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A curated content platform of COVID-19 news stories with a supplier-retailer lens by Advantage Group.

Edition 3 – April 22, 2020

FEATURED STORY

Innovation

The Robots are Coming (Faster Than Before)

Summary: New social distancing requirements necessitate the need for contact-free retail. While manufacturers and retailers face headcount shortages due to COVID-19 safety measures and illness-related absenteeism, the pace of automation within the grocery sector is seeing a massive spike.

Advantage Perspective: In exploring some of the ways in which retailers across the globe are ramping up the deployment of technology throughout  the value chain, we have identified two key trends:

  1. No-Touch Retail: The proliferation of apps and technologies designed to make queuing, payment and online delivery contact-free.

2. Retail Robotics Solutions: The use of robots and AI to carry out labour-intensive tasks.

 

A. Crowd-Control (physical distancing)

Many retailers are using technology to control the volume of shoppers that can be in their stores at any one time, as well as eliminating shoppers' risk of exposure. 

 

  • Aldi Switzerland has introduced a smart display and digital counting system at the entrances of 110 stores. Once maximum occupancy is reached, a red screen appears telling the next shopper in line to refrain from entering. The screen changes to green as soon as someone exits the store.

 

  • In Italy, there have been strict protocols capping the number of people per household permitted to leave their homes for essential shopping purposes and only for a specified amount of time. Local retailers have taken the lead in rolling out applications that allow shoppers to queue virtually.

 

→ Essulunga has launched an app that allows shoppers to reserve spots in line at some of its stores; sending them notifications when their turn has arrived.

 

→ Coop Lombardia and Coop Liguria have introduced an app-based solution that gives shoppers the ability to select between and reserve 30-minute time slots throughout the day to make their store visits. Not only does this reduce the need for lining up outside, but it also allows store managers to monitor the number, ages and occupations of those entering the store at different junctures so that they can be better prepared in terms of inventory and in-store services.

 

B. Contactless Payment Solutions

With many published studies reporting that the Coronavirus can live on hard services for up to 72 hrs, retailers are scrambling to make “tap and go” and app-based payment options more readily available.

 

  • SPAR Austria has set up in-store kiosks where customers can purchase and top-up vouchers to replace cash payments.

 

  • Woolworths Australia has disabled a requirement for shoppers making credit card purchases in excess of AUD$200 to enter a security PIN.

 

  • In the US, Walmart has rolled out an app that alleviates the need for customers to touch a screen in order to select their preferred payment method at check-out.

 

C. Contactless Delivery:

Going beyond just providing customers with the option to have their orders left outside one’s door or at a designated drop off station, technology is playing a role in easing online shopper’s anxiety and expediting last-mile delivery.

 

  • In China, where e-commerce is arguably the most technologically advanced and where the spread of the pandemic first started, it is no surprise that high-tech innovations are leading the way. For many meal and grocery delivery services, Chinese consumers can log into the delivery app and see the names and body temperatures of those who packed and are making the delivery.

 

  • In the US, where the likes of Amazon, UPS and Walmart have been testing delivery drones, there is talk that the advent of COVID-19 could loosen some of the regulatory hurdles for wider scale roll-out as the need to deliver essential medicine and goods to vulnerable individuals becomes heightened.

The adoption of autonomous mobile robots (AMRs) in warehouses and fulfillment centers has been garnering popularity for some time now due to cost efficiencies, data capturing and computing capabilities.

 

The appearance of robots in physical store settings during open retail hours has been less prevalent, however, mainly due to negative connotations around job replacement and a limited number of use cases to justify the upfront capital investments.

 

As retail outlets suddenly face a staffing crunch due to COVID-19 related safety measures and illness related absenteeism, relying on robots for tasks such as floor cleaning and shelf stocking is gaining momentum. Deploying robots for labour-intensive tasks not only helps mitigate staffing shortages, but it also frees up in-store employees to shift their focus towards newly emerging priorities such as sanitizing high-contact surfaces and customer service by managing the flow of shoppers entering the store and queuing up for check-out.

 

Versus some of the app-based technologies that are emerging in the “no-touch” retail space, the pace and extent to which robots will replace the functions of in-store personnel once COVID-19 subsides is less certain, as scalability and capital intense investment requirements present rapid adoption constraints.  

 

Nonetheless, the onset of COVID-19 should ease social concerns about the role of robotics in stores, especially if their application leads to improved health and safety standards and promotes stronger customer service during a time when shoppers are antsy and under duress.

Virtual Collaboration

‘The Show Must Go On’ – The Future of Collaboration Minus the ‘Water Cooler’

Before the COVID-19 pandemic, technology played an integral part in keeping supplier and retailer colleagues and business partners connected, yet virtual connectivity was typically reserved for bringing in those who worked remotely or who were far from the office center. Common wisdom said that joint business planning, sales presentations, and brainstorming or process improvement workshops were reserved for those on-site and web-based platforms could never replace ‘face-to-face’. Additionally, the concept of virtual vendor conferences or tradeshows was considered a cool concept but was too upstream for most who clung to conventional means of doing business. In short, conversations at the ‘water cooler’ or dinner at ‘the club’ were still the places to get things done. 

