We open this space where experts retailers will share their views on how to deal with the current crisis situation.
DEMAND IS GONE AND IT’S NOT RETURNING LIKE BEFORE.
A realistic look at the beauty and fashion retail sector.
We all empathize with businesses and people affected by the impact of COVID-19. The fashion retail sector is no exception and it will end up being deeply impacted.
While the level of uncertainty is high, making the right decisions will be difficult yet not impossible. To this end, we need to reflect on the effects of the crisis on the sector and take all available options into consideration.
What measures can retail and beauty brands or companies take to save their businesses and prepare for the market’s recovery? Ten answers for the sector:
This is a marathon. Before a vaccine appears, the consumer will probably not return his/her regular behavior due to fear of infection and restriction of course. Signs of improvement will be seen at the start of the 2021 autumn/winter campaign.
- Be reasonable.
Adjust your projects to the year’s demand and purchasing budget, month-to-month, week-to-week and continuously review them. Don’t stop buying, but buy what is fair and less of a risk.
- Manage your stocks.
Understand market fluctuations in detail what stock do they have today, what is about to come in and what is about to be produced. Cancel what you don’t need, determine what can be sold for a complete price and what needs to be liquidated.
Moreover, work on a liquidation plan for the merchandise you can no longer sell because it is out of season, maximizing actions in promotional events that will occur throughout the year.
- Rethink your product/brand/category mix with use of data and analysis.
Carry out a sophisticated analysis to grasp what categories, brands, collections, products and product types are your indisputable winners at all times of the year and at what prices. Today more than ever, concentrate on them, guaranteeing a level of minimum sales.
Everything else can be gradually added according to how demand starts up again. Also consider that the requirements of the consumer can change due to voluntary isolation.
- Doubtlessly count on digital channels.
Companies that already have online shops should take advantage and immediately improve them. The physical store will suffer, especially if it is in a high-capacity location.
Those who don’t have online shops, should search for online and face-to-face alternatives that can even serve to get closer to your customers and improve their experience. For example, through personal appointments at the point-of-sale, the shipping of complete outfits according to occasion on a regular basis, personal shopper services, expanding sales options through Messenger or Whatsapp, etc.
- Maintain your suppliers and search for alternatives.
Understand the situation of your suppliers. There is no point in bankrupting your suppliers if later on they are not able to comply with orders when you need them. Companies that import merchandise must cancel in order not to compromise the future even further and go on to look for greater local production from here on out in case it’s required.
It will be hard to match China’s price-competitiveness in some products but it is the best option and, in the meantime this will help start up the local market once more.
- Renegotiate your rental terms.
Shopping centers may be the last spaces to recover. Though it sounds impossible, this is the time to renegotiate with them if rental terms and conditions are not linked to sales.
The strategy should be the same for companies whose landlords are not shopping centers: it is possible to find new circumstances where everyone’s a winner and no one’s left with an empty business space.
- Communicate, communicate, communicate.
A crisis is a time to rethink communication strategies. Some suggestions:
1. Do not disconnect from customers – even if they are not buying.
2. Show who you are, strengthen the brand identity at all points and moments of contact with the public.
3. Rethink the concept of experience that has been so in vogue in recent years.
- Take care of your people.
This is not only an ethical obligation, but also practical, with the capacity to redefine a brand before customers.
- Each type of business requires a different strategy.
The strategies you pursue will depend on your creditworthiness, form, business model or brand positioning:
1. Large business premises will be greatly affected as they are located in shopping centers and have high capacities that the public will surely reject. In addition, your target is precisely the segment that will see your revenues shrink.
However, it is an opportunity to enhance and prioritize an online platform. It is important to facilitate online purchases with good product information, as well as exchange, return and shipping conditions.
2. For small and medium-sized brands, the result will depend on the segment they are targeting and where their physical stores are located. Those found in shopping centers will have to concentrate their efforts on online platforms and will have an advantage if they have already developed them. Door-to-door operators may do better. Sales could migrate from the shopping center to beyond.
In general, the proper strategy should seek to ensure the soundness of your business model while waiting for the market to rebound, and not open any new stores and close those that, with or without COVID 19, do not perform well.
3. Brands highly dependent on the purchase budget of some large shops (departments stores) are going to have to push other forms of business if they have them, and make more enthusiastic use of online communication and e-commerce platforms of department stores. Unfortunately, you will have to assume that department store purchase budgets have been reduced and there is not much room for negotiation.
The rest of 2020 and till the beginning of 2021 will be a period in which physical sales channels will be affected and so there will be a great opportunity to migrate sales towards the e-commerce channels and online communication.
This is an advantage insofar as e-commerce permits access to immediate data that companies can process to understand and use as insight in the design of more successful strategies and tactics.
The year will be hard and it won’t only be a challenge to get through this crisis, but it will also be a challenge to be ready to run a second marathon as soon as the recovery begins.
Written by: Fiorella Bianchi Lahoud (Commercial Marketing Manager in Smart Brands)