S&P Global says as soon as restrictions are eased and economies open, retailers will have to rapidly transcend their selling process, their relationships with customers and also make changes to their assortment, supply chains, store bases and store configuration.
One of the biggest challenges for retailers will be to invest and fund this transformation while dealing not only with the pandemic but the accelerated digital disruption most of the sector has endured in recent years. They will have to integrate their supply chains, warehousing, distribution, and stores into a cohesive unit to offer a seamless ‘phygital’ (physical-digital) experience. At the same time, they will need to rethink their strategies aimed at differentiated shopping experiences at stores, given physical restrictions.
Retailers will also have to drastically reduce their cost base, as the pandemic will lead to higher costs and investments in cleaning, hygiene, and health and safety measures to protect employees and customers. This, coupled with physical distancing, will weigh on profitability in the near term, it added. However, the company expects these costs to gradually blend into the industry's cost structure.