Mitigating Retail and Ecommerce Continuity Risks in Times of the Coronavirus Outbreak

Worldwide governments have instituted a so-called maximum-control scenario. This scenario aims to flatten the pandemic curve to avoid a peak in infections, rebalancing the pressure on health institutions. Society is urged to act responsibly, and organizations are encouraged to facilitate and stimulate such behavior. The health of employees and customers should therefore be the number one priority of organizations. Not only to safeguard the health and safety of society, but as well to secure business continuity. Minimizing the economic impact, for both your organization as well your employees.

The retail, ecommerce and the distribution of goods are crucial in keeping people’s lives – and economy – going in times of crises. Those industries stand or fall by field-staff, such as warehouse workers, cashiers, shelf-stockers and delivery drivers. It means that a vast majority of our society is unable to work from home and are exposed to health risks on a daily basis. In addition, for most organizations in these industries keeping customers and colleagues at a safe social distance is challenging, and therefore requires more attention than other organizations. Especially for those industries, it’s of utmost importance to keep safeguarding people’s health and mitigating business continuity risks. We’ve identified the three main risks to business continuity posed by the coronavirus outbreak: government-imposed restrictions, labor shortage and disrupted balance of supply and demand.

Government-imposed restrictions

Although regulations imposed by governmental authorities are out of organizations’ direct control, organizations have the ability and responsibility to anticipate adequately. Ways to anticipate governmental regulations and to mitigate potential further risks to business continuity posed by government-imposed restrictions include:

• Impose clear and strict rules for your employees. Appoint a responsible person to strictly manage and maintain the new business rules.
• Equip your properties with physical barriers to encourage social distancing: Ground markings to mark desired minimal distance. Bright colored vests to raise attention. Placement of partition walls to minimize contact between your employees and customers. Mandatory equipment to enforce social distancing (e.g. shopping carts).
• Ground markings to mark desired minimal distance.
• Bright colored vests to raise attention.
• Placement of partition walls to minimize contact between your employees and customers.
• Mandatory equipment to enforce social distancing (e.g. shopping carts).
• Adapt your opening times to spread the number of customers throughout the day, decreasing peak hours. provide the option to shelf-stock outside of business hours or without presence of external people. allow access for risk groups-only during set time windows.
• spread the number of customers throughout the day, decreasing peak hours.
• provide the option to shelf-stock outside of business hours or without presence of external people.
• allow access for risk groups-only during set time windows.
• Encourage self-checkout to limit human contact and cash flow.
• For ecommerce, consider dedicating a percentage of the timeslots for risk-groups-only such as the elderly.
• Drop-off of goods at doorsteps instead of in-house delivery.

Labor shortage

A second risk to business continuity is labor shortage. Sky-high demands due to hoarding, sick leave due to symptoms like sneezing and coughing and the threat of your staff getting infected with Covid-19 are impacting staff availability. Measures that will help to cope with these fluctuations include:

• Increasing efficiency, and as such lowering the need for additional resources, by considering measures reducing variability. One of those measures is for example compromising on service levels, such as considering longer delivery lead times or reducing variety.
• Setting up a Quick Start Onboarding Program for bulk labor. It makes it easier to train new (temporary) resources – from the hospitality or catering industry for example – in a shorter period of time to bridge the period of high demand. It will relieve your current employees from pressure, and they can be reallocated to tasks that require more experience.
• Working in shifts. For instance, implementing a (temporary) A/B shift work schedule limits the risk of spreading a virus across your entire team. Make sure such (new) business rules for workforce scheduling are implemented in your software.
• Introducing flexible working between your locations and chains. Assign your resources wisely: consider reallocating resources to locations that have a severe lack of staff or to locations that are coping with peaking demands. Make sure such (new) business rules for workforce scheduling are implemented in your software.

