details

Tushar Singh and Saurabh Goel are senior analytics consultants based out of eClerx’s  London office. They are currently focused on analytics for Retail and CPG industries.

References

https://www.visualcapitalist.com/shoppers-buying-online-ecommerce-covid-19/

https://www.dnb.com/content/dam/english/economic-and-industry-insight/DNB_Business_Impact_of_the_Coronavirus_US.pdf

https://www.theguardian.com/business/2020/mar/26/next-stops-online-shopping-amid-uk-coronavirus-restrictions

https://www.prnewswire.com/news-releases/numerator-extends-covid-19-shopping-behavior-index-to-qsrs-home-improvement-electronics-and-office-supply-301038352.html

https://www.mindshareworld.com/uk/news/mindshare-uk-covid-19-consumer-impact-tracker-finds-a-nation-on-high-alert-to-the-threat-anxious-and-looking-for-guidance-from-sources-with-no-nonsense-helpful-information

https://www.bloomberg.com/news/articles/2020-03-25/e-commerce-isn-t-faring-any-better-in-the-social-distancing-era

https://www.kokoro-global.com/coronawatch-european-webinar-wave2/

https://www.theguardian.com/world/2020/mar/09/shopping-travel-events-what-coronavirus-means-for-consumers

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We will only use your personal information when the law allows us to. If the European data protection legislation applies, we will use your personal information on the basis of the following lawful grounds under GDPR:

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In certain instances, you have a right to receive any personal information that we hold about you in a structured, commonly used and machine-readable format. In such circumstances, you can ask us to transmit that information to you or directly to a third party organization. The above right exists only in respect of personal information that:

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While processing such requests, we are not able to guarantee technical compatibility with a third party organization’s systems. We are also unable to comply with requests that relate to personal information of others without their consent.

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You can request the exercise of any of the above rights by contacting us. Most of the above rights are subject to limitations and exceptions. We will provide reasons if we are unable to comply with any such request for the exercise of your rights. However, we may charge a reasonable fee if your request is clearly unfounded or excessive. We may need to request specific information from you to help us confirm your identity and ensure your right to access the information (or to exercise any of your other rights). This is a security measure to ensure that personal information is not disclosed to any person who has no right to receive it.

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We reserve the right to change or update this Privacy Notice at any time. Such updated Notice will be available at https://www.eclerxdigital.com/privacy-policy/ and we will advise you of material changes to our Privacy Notice by appropriate means. We may also notify you in other ways from time to time about the processing of your personal information.

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If you have any enquires or if you would like to contact us about this Privacy Notice or our processing of your personal information, including to request the exercise of your rights as outlined above, please contact us at DPO@eclerx.com.

PRIVACY POLICY

eClerx means and includes eClerx Services Limited and its subsidiaries (hereinafter referred to as “we”, or “our” and used
interchangeably) having its registered office at Sonawala Building, 29 Bank Street, Fort, Mumbai 400 023 and operates eClerx.com, as well as its associated websites including but not limited to eclerxmarkets.com, eclerxdigital.com, eclerxcustomeroperations.com, careers.eclerx.com (the “Websites”). This Privacy Notice (“Notice”) sets out the way in which we process your information in accordance with the General Data Protection Regulation (GDPR). The Notice applies only to the information we collect through or in connection with any of our digital or offline channels.

eClerx is a controller of your personal data available with us. This means that we are responsible for deciding how we hold and use personal information about you. This Privacy Notice does not form any part of any contract of employment or other contract to provide services. It is important that you read this Privacy Notice, together with any other privacy notice or consent forms we may provide on specific occasions when we are collecting or processing personal information about you, so that you are aware of how and why we are using such information.

THE INFORMATION WE COLLECT

WE WILL COLLECT, STORE, AND USE THE FOLLOWING MAIN CATEGORIES OF PERSONAL INFORMATION ABOUT YOU WHEN YOU USE OUR WEBSITES (NOT AN EXHAUSTIVE LIST):

  • Information that you provide via our Websites, including information you provide when you register on our Websites e.g. name, email address, designation, company, country and telephone number.
  • Information captured indirectly from third parties about your computer and about your visits to and use of this Websites, such as your Internet Protocol (IP) address, demographics, your computers’ operating system, and browser type and information collected via cookies (Please read about our Cookie policy at eclerxdigital.com/cookies-policy).

