Canadian retailers have a burning platform to transform. They cannot show the hesitancy they have over the last decade if they are going to get to 2021 with a proposition that creates consumer value, says a retail supply chain strategist and serial transformation executive.
Gary Newbury said he sees three stages over the next year for the retail industry kicking off with “Just Do It.”
“Make operational changes to create better shelf fill at store level. Establish ‘click and collect’ as people start to social distance themselves and avoid contact with people and surfaces. This is the immediate challenge for retailers. They will also need to honestly evaluate their performance and gather requirements for the next phase,” he said.
“This episodial event is flushing out some of the deep-seated issues in how grocers, particularly, have been kind of skipping over things.”
The next phase he identifies as “Transform Boldly and Quickly.”
“Driving a transformational change to their business model. The demand for talented transformational change agents will be very high across North America. The driver of this will be the new consumer reality Canadian retailers are facing, how “shocked” consumers are during the current period, and how this fundamentally changes their mindset (affect and cognitive, attitudes and beliefs),” said Newbury.
“They have to transform their business. Certainly, Canadian retailers have to really think about ‘okay, we’ve had this issue, we haven’t done a very good job of business transformation. This is our chance to really go for it under pressure. If we don’t do it, we won’t get to 2021’.”
The third phase is what he calls “Disband the Old.”
“This will be a period of tuning their new capabilities to the ‘developing’ consumer behaviours that we will start to get a picture of over the next three to six months, in order to remain relevant with a viable proposition. The key here is for retailers to unlearn what they knew to be true over the last decade and embrace the new consumer reality. The Great Recession and the advent of smart phones have not moved them forward quickly enough. COVID-19 will. Many will not survive, even less thrive,” explained Newbury.
The current crisis is opening some eyes at the weak links in a company’s supply chain. This has really shone a light on those that have not ben managing supply chain risks, nor optimized for profitability.
Here is what Newbury identifies as the top things retailers need to do over the next month:
Flush out excess SKUs (stock keeping unit) now. Reduce choice at subclass level – consumers want stuff, not choice. Run clearance promotions to create shelf space for the key ‘Survival’ lines. Redo planograms to reflect revised (and shorter SKU list). Find local suppliers and onboard them, secure production. Pay suppliers ahead of terms to encourage support during this ‘triage period’
Use dynamic/unconstrained routing and more frequent physical replenishments – once routed, alert store with expected arrival time. Double shift trucks and trailers if not already doing so – have ‘dry goods only’ runs and tap into local delivery market for extra transport resource. Use any bylaw concessions with evening and overnight deliveries to get product moving quickly and efficiently- pack more on trucks with high stem mileage (due to lower travel times)
Increase ‘on hand’ stock at DC for the lower SKU count – to support more frequent (and unscheduled – emergency support) store replens. They are competing with other grocers trying to secure the same national brands/products. It’s time to consider collaborating to create more supply. Open up warehouses for 24/7 receiving. Widen selection shifts and change store cut offs to allow a flatter profile of selection and loading staff in warehouse and, most importantly,
Use stores as a hub of fulfillment – implement click and collect at each store for store pick and kerbside pick up. Do not push home delivery unless an established capability exists (collapse any eComm merchandise and operations into store network).
