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Will COVID-19 Infect Retail IT Spending? How Providers Can Be Prepared.

By Sandeep Unni | March 18, 2020 | 0 Comments

We are living through unprecedented times. The spread of the COVID-19 outbreak has changed shopping habits and resulted in a change of the retail landscape everywhere. Several global and national brands shuttered stores, and online sales has gathered steam. Online grocery delivery also saw a surge as millions of consumers hunkered down at home.

In China, fast-food brands, such as McDonald’s, Starbucks and Yum! Brands, ramped up “contactless” pickup and delivery services to keep their workers and customers safe. Companies such as JD.com and Meituan Dianping, which operate large food delivery networks, are also experimenting with end-to-end contactless solutions using unmanned vehicles and drones.

Even before mandated social distancing took hold in our lives, a recent survey by Coresight Research found that  58% of people say they are likely to avoid public areas such as shopping centers if the outbreak worsens in the U.S. Beyond malls, the survey found consumers will likely avoid restaurants, movie theaters, sporting events and other entertainment venues.

This detrimental impact on sales could force the hands of retailers that rely on store presence to curtail IT and overall spending decisions in an effort to maintain profitability. An uncertainty can also have a bearing on consumer spending patterns, and any deterioration in the outbreak can significantly disrupt consumer buying behavior.

Aside from the demand-side impact from consumers, retailers also face supply chain shortages stemming from factory shutdowns, slowed production activity and bottlenecks in transportation of goods. Even as the factories are ramping up production, segments spanning electronics, luxury, fashion and apparel, drugs, holiday décor and toys, all with global supply chain reliance, are expected to be impacted.

So what does this mean for technology buying cycles and opportunities for technology and service providers in retail? We see a few immediate avenues:

  • Continue engagement with your buyers to demonstrate your value. You should not see cancellation of IT buying decisions, but these decisions could face short-term pullbacks as retailers assess the extent and impact of the outbreak on their businesses.
  • Providers with AI/ML expertise particularly in use cases that span core supply chain planning, forecasting, inventory and merchandising functions should steer investment decisions in these functions.
  • Emphasize the opportunity to leverage digital and unified commerce technologies with store fulfillment methods, such as click and collect and store delivery that provide continued business growth for the physical store.
  • Digital workplace and remote work technology spend is already seeing a boost, presenting continued opportunities for such solutions to boost security and robustness of scale.

Gartner clients with vertical industry-focused portfolios and looking to mitigate potential impacts should see Mitigate COVID-19’s Impacts in Vertical Industries With These Vendor Action Items.

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