As challenges with Coronavirus drove the closure of all essential businesses, and retailers and suppliers began to take measures to keep their associates safe, healthy and productive, work-from-home became commonplace. Just like that, the world changed to one where virtual collaboration and connectivity through technology became the only way for businesses to survive. Since then, the importance and use of technology has become the lifeline for retailers and suppliers, and it will continue to be as the Coronavirus passes and the ‘new normal’ is set in motion. 

We’ve provided an overview of the virtual connectivity opportunities available to businesses today and advice on how to cope with these new tools in each of the following collaboration environments: 1) Joint Business Planning and Negotiations, 2) Workshops, 3) Conventions and Trade Shows

The prevailing sentiment is that important negotiations such as joint business planning should be done face-to-face so seasoned negotiators can take advantage of a carefully chosen space and monitor emotional cues so as to be in control of the setting. The face-to-face also allows them to course-correct as they manage both the collaborative (what’s in it for both of us) as well as the competitive motivation (how can I get the most for my organization) that exists in any negotiation. In fact, research indicates that online negotiations tend to yield less impactful results for both parties and the development of rapport is typically of lesser importance which may erode trust in these settings. 

 

In the new world, this paradigm will and is already changing as the virus forces business partners to push out of comfort zones and consider new platforms and strategies for negotiation. Consider these elements as we enter a new world. 

 

  1. Layout the rules of engagement in advance – Virtual collaboration is a new process for everyone. Discuss the negotiation process before beginning. What is the timeline, frequency of contact and the right medium for each contact point (audio, video, email)? For lengthy calls, plan for breaks to provide an opportunity for negotiation to settle or reset. Aligning on the process and setting ground rules will create a framework with a level playing field. 
  2. Take your time and develop rapport – Virtual meetings tend to be transaction focused. Abruptly starting a negotiation can be off-putting. Take the time to exchange greetings and even schmooze a little bit just like you would when greeting a business partner at the door of your offices, and as you wait for others to come into the room. Then, outline your positioning and extend your offer. 
  3. Focus on the strategic versus the transactional – Research indicates that virtual conference calls tend to be more transactional. Challenge old norms by focusing joint discussions on the strategic and longer-term wins. Especially during a crisis, parties are focused on the here and now, however, current decisions will have implications for the mid and long-term as the crisis subsides. Looking at the short-term actions as contingencies will allow for plans that include mid and long-term actions that will soften the impact of what is to come. 

Traditionally, flip charts, post-it notes, whiteboards with dry-erase markers and other office-centric supplies provided the framework for process improvement workshops and brainstorming sessions. Thinking back, one had to book rooms, do enormous amounts of setting up and relied on large over-sized items that they needed to take pictures of or cart away to transcribe and summarize the next steps. Little did business partners know that life would change so quickly and that they’d be working in online bulletin board environments with electronic post-it notes, personalized tagging and voting functions that would transcend our current ways of working and not only simplify but automate the process. The big takeaway is that there are many slick software programs out there (Miro, Mural, Whiteboard, and others) but it takes time to assess the right one for a specific business need.  

 

  1. Identify the software that fits your intended purpose (brainstorming, process improvement, etc.) This will ensure that the team is not overwhelmed with the software or under-supported in what they are trying to accomplish. 
  2. Trial the software with an internal workgroup before using it with clients. This will allow your team to work through the process and iron out the wrinkles in a test-and-learn setting. 
  3. Set up the workshop with external business partners and provide an overview of the tool or share a link to the on-line environment in advance so that individuals can peruse the tool on their own before the session. 
  4. Once in the session, acknowledge that you are exploring new technology together in the wake of the crisis. Work together to create a win-win! 

Who could have fathomed that massive events that fuel a company or industry’s annual platforms would go dark in 2020? Conventions, expos, and tradeshows facilitated unveilings in innovation, sales, negotiations, and high-level top-to-tops. This year, organizations that rely on them are taking an ‘adapt to survive’ approach and going virtual to make the most of the opportunity to bring communities together as they join the conference from their living rooms at the ‘click of a mouse’. Virtual event planning companies are there to support organizers with tools and support to manage the entire process: 

 

  1. Website management and event marketing
  2. Invitations and attendee registration
  3. Account management assignment to exhibitors to make the most of their virtual spaces
  4. Analytics to track traffic to sites and exhibitor spaces throughout the conference
  5. Private chat/meeting rooms are made available for individual business meetings and presentations  

 

In short, virtual event planners can provide much of what a convention or tradeshow can offer in print, sound and video without the stress of travel, T&E and other operational costs especially at a time when companies are resizing their budgets in an uncertain economy.  

