This year, we’ll likely see a holiday shopping season like no other before it. And hopefully, we’ll never see one like it again. As we all know by now, the Covid-19 pandemic has upended the retail landscape. A number of major retailers have closed their doors forever, unable to withstand the one-two punch of mandated store closures and the e-tail tsunami. But others, particularly those that had already mastered the e-tail game, have thrived. Meanwhile, many have done an admirable job of changing up their business models in the blink of an eye.
Jessica Dankert has had a front-row seat to the action. She is vice president of supply chain for the Retail Industry Leaders Association (RILA), a trade association of U.S. merchants. It probably goes without saying that these days, Dankert and her colleagues are focused on helping RILA’s member companies navigate the uncharted waters of 2020 and beyond.
Dankert recently spoke to DC Velocity Editorial Director David Maloney about the current state of retail, what retailers expect for this unusual holiday season, and how the in-store experience is likely to change.
Q: Between the mandated store closures and subsequent operating restrictions, the Covid-19 pandemic has seriously disrupted retail operations. How would you describe the current state of the industry?
A: It has been a very interesting past handful of months, but I think retail generally is really quite strong. Most companies have reopened, and we’ve seen sharp spikes in e-commerce sales as homebound consumers shifted to online buying. I think it has been impressive to see how retailers have been able to pivot so quickly and respond to the needs of the consumer in this new era of doing business.
Q: We’ve seen several major retailers file for bankruptcy or shut down altogether. Were those companies that were already struggling or were their problems brought on by the pandemic?
A: I think having mandated closures has not been helpful—and not just for retailers, but also for the restaurant, hospitality, and entertainment sectors. It has been challenging. You see a lot of retailers examining and adjusting their models in order to respond to the new realities and, in many cases, coming back stronger.
Q: Are there common denominators among those companies that will succeed in this environment versus those that are at risk?
A: I think the supply chain is key to the retail organization. Certainly, the companies that designed their supply chains from the outset to be flexible and responsive have done well and survived the first part of the pandemic. But it has been a learning experience.
We’ve seen a lot of examples of supply chains that have really risen to the occasion in order to keep goods moving. We’ve witnessed their ability to pivot and meet entirely new needs, such as offering curbside pickup or ship-from-store service for retailers who weren’t already doing that. The speed at which retailers and their supply chains were able to adapt their operations to the new realities has been very exciting to see.
Q: How critical is information to these efforts? Will this push more retailers to digitize their supply chains?
A: The experience of retailers in the past couple of months has underlined the importance of visibility, which has been underpinned by digitization and a lot of the technologies that help provide that visibility. We need to accelerate that process and really get to a point where it’s enabling the kind of flexible supply chains you need in times of disruption.
Q: Are retailers moving to automated systems, especially if they’re filling fewer store-replenishment orders and more small orders for individual customers?
A: I think automation has definitely been on the table, and we continually talk about it with members. I don’t know that [the surge in e-commerce] has necessarily accelerated the shift. It just changes the conversation a bit and adds more data to that discussion. So much of what retailers do is data-driven—they’re constantly looking at the data to see what trends are taking shape that they’ll need to respond to and plan for. At the end of the day, it’s all about flexibility—the flexibility to respond to a pandemic or another type of disruption or consumer trend. So to the extent that automation can enhance flexibility and an operation’s ability to respond to whatever challenge crops up next, it could be another valuable tool in the retail toolbox.
Q: Are larger retailers faring better than smaller retailers?
A: I don’t think it’s necessarily a question of size. It really depends on the retailer itself and how well it was prepared for disruption—specifically with respect to its ability to make quick changes and quick decisions all in the name of meeting customer needs. It is really more around the organizational culture and whether or not company leaders have set up an organization, and by extension, a supply chain, that’s able to react and respond in times of upheaval.
Q: How key is that supply chain to their success?
A: It is certainly a big driver, but not the only driver. Supply chain is what’s behind the scenes making it happen and is obviously critical to serving the customer. What we’re seeing across many organizations are supply chains that over the past decade or so have grown increasingly important and have adopted a more strategic and customer-facing role. While [retail success] is really much more about the total experience a customer has, a good supply chain is certainly a key ingredient of successful retail, especially in the age of e-commerce.
Q: During the shutdowns, many people tried online grocery shopping for the first time and started ordering items they formerly bought in stores from e-commerce sites. Has this become the new norm, and are brick-and-mortar stores going to have to change their role?
A: That is a huge question that everybody is looking at: How “sticky” are these e-commerce sales trends? How long does this pattern play out? Is this a long-term shift? How much of that business will revert to stores as economies open up?
In many ways, the surge in e-commerce is just an acceleration of a trend that retailers had long been aware of and were planning for. They were already looking at the brick-and-mortar in-person experience and how that and the e-commerce experience can complement each other. What can you do differently with the brick-and-mortar setting to make it more relevant and enrich the customer’s experience? The e-commerce explosion is going to move things along a little bit, but I think retailers have been giving a lot of thought to that topic for some time now.
Q: How are retailers envisioning this holiday season? Do they think it will be a typical shopping season with respect to the time frame?
A: I don’t think anything about 2020 will be typical, including the holiday shopping season. In a traditional year, peak season starts around Thanksgiving, which helps guide all the forecasting, sales, and planning activity that goes into retailers’ preparations. All of those things will be different this year. As for timing, it will depend a lot on the economy and what is done at the federal and state government levels, the impacts there.
While it will definitely be an atypical holiday season, I do think that people are still going to be shopping. People are always going to need to buy things and shop for holiday gifts.
Q: Container shipments and overall import volumes are down. Does that mean retailers are “leaning” their inventories, and will we see shortages in some product categories as a result?
A: Retailers are continually evaluating what they’re doing with their inventory and what makes sense going forward, given the constant shifts in consumers’ purchasing patterns. The answer will be different for different retailers and for different products. I don’t think we’ll necessarily see across-the-board reductions in inventory, but I do think retailers are giving a good deal of thought to where they’re positioning their stock and what that means from a customer standpoint.
Q: Do you see more shipments coming directly from stores this year?
A: Definitely. We are seeing more retailers either launching ship-from-store programs or expanding their existing ship-from-store footprint. Ship-from-store makes a lot of sense in terms of being closer to the customer and being able to be more responsive. It’s essentially another tool in the retailer’s toolbox.
Q: While customers have been somewhat more understanding during the pandemic, they haven’t necessarily lowered their expectations for speedy delivery. Is that going to present a challenge during peak season, and are retailers looking at other delivery modes, such as crowdsourcing, to meet those expectations?
A: Parcel shipping at peak has frequently been a challenge during holiday seasons, so it is something they plan for. And they’re always looking at different delivery methods, whether it’s crowdsourcing, working with third parties, or other nontraditional ways to handle that last mile. You see a lot of new players in the space trying to help retailers solve their delivery challenges and a lot of retailers trying new tactics. I think the result will be a lot of options for the customer, as opposed to a one-size-fits-all solution.
Q: Bottom line, how are retailers looking at the upcoming peak holiday season? It’s going to be very different from anything we’ve ever experienced.
A: Yes, it is going to be a nontraditional, atypical rest of 2020. But based on what I’ve heard from members I’ve spoken with, retailers are very optimistic. Retailers have been buoyed by the experiences they’ve had with customers over the last several months and the success of their efforts to meet customers’ changing needs. The customers have responded to that. I think it has really just underscored the importance of retail in this country.
Q: Is there anything you wish to add?
A: Yes. Everyone, please wear your masks when you shop. It is important to keep retail workers safe. It is important to keep our communities safe. Please wear your masks.