The reality

In recent weeks, restrictions have started to be lifted for various businesses due to the spread of the coronavirus. In Texas, hair salons and tanning salons are allowed to reopen, provided they comply with infection control guidelines. Georgia has decided to reopen children's summer camps under similar conditions. All across the United States, hopes are high for shutdowns and social distancing mandates to end. Behind this is the president's statement that the United States has "defeated" the COVID-19. In fact, 25 million more people went out during the week of May 3-9, 2020 than the previous week.

Unfortunately, pandemics like the COVID-19 do not allow countries and the world to immediately return to "normal life." Indeed, we can never expect society, the economy and politics to return to the state they were in before the coronavirus began to pose a significant threat at the end of 2019. Even in countries such as South Korea and Germany that have managed the pandemic tightly, moves to reopen have led to a surge in new infections, a situation that has prompted public health officials to extend lockdowns. These examples show that the road to “normal” will take at least 18 to 24 months instead of weeks.

The problem

But it's not just consumer demand that's affected by the repeated reopenings and closures. This cycle is likely to continue for a long period of time around the world, which will have a major impact on supply. A spate of staggered periods of business closures and economic crises around the world could disrupt entire supply chains, resulting in an imbalance between supply capacity and consumption demand.

The clothing life cycle can be used to illustrate how supply chain disruptions occur. The global apparel market is said to be worth nearly $800 billion, with the largest consumption in the Asia-Pacific region, followed by Western Europe and North America. However, garment production, distribution and sales are global. First, cotton is grown in China and India, the two largest producers. Cultivation requires water and fertilizer, both of which are brought in from other regions, and workers are employed to produce, transport, and maintain them. After cotton is grown, it is harvested by yet another worker and then processed into fiber by another worker. It is then transported as fiber to Bangladesh and Vietnam, the world's largest garment producers, and further tailored into final garments by additional workers. From there, it is then packed and transported to another country or region through the hands of truck drivers, pilots, captains, dockers, etc. Once you reach your destination, you will need marketing and retail workers to sell your goods.

The bottom line is that when the coronavirus lockdown interrupts the clothing lifecycle at any stage, supply and demand are out of alignment. A lockdown in cotton-producing regions would leave factory workers unemployed for lack of supplies of necessary materials, even if garment regions like Bangladesh and Vietnam were ready to produce. If consumers can't buy clothes in retail stores due to lockdowns in Western Europe, suppliers won't be able to sell their goods and make a profit. Everyone involved ends up in a vicious circle of unemployment and loss of profitability.

Adapting to the new normal

It takes an average of only two to three months to adapt and become long-term established in new behaviors. The disruption caused by the coronavirus will likely last 18 to 24 months, and the behavioral changes that will occur over the next two years will be permanent. The way consumers shop and interact with store associates is unlikely to return to the way it was before, and a profitable return for retailers won't happen anytime soon.

Consumers have already shifted their purchasing power to the Internet, and retailers have no choice but to adapt to this change in order to survive. Retailers who have not adapted to online sales and have better forecasting methods are struggling to compete with those who have already adapted. As long as we continue to rely on old methods, the problem will only get worse.

So how should companies respond to the new consumption behavior brought about by the COVID-19 and the completely different supply and demand pattern?

The answer lies in AI solutions. Unlike humans who are baffled by the scope and scale of the coronavirus's impact on everything from retail formats to levels of pollution, artificial intelligence is turning machines into a blind eye to those of us who sit on the sidelines of rapid change. It uses learning to instantly take in ever-changing data and make accurate predictions. Supply chain demand forecasting algorithms must take into account new types of data that companies have traditionally ignored. Whereas typical supply chain demand forecasting relied solely on transactional data from retailers, the current supply chain volatility requires building models for each product category. . In doing so, we will be able to understand changing demand, the adaptability of demand, and also changes in lead times to account for lockdowns and production changes.

AI can also significantly reduce shipping times. This is an important consideration in situations where the majority of customers use product delivery rather than buying directly from retailers. Walmart Inc. is one company that has demonstrated how AI solutions can be used to rank product assortments. We've made the most in-demand items available for immediate home delivery, which has become commonplace thanks to retailers like Amazon.

With the retail landscape permanently changing, and the concomitant changes in retail customer behavior, businesses will have to adopt the latest AI solutions to navigate the storm. . At a time when the way we buy and sell goods, even domestically, is undergoing major changes, and supply chains are constantly disrupted around the world, artificial intelligence can provide accurate predictions and critical responses to sustain businesses and, in turn, the economy. It may be the only way to do it.

*This article is as of May 16, 2020

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Source:https://www.crowdanalytix.com/how-coronavirus-will-reshape-retail/
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