 

Where do these events miss? The hustle and bustle of personal connectivity and the smell, taste, and touch, that push purchasers to commit to sales. 2020 will be a year when vendors and exhibitors reconsider those ‘must-haves’ and leverage technology to create virtual touchpoints to gain at least some lost opportunity due to the virus. In the future, we predict an influx of innovation to address the challenges that remain in creating the emotional responses that clinch a deal. 

Advantage Perspective: Now and for the foreseeable future, virtual collaboration tools will snatch a prominent role as teams and business partners work together to do the things they have always done in a conference room, at the lunch table, on a whiteboard, on the trade show floor and more. Already, the requirement for suppliers and retailers to work remotely is creating trial and experimentation, and simultaneously raising the level of technology to empower their teams to connect, collaborate, negotiate, workshop or network among industry communities. The ‘water cooler’ may be relegated to the corner, for now, but there will always be a new way to collaborate to get the job done. 

Voices on the Ground

This week we speak with Ana Fioratti, Managing Director for Advantage Brazil to understand how COVID-19 is impacting life and retail in the country.

COVID-19 has had a disruptive impact all over the world, officially arriving in Brazil in mid-March, when the first cases were confirmed, while we were overwhelmed with terrifying news from Asia and Europe during the previous few weeks.  

 

The impact on shopper behaviour was immediate. Customers were frantically buying essential items for a long period of confinement. While these items were still available on retailers’ and wholesalers’ shelves, most were not prepared for this peak in demand that hit the entire supply chain.  

March 12th was registered by most companies as the starting point of exponential growth on demand for a “war basket” of products, including mostly non-perishable items such as beverages, frozen foods, grains (rice, beans, flour, pasta, etc.), HPC, home cleaning with an emphasis on disinfectants and alcohol, and at drugstores masks, gloves, prescription drugs of continued use and some OTC basic items. During the first week, the average increase in sales for most ranged from 30% to 50% (with some items up more than five times) while other items of the regular basket suffered a sharp decline in demand.  During the second week, demand hit even higher peaks at some companies, leading to massive out of stocks. 

 

The beginning of April has already shown increasing declines in demand in addition to a change in the basket content, now with more items of weekly purchase, such as fresh fruit, vegetables, bread, some beverages, dairy, and proteins.

 

The hypothesis of retailers from the supermarket channel is that the purchase of items for storage during a long period has already been made, and now shoppers are focusing on items that cannot be stored more than a few days as well as replenishing the already stored items as they are consumed. 

 

Cash & Carry’s were severely impacted by the closure of bars, restaurants and all sorts of foodservice operations and other businesses that used to buy their supplies from this channel. In drugstores, the most requested items – masks, gloves, and alcohol – were sold out and drugs of regular use were already piled up at consumers’ homes. A similar impact was suffered by stores in shopping malls (that were closed except for supermarkets and drugstores, but the usual traffic of clients of the mall ebbed down) as well as on streets (empty after the restriction rules were implemented).  

 

The problems for consumers augmented, with increasingly longer home-delivery delays, chronic out of stocks, errors in delivery, problems with payments (several companies did not have a solution for payment without contact with the person who delivers, which did not meet the requirements of consumers in isolation to avoid any contact), as well as packages that did not reduce the risk of contamination along the process from picking to delivery.  

Stores increasingly implemented safety measures for their staff, suppliers and clients, including hand sanitizers in different strategic points, and instructions about personal conduct and distances to be kept from others. In some cases, they provided masks for staff in contact with clients as well as acrylic panels to reduce the risk of contamination of cashiers by clients. Cleaning and disinfecting routines were implemented more frequently in all areas, as were other measures such as restrictions to the number of clients allowed inside the store and disinfection of handles of shopping trolleys, baskets, and other items after each client touched them, etc. 

 

All team members whose functions were compatible with remote work began working from home in all companies, and the contact with business partners was restricted to teleconference and/or phone. Planning at most companies is weekly, with operational issues being prioritized over strategic.  

 

Some international manufacturers have been sharing their experience in markets where the pandemic started earlier with local clients, providing insights on the impact on business. The manufacturers of high demand items during this period experimented with a strategy of strongly increased collaboration, all focusing on maintaining sufficient supply to face the demand at each moment. 

 

On the other hand, manufacturers of products or categories whose demand sharply declined had difficulties in keeping the closeness of contact and collaboration, and are very concerned with the current negative impact on their cash flow as well as with their ability to recover their production capacity when the market returns to normality, including the potential requirement to offer different products to meet the needs of impoverished shoppers and the required investments to attract them to stores and keep their established brand image.  

 

Overall collaboration seems to have gained in value and the digital relationship models have overcome doubts and barriers regarding their potential of effectiveness, time and costs. 

 

The majority of companies in all segments are doing some type of community support initiative, often jointly with the local public administration offices or ONG’s, aimed at helping those in greater need and sometimes also the health care institutions and professionals.  

A Pulse on Big Brands

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