The new way of planning in retail
GUEST BLOG: In this contributed post, Laurent Homeyer, retail and hospitality industry advisor in EMEA & APJ, Workday, explains how retailers can properly plan their strategies during the coronavirus outbreak.
The UK retail sector has been facing enormous challenges for some time. The global pandemic combined with rising rents, falling consumer footfall, and intense competition has forced retailers to readdress the size, scale, and scope of their operations. In a situation that is changing daily, and with a matter of days to ready themselves for a November lockdown, retailers had little time to prepare and respond to the complex challenges they now face.
Fundamental to success and dealing with these challenges will be planning. However, planning itself needs to be reimagined. Covid-19 made traditional long-term planning obsolete. In fact, by March 2020 many annual plans were outmoded forcing retailers — from ASOS to Aldi, H&M and Morrisons — to rethink how they were going to survive. Planning now has to be agile, and continuous if retail businesses want to navigate their way through the pandemic and try to regain ground over the Christmas period.
Planning in the short term
The retail industry has shown remarkable resilience during the pandemic, finding ways of dealing with the crisis. From Pret a Manger launching a coffee subscription service to ASDA introducing an electric vehicle fleet to increase its online delivery capacity. But, key to the most successful responses was agility. Agile mindsets and business models are critical at a time of profound change and this was no exception. Successful retailers are operating with increased levels of agility, responding to the crisis in new and different ways, whether this is in delivery options, new supply chains or ways of working for its own staff.
Planning, but not as we know it
The most significant obstacle to effective planning is an uncertain future. One of the main headaches retailers face is not knowing if customers are going to return and, if they do, through which channel (for example in-store, online, or click-and-collect). This is as true for the businesses that were deemed essential during lockdown (primarily grocery and pharmacy) as all the others. Contingency planning has never been more important as nothing can now be taken for granted. This coupled with truly dynamic scenario planning with flexible models, mapped to how each individual business is run and immediately seeing the cost impact for each update is invaluable when trying to create an optimal plan based on “what if?” scenarios.
Furthermore, planning and organisational functions across the retail industry are now having to swiftly adapt to a second lockdown. Retailers need to adjust to much shorter planning cycles as they can no longer confidently predict what the near future is going to hold, what government advice and laws are going to be, and how this will impact consumer behaviour. This means adopting the right technology that can give the agility, data analytics and insight that retailers need. Tools that give a 360-degree view of the business, providing information on finances, HR, and operations and making planning more intuitive and effective.
Take John Lewis for example. During the initial lockdown, it successfully digitised its payroll system. This was a huge help at a time when employees started working remotely. The project allowed the payroll team to deliver payslips on time for a workforce that was dispersed between furloughed workers, people working from home, and frontline employees. Ultimately, it reduced operational workload and pressure for managers by over 20% and increased efficiency across the organisation.
Weathering the storm
Retailers are living through the single greatest challenge in a generation and there are no signs of it slowing down. How they adapt to the huge disruption presented by Covid-19 and the second lockdown in the run-up to Christmas may lead to the ultimate success or failure of their business. And, there is no single magic bullet that will solve all the many problems the industry is now facing. Simply moving more of a business online or closing some stores to realise cost savings will not be enough. Creating a compelling, differentiated value proposition that will appeal to customers is paramount and customer-centricity is key. Achieving this will be tough, but planning in a responsive and intelligent way will be a big part of this.