Disrupted level of demand

Hoarding of goods, disrupted supply and unusual demand for certain products all contribute to a (sudden) unanticipated change in demand. This may not directly put business continuity at risk, but since both demand and supply are a lot less predictable it is very important to align them on a very regular basis to safeguard business continuity in the long run. Measures to shape your demand and adapt capacity planning to cope with the significant changes in demand (and supply) caused by the virus outbreak include:

Demand shaping

• Adapt your advertising strategy Durable goods like pasta, rice and eggs are target products for hoarders. To shape demand, adapt your advertising and discount strategy to encourage sales of fresh goods or goods that have a lower demand. It allows you more time to restock durables and other products in high demand. Shift the time windows or days during which discount offers are valid. It helps to spread your clientele throughout the (week)day(s) and to avoid peak hours.
• Durable goods like pasta, rice and eggs are target products for hoarders. To shape demand, adapt your advertising and discount strategy to encourage sales of fresh goods or goods that have a lower demand. It allows you more time to restock durables and other products in high demand.
• Shift the time windows or days during which discount offers are valid. It helps to spread your clientele throughout the (week)day(s) and to avoid peak hours.
• Find ways to inform your customers about the level of occupancy to avoid overcrowding. For instance, use mobile applications to share live occupancy rates at your stores, so you can recommend your customers the best timing to visit your store and as such avoid peak hours.

Capacity planning

• Find ways to structurally upscale your supply in case demand will remain high: Gain preliminary insight in the capacity of (logistic) subcontractors and other third parties of interest. Explore if your organization can cooperate with suppliers that are now experiencing limited to zero demand due to governmental regulations, such as hotels, restaurants and cafes.
• Gain preliminary insight in the capacity of (logistic) subcontractors and other third parties of interest.
• Explore if your organization can cooperate with suppliers that are now experiencing limited to zero demand due to governmental regulations, such as hotels, restaurants and cafes.
• Explore the opportunity to cooperate with local organizations active in the hospitality and/or catering branch. Setting up local initiatives, such as take-away food options by local suppliers in supermarkets may not only reduce the pressure on supply, it also supports the local economy reinforcing positive associations with your business.

Transparency in times of crisis

In times of crises, trust that things will be alright and having something (normal) to hold on to are very important to people. Especially when it comes to critical goods that support them in their daily lives. A lack of information or misinformation may lead to high frustrations, damaging the credibility of and trust in your business, now and in the future. Next to knowing and anticipating the main risks that pose a threat to your business continuity, transparency is key in safeguarding the continuity of your business.

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Trust = Truth + Transparency + Relationship + Experience

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Expectation management
Since people understand that the usual has become unusual, be realistic to your employees and customers. If the pressure on your retail- or ecommerce-business causes a reduced level of service, communicate it to your customers. If you can only deliver the next week, while your usual policy is to deliver goods the next day, inform your customers about it. Be open about larger delivery time windows and communicate to your customers if goods cannot be delivered (on time). Managing the expectations of your stakeholders will lead to understanding and avoids negative associations with your brand.

Clear customer communication
In managing expectations, organizations need to be careful what is communicated and how it is communicated. Confusion and misinformation should be avoided at all times, since it may lead to false assumptions. Try to find a balance between communicating in advance, before having all the facts at hand, and communicating (too) late, when hundred percent accurate information can be provided. Communicate what you know and be transparent about what you don’t know (yet).

Visibility
In times of crises, visibility is crucial. People need to have the perception you can manage unanticipated situations. It helps to increase your brand’s credibility and to build customer trust. Acting clear and decisive now, helps your brand to be stronger in the future.

To conclude

Unfortunately, there is no unambiguous answer to the question how to act in times of unanticipated crises like the coronavirus outbreak. The critical role of retail- and ecommerce industry is however undeniable. In a volatile time, navigating through the fog of uncertainty, strong management makes or breaks a business. Know the risks that pose a threat to your business continuity and respond and mitigate those risks accordingly. These times of crises demand a flexible and agile attitude, a quick and decisive response and transparent communication.

This is an article written by Joël Hogeveen, Business Consultant.

Our employees are encouraged to proactively think along with you to cope with the new challenges arising from the virus outbreak. If you have any questions, please reach out to your regular contact person at ORTEC.