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Huge Swings in Retail – Getting Your Supply Chain Through COVID-19 And Out The Other Side

By Thomas O'Connor | March 30, 2020 | 0 Comments

The global outbreak of COVID-19 is driving huge swings in demand across retail as businesses selling necessities experience a surge in sales, while others selling discretionary items face significant revenue reductions. Specifically:

  • Fashion, apparel and luxury markets are facing a significant decline in sales driven by nervous shoppers looking to minimize their spending, a reduction in tourist numbers and a vast number of temporary store closures. Reports state that a number of fashion leaders including H&M, Macy’s and Zara have temporarily stopped manufacturing new goods, while indications are that a year-on-year decline of 20-30% in total luxury goods sales should be anticipated.
  • Government figures indicate total retail sales in China, the first country impacted by COVID-19, declined 20.5% in the first two months of 2020, although a number of global retailers I have been speaking with indicate that conditions are starting to improve in the market as restrictions on peoples movements are eased.
  • This contrasts with Grocers who have experienced a huge surge in demand although this does now appear to be leveling off in many markets. For example data from Placer.AI (https://www.placer.ai/covid-19/) shows a clear spike in foot traffic at leading U.S. grocery stores in early March, followed by either a flattening or year-on-year decline starting around March 20th.
Year over year foot traffic variance at Walmart Neighborhood Markets, Kroger, Albertsons and Costco (Source: Placer.AI)
  • In markets where there are increasing social distancing measures, a surge in home improvement sales appears underway as consumers look to spend their additional time at home completing long delayed odd-jobs and spend increased time in their gardens.

In this disrupted retail environment, CSCOs need to combine an effective near-term response to the impacts of COVID-19 across the end-to-end supply chain with a clear plan that positions the business for success as the global economy recovers. Below you will see key impacts on and top recommendations for retail CSCO’s taken directly from my research paper Retailers Seek to Mitigate Disruption From COVID-19 and Identify Emerging Opportunities (Accessible by Gartner clients only). Gartner also has an extensive COVID-19 Resource Center with content that is free to all as we look to get through these challenging times. 

Finally, below are a few potentially interesting links related to COVID-19 from across the web:

Until next week – stay safe, look after your family and social distance.

Best,

Thomas

Note: I’m currently planning to publish a blog each Monday morning for the next month on retailers and COVID-19, so if you’ve found this one useful please do look out for a notification from my account on LinkedIn or come back to this page each Monday .

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