NAVIGATING UNCERTAINTY: Recovery
May 2020 | ISRAEL J. RODRIGUEZ, JR.
In April, Edgewood Consulting talked to leading food, drug, mass, club and online retailers, 25 VPs, Directors, Category managers and senior buyers across several food, OTC, HBA and perimeter categories for their thoughts and perspectives on the Covid 19 crisis impact on retail and they were exceedingly honest. How do retailers feel? What are their priorities? What lessons have they learned or want to learn and what help do they want most? Here’s what we learned.
Retailers described in detail the issues they need to address in the next two to three months. Rising to the top are these three they consider their highest priorities:
- Recovering lost traffic/trips (or retain trips & shoppers gained)
- Recovering product supply and eliminating OOS
- Thought leadership to help with near and long term recovery
Followed by a host of challenges:
- Assortment optimization
- Shopper targeting
- Shopper Education
Moving Forward to Recovery and ‘Non-Normal’
Retailers are beginning to turn attention to recovery and want insights, strategy and support. Retailers’ two major recovery issues are: recovering business and shopper confidence.
Recover business - i.e. sales, traffic, trips or shoppers lost during this crisis. In some cases, retailers must also determine how best to retain new business gained.
“Traffic is one issue "we" need to overcome, but this will take a very long time and help... We don't know how to address it yet.”
Recover shopper confidence - find ways to instill confidence in a safe shopping experience. Most retailers believe this will take much longer to resolve.
“Quarantine gets lifted but how long will the fear and reluctance last among customers? ...Until the vaccine is developed it will be very difficult to go back to being normal.”
“Learn from airlines how customers regained confidence to fly after 9/11.”
Edgewood has a long history of developing strategic plans and programs that have resulted in successful transformational innovation at retail. With that in mind, here are three important principles to keep in mind when developing a recovery strategy of this magnitude.
- Look forward, not backward – There’s an old military maxim: “Generals are always fighting the last war, planning for the next.” The ‘recency effect’ is the tendency to remember the most recently presented information best. Beware that the ‘recency effect’ favors looking backwards (in this case, at initial crisis mode) instead of forward when planning recovery.
- Aim Before You Shoot - Look before you leap. Like a good football coach, be sure to scout, prepare and have a well thought out game-plan as well as the metrics and knowledge to enable the right game-time adjustments.
- Advantages of a Phased Approach - When a war cannot be won in a single battle, campaign strategy maps the series of battles to victory. For this long climb back to recovery, we recommend breaking up the challenge into discrete phases because the priorities change with each phase and the strategy and tactical effectiveness of your efforts and investments likewise change in each phase along the way.
We recommend an approach that tailors your recovery strategy and tactics uniquely with
- Retailer Assessment - Results vary by retailer and each faces different obstacles & opportunities to recover and thrive. Benchmark retailer results with research & analysis to understand causal factors - WHY? And understand the implications for priority, strategy, tactics?
- Category Assessment - Categories have responded differently, each with unique key success factors to defend and recover. How have your core shoppers been affected in each category? What are your implications for priority, strategy, tactics?
- Phased Plan – Priorities, challenges, objectives and measures of success change by phase as brands and retailers progress from Crisis mode to Recovery and into to New (non) Normal phases.
Strategic Approach By Phase
Strategy Tailored by Assessment and Recovery Phases tailors strategy and tactics to maximize results for each phase:
- Priorities change with each phase
- Strategy and Tactical effectiveness also changes with each phase
Consider the dangers of the recency effect with the following example. A common refrain heard during the heat of the crisis about assortment is:
“We want to focus on core SKUs for the time being....”
This makes sense during crisis mode when priorities are to maximize product supply and minimize shoppers’ time in stores. However, as time marches on to recovery and new (non) normal phases, priorities shift to recovering trips and building baskets respectively. Assortments should change to reflect these changing priorities in each phase. This is a valuable lesson to guide preparedness planning and why a phased approach to strategy and tactics is most effective.
Intelligent and fact-based assessments of retailer and category impact marks the first and important ‘aim before you shoot’ steps to effective strategy. Further tailoring your strategies and tactics by Phase helps to maximize effectiveness and ROI with a ‘forward-looking’ approach to recovery strategy.