- The retail stores are one of the hardest-hit industries by the coronavirus pandemic and the ensuing mass migration of shoppers to online retail portals.
- High street retail outlets as well as the supermarket chains, all have been equally hit during this time with several big names already filing for bankruptcy while others are cutting down on the number of stores.
- The retail stores have been adopting innovative strategies to bring back shoppers, improve their bottom lines, and reduce their costs in a bid to ensure their short-term survival and long-term profitability.
- Focus on select retail stocks – TSCO, SBRY, MRW.
The continuing social distancing measures and the increasing prevalence of online buying behaviour have hit the store-based retail industry the hardest in the past few months. While many high street and weak retail businesses have had to close their doors as they were unable to withstand the two-pronged onslaught, those who have survived are adopting novel measures to acertain their stability and drive revenues.
The 5-pronged strategy
Let us take a closer look at the five ingenious strategies being adopted by the store-based retailers to transform themselves in line with the challenges posed by coronavirus pandemic.
Use of AI – Artificial intelligence (AI) in helping retailers in a big way. Advanced algorithms which can shift through mountains of historical data can predict how much should a store buy so that its storage and transportation costs can be optimized. AI also helps retailers determine the optimum amount of working capital, labour, and floor space required for a particular location with the help of data from past behaviour of consumers.
Equipment and store layout optimisation – Retailers are striving to get the maximum output from the equipment they have installed inside the stores. For instance, the refrigeration equipment, storage bins, and display units are being better utilized so that their overhead costs may be reduced. Reducing these overhead costs is helping the retailers to keep their businesses sustainable even at lower revenue levels.
Extending shelf-life of food products – For any retail company dealing in eatables & beverages, losses on account of spoilage of the perishable food items is a major area of concern. After the pandemic, retailers are paying particular attention to this category and are using technologies & equipment to increase the shelf life of these items. In fact, some stores are even adopting strategies like semi-processing of food items, so as to give consumers value-added offerings, while also improving their turnovers.
Using apps to attract customers - Store retailers have also started using high-tech features to beat the IT-driven online retail. For instance, many retail stores have started to give app-based information on bargain sales, promotional offers, and stock clearance sales to their valued customers, so that they may just have to only click on their mobiles once to book their merchandise. This technological innovation is not only expected to bring in more customers to the shop retail, but also reduce the costs related to obsolescence and spoilage.
Supply chain improvements – Supply chains are very critical operational segments for any retail company. They gained special importance during the coronavirus pandemic period as they got disrupted at many places for the British retailers. A highly optimized supply chain helps a company save time and transportation costs apart from minimising the wastages and labour cost. In the aftermath of the pandemic, most of the retailers have started to revisit their supply chains. For instance, while some are trying to load their vehicles for raw materials and finished goods to their full capacity, few are extending the working hours of their logistics’ staff into non-peak hours.
Let us now glance through the stock performance of selected retail companies in the UK since the opening of the lockdown.
TESCO plc (LON: TSCO)
The shares of Tesco plc have been underperforming at the London Stock Exchange after initial gains made immediately after the opening of the lockdown. On 1 May 2020, the shares of the company traded on the exchange at GBX 236.30 per share, and towards the second week of May, they took a sharp upward turn to reach a high of GBX 248.20 on 13 May 2020. Thereafter, the stock has been in a downward spiral, reaching a low of GBX 211.60 on 9 July 2020, before making a sub-dued recovery. As of 14 September 2020, the shares of the company were quoted at GBX 219.20 (GMT+1 12.32 PM), down by 0.72 per cent over its previous days close.
Source – Thomson Reuters
Tesco PLC (LON: TSCO) is a United Kingdom domiciled retail company. It is the largest groceries retailer of the nation and owns close to 30 per cent of the British retail market. The shares of the company form a part of the FTSE 100 index.
J Sainsbury Plc (LON: SBRY)
The shares of J Sainsbury Plc were underperforming at the London Stock Exchange immediately after the opening of the lockdown before making a recovery. On 1 May 2020, the shares of the company traded on the exchange at GBX 194.60 per share, and towards the third week of May, they dropped down to reach a low of GBX 182.50 on 26 May 2020. Thereafter the stock recovered to GBX 208.70 on 30 June 2020, before getting into a downward spiral again. As of 14 September 2020, the shares of the company were quoted at GBX 186.30 (GMT+1 12:38 PM), up by 0.24 per cent over its previous days close.
(Source -Thomson Reuters)
Sainsbury Plc (LON: SBRY) is one of the largest supermarket chains in the United Kingdom. In terms of market share, it is third only to Tesco and Asda. The shares of this company also form part of the FTSE 100 index
WM Morrisons Supermarkets plc (LON: MRW)
The performance of WM Morrisons Supermarkets plc at the London Stock Exchange has been volatile since the opening of the lockdown in May 2020. On 1 May 2020, the shares of the company traded on the exchange at GBX 183.30 per share. Towards the second week of May, they took an upward turn to reach a high of GBX 196.30 on 13 May 2020 before turning down to GBX 179.10 on 26 May 2020. Thereafter they went through a couple of sharp up and down motions before getting into a downward spiral since 9 September 2020. The shares of the company are quoted at GBX 197.35 as on 14 September 2020 at (GMT+1 15:28 PM) losing 0.53 per cent over its previous days close.
Source – Thomson Reuters
WM Morrisons Supermarkets Plc (LON: MRW) is a mid-sized retailing company based out of Britain. The shares of the company form part of the FTSE 250 index.
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