Some of the data that eClerx stores will be hosted within our websites including but not limited to following locations: Chicago, USA; London, UK; Amsterdam, Netherlands; Milan, Italy; Singapore, Mumbai, India.

THE LEGAL BASIS FOR PROCESSING YOUR PERSONAL INFORMATION:

We will only use your personal information when the law allows us to. If the European data protection legislation applies, we will use your personal information on the basis of the following lawful grounds under GDPR:

  1. where it is necessary for a contract – in order to perform obligations which, arise under the contract we have entered into with you, such as when you use our Websites or register on our Websites for usage of its services, it will be necessary for us to process your personal data. We process your Personal Information for the performance of a contract in the following circumstances:
    • to provide better usability, troubleshooting and site maintenance; and
    • to create your user ID.
  2. where it is necessary for our legitimate interests (or those of a third party) – either we, or a third party, will need to process your personal data for the purposes of our (or a third party’s) legitimate interests, provided those interests are not overridden by your rights and freedoms, including your right to have your personal data protected. Our legitimate interests include maintaining the smooth operation of eClerx, to identify you once you register on our Websites, to contact you and respond to your questions or requests, to understand which parts of the Websites you visited and how frequently, to understand your preferences in order to provide you with desirable content, to send you communication on sales and marketing programs, and for registration and subscriptions purposes.
  3. Consent – in limited circumstances, we may ask for your consent to process your personal data in a particular way, e.g. your consent to the usage of cookies as per our cookie policy.

SITUATIONS IN WHICH WE WILL USE YOUR PERSONAL INFORMATION:

The primary situations in which we will process your personal information will be to manage the existing services provided to you, to provide new information about our products and services, to understand your usage preferences in order to provide access to desirable content, to process a job application and former employee related requests, to communicate with you in case of customer support, to process transactions, for sending newsletters, updates and promotional materials, to carry out advertising and market research based on behavioral metrics, geo-location data, demographic data and marketing preferences we capture.

IF YOU FAIL TO PROVIDE PERSONAL INFORMATION:

If you fail to provide certain information when requested, we would not be able to establish contact with you to assist with
the provision of corresponding services, or apprise you of potential and/or existing business services.

CHANGE OF PURPOSE:

We will only use your personal information for the purposes for which we collected it, unless we reasonably consider that we need to use it for another reason and that reason is compatible with the original purpose.

Please note that we may process your personal information without your knowledge, in compliance with the above rules, where this is required or permitted by law.

AUTOMATED DECISION-MAKING

You will not be subject to decisions that will have a significant impact on you based solely on automated processing, unless we have a lawful basis for doing so, we have notified you and given you a right to challenge the decision or to require that the decision be taken by a person.

HOW WE SHARE YOUR PERSONAL INFORMATION

In certain circumstances we may need to share your personal information with third parties, including third-party service providers and other entities within the eClerx group of companies.

Why we might share your personal information with third parties

We will share your personal information with third parties where required by law, where it is necessary to administer the working relationship with you or where we have another legitimate interest in doing so.

eClerx Group Companies within the EEA:

We will share your personal information with other eClerx Group Company offices in the European Economic Area (“EEA”) for any or all of the following purposes:

  • as part of our regular reporting activities on company performance;
  • in the context of a business re-organization or group restructuring exercise;
  • for system maintenance support and hosting of data;
  • for the conduct of centralized functions which support the operations of eClerx Group companies in the EEA.

eClerx Group Companies outside the EEA

We will pass your personal information to, or allow access to such information by, other eClerx Group Companies worldwide where we have lawful grounds to do so. For example, as a result of the safeguards we apply, it will be within our legitimate interests to carry out intra-group transfers of data. The purposes for which we will do so include the performance of our global IT support function and for performance of contracts with our clients.

