THE RETAIL WORLD 2020 - ISSUE 02 RETAILING IN A TIME OF CRISIS - A WORLD RETAIL CONGRESS PUBLICATION
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THE RETAIL WORLD 2020 RETAILING IN A TIME OF CRISIS ISSUE 02 A WORLD RETAIL CONGRESS PUBLICATION
CONTENT
INTRODUCTION ANALYSIS
Be First to the Future: winning in essential retail . . . . . . . . . . . . . . . . . . . . . 4
Facing up to the big questions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
W
elcome to teams need to be focused not just on the immediate Retail’s key priorities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
the second challenges today but that it is essential they prepare their Innovation Spotlight: Italy. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
issue of businesses for the future. We hope the ideas and insights Pandemic helps consumers find their voice. . . . . . . . . . . . . . . . . . . . . . . . . 12
this special included in the opening articles of this second issue are
series of reports from the useful and stimulating. VOICE
World Retail Congress on Pandemic helps consumers find their voice . . . . . . . . . . . . . . . . . . . . . . . . 14
Building on the written reports in this issue, we are
Retailing in a Time of Crisis.
We felt strongly that at this
also keen to include further content and you will find THE RETAIL ENTREPRENEUR
a link below to a special webinar that I was invited to
unprecedented time when Accelerating change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
participate in alongside Matt Shay, the President and CEO
the COVID-19 pandemic is
affecting all aspects of life
of the NRF, Christian Verschueren the Director General INNOVATIONS
of EuroCommerce, Simon Susman, the Chairman of the Retail Innovations Responding to Coronavirus . . . . . . . . . . . . . . . . . . . . . 18
and commerce we should
Intercontinental Group of Department Stores and chaired
find a way of connecting
the retail industry through
by Mr BS Nagesh, the Chairman of Shoppers Stop and COUNTRIES
TRRAIN in India.
the sharing of experiences and lessons. This report series, GLOBAL
which is being updated every two weeks, is bringing The other link is to an interview with Deborah Weinswig,
together country reports from senior retailers, retail editors
WALGREENS BOOTS ALLIANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Founder and CEO of Coresight Research and one of the
and industry experts. most respected observers and analysts of global retail who SPAR INTERNATIONAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
What we are experiencing is a fast-moving situation that
shares her first thoughts on how retail is being reshaped IKEA RETAIL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
by this crisis.
is impacting on every country but in often different ways ASIA
depending on the structure of economies and business. We hope that you find this latest report useful and China . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
This is particularly true of the emerging markets and we informative. Please do feedback to me your own thoughts
have therefore extended our country coverage for this China & Hong Kong . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
and comments.
issue to include Brazil and South Africa as well as a second India . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
report from India which serve to underline the unique AFRICA
challenges retailers are facing in those huge markets.
South Africa . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
We have also extended the contributions from leading
retail experts who are sharing their high-level analysis IAN MCGARRIGLE MIDDLE EAST
on how retailers should be thinking and planning for the CHAIRMAN | WORLD RETAIL CONGRESS Saudi Arabia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
post-pandemic world. What is clear is that retail leadership IAN.MCGARRIGLE@WORLDRETAILCONGRESS.COM
EUROPE
Europe | Eurocommerce . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Denmark . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
France . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Germany . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Russia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Russia | Wildberries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Spain | El Corte Inglès . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Spain | Tendam . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
Spain & Portugal | Mercadona . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
United Kingdom . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
Reset, Recover, Revive
Interview with Deborah Weinswig, OCEANIA
Founder & CEO, Coresight Research
Australia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
LATIN AMERICA
Latin America . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
Brazil . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
NORTH AMERICA
United States | NRF . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
United States . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
2 | ISSUE 02 ISSUE 02 | 3
ANALYSIS
One thing is certain in this period of uncertainty: for grocery retailers, the COVID-19
BE FIRST TO THE
outbreak will permanently transform the landscape in which they operate. Consumer
behaviour is changing rapidly and radically. In the wake of the pandemic, first-time users
comprise 41% of US online grocery shoppers. And about 35% of food expenditures – more
than $2.5 trillion globally – is up for grabs as consumers shift to dining at home and
FUTURE: WINNING IN experiment with new channels/formats and trialling new products. Competitive balance
is in flux as well, as weaker retailers struggle to maintain position in this unprecedented
economic shutdown.