If you would like details of the particular Group Companies which can access your personal information, please contact us using the details in the Contact section below.

Regulatory and Law Enforcement Agencies

If we receive a request from a regulatory body or law enforcement agency, and if permitted under GDPR and other laws, we may disclose certain personal information to such bodies or agencies.

New business owners:

If we or our business merges with or is acquired by another business or company, we will share your personal information with the new owners of the business or company and their advisors.

HOW LONG WE WILL HOLD YOUR INFORMATION

We will only retain your personal information for as long as necessary to fulfil the purposes we collected it for, including for the purposes of satisfying any legal, accounting or reporting requirement.

DATA SECURITY

We have put in place adequate safeguard measures to protect the security of your information. (Details of these measures are available upon request). Third parties will only process your personal information with our instructions and where they have agreed to treat the information confidentially and to keep it secure.

YOUR DUTY TO INFORM US OF CHANGES

It is important that the personal information we hold about you is accurate and current. Please keep us informed if your personal information changes during your working relationship with us.

YOUR RIGHTS ON INFORMATION WE HOLD ABOUT YOU

You have following rights in relation to personal information we hold about you.

Right of Access:

You have the right at any time to ask us for a copy of the personal information that we hold about you and to check that we are
lawfully processing it. Where we have good reason, and if the GDPR permits, we can refuse your request for a copy of your personal information, or certain elements of the request.

Right of Correction or Completion:

If personal information we hold about you is not accurate or is out of date and requires amendment or correction you have a right to have the data rectified or completed.

Right of Erasure:

In certain circumstances, you have the right to request that the personal information we hold about you is erased e.g. if the information is no longer necessary for the purposes for which it was collected or processed or our processing of the information is based on your consent and there are no other legal grounds on which we may process the information.

Right to object to or restrict processing:

In certain circumstances, you have the right to object to our processing of your personal information. You may also have the right to restrict our use of your personal information, such as in circumstances where you have challenged the accuracy of the information and during the period where we are verifying its accuracy.

Right of Data Portability:

In certain instances, you have a right to receive any personal information that we hold about you in a structured, commonly used and machine-readable format. In such circumstances, you can ask us to transmit that information to you or directly to a third party organization. The above right exists only in respect of personal information that:

  • you have provided to us previously
  • is processed on the basis of certain lawful grounds; and
  • is processed by us using automated means.

While processing such requests, we are not able to guarantee technical compatibility with a third party organization’s systems. We are also unable to comply with requests that relate to personal information of others without their consent.

Exercise of your rights:

You can request the exercise of any of the above rights by contacting us. Most of the above rights are subject to limitations and exceptions. We will provide reasons if we are unable to comply with any such request for the exercise of your rights. However, we may charge a reasonable fee if your request is clearly unfounded or excessive. We may need to request specific information from you to help us confirm your identity and ensure your right to access the information (or to exercise any of your other rights). This is a security measure to ensure that personal information is not disclosed to any person who has no right to receive it.

RIGHT TO WITHDRAW CONSENT

In the limited circumstances where you may have provided your consent to the collection, processing and transfer of your personal information for a specific purpose, you have the right to withdraw your consent for that specific processing at any time. Once we have received notification that you have withdrawn your consent, we will no longer process your information for the purpose or purposes you originally agreed to, unless we have another legitimate basis for legally doing so.

COMPLAINTS

If you are unhappy about our use of your personal information, you can contact us using the details in the Contact section below. You are also entitled to lodge a complaint with the applicable EU data protection agency.

CHANGES TO OUR PRIVACY NOTICE

We reserve the right to change or update this Privacy Notice at any time. Such updated Notice will be available at https://www.eclerxdigital.com/privacy-policy/ and we will advise you of material changes to our Privacy Notice by appropriate means. We may also notify you in other ways from time to time about the processing of your personal information.

CONTACT

If you have any enquires or if you would like to contact us about this Privacy Notice or our processing of your personal information, including to request the exercise of your rights as outlined above, please contact us at DPO@eclerx.com.

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