ESSENTIAL RETAIL T
o come out as winners, grocery retailers must
see the outline of the future in today’s crisis
– and be first to that future by distinguishing
the trends that will persist. Each market will be
• Grocers are one of the few retailers who will have
relatively strong P&Ls in the near-term, giving
them the opportunity to look for undervalued
assets through M&A.
different based on customer preferences, competition and
Chris Biggs and Gavin Parker, BCG Managing Directors & Senior Partners, offer their • Grocers have played a vital role in serving
demographics, but some likely elements and how retailers
perspective about what the future may look like and how retailers should respond communities during the crisis. Now is a defining
should respond to them are already in view:
to come out on top. moment to keep that momentum by ensuring
• The shift in food expenditures will give retailers that total societal impact is embedded into the
an opening to gain a larger foothold in meals for future strategy.
in-store or at-home dining, a potentially significant
With so much at stake for grocery retailers, the bold
opportunity since out of home consumption – 40-
moves to be first to the future can be divided into three
50% of total food expenditure in many markets – is in
imperatives:
limbo and will likely take time to recoup lost business.
1. Reshape your channels by building a winning
• Shoppers’ attitudes towards brands and products
ecommerce model and innovating your
are being reshaped. As a result, differentiated
physical space.
private labels targeting a new consumer emphasis
on value and health are expected to take 2. Reimagine your offerings through understanding
significant share. new behaviours and occasions, targeting through
private labels and personalised marketing
• The ascendance of online channels is encouraging
many retailers to quickly launch and expand 3. Reposition your business through reallocating
their ecommerce offering, but some customers the cost base to fuel future growth and build
are finding the service delivered underwhelming. digital capabilities.
In the medium term there are real strategic
considerations to building a compelling online Retailers must begin to take steps to navigate this
offering that is economically viable. radically altered world now; past crises have taught us that
early actors win. The relative return on investment from a
• Store formats that win will need both a superior major retail transformation when started preemptively in
customer proposition and advantaged economics. a downturn can be as high as 50%. And the post-downturn
Short-term LFL gains in larger store formats are growth of firms that expanded business opportunities
There is a small window of opportunity to act covering up a likely longer-term decline. during a recession can be as much as 8% above those
that shrank. In other words, if you are only focused on
• In order to cope with spikes in demand, many
NEED TO GO FROM SEQUENCING THE CRISIS… grocers have simplified their ranges and
stabilisation now and plan to prepare for the rebound later,
it will likely be too late.
promotional intensity. As consumers get used to
this new offering, there is an opportunity to reset
Stabilise the business; rather than letting the complexity creep back in.
Prepare for rebound Adapt for the new normal
ensure safety
…TO MAKING YOUR BOLD MOVES NOW
Stabilise the business; ensure safety
Prepare for rebound
Adapt for the new normal
!
ISSUE 02 | 5
ANALYSIS
With the IMF now predicting recession for 170 countries, retail will have to learn and
adapt quickly from this global crisis argues Boris Planer, Director of Go-To-Market
Intelligence at Edge by Ascential.
FACING UP TO THE
BIG QUESTIONS
By Boris Planer
As governments around the world continue to search networks in hyper-local ecommerce fulfilment schemes;
for viable approaches to dealing with the coronavirus the right product and service mix for a consumer whose
outbreak – considering public safety as much as the limits priorities are shifting at an unprecedented pace; the role of
of tolerable strain on public finances, business disruption automation as retailers and suppliers hasten to re-allocate
and pressure on job markets, as well as private household resources to business critical points of operation; and how
budgets – the International Monetary Fund last week to build loyalty at a time when the grocery basket shifts
updated the markets on its world economic outlook, online and shopper missions are increasingly focused on
predicting recession for as many as 170 countries. value and the replenishment of essential goods.
Hopeful early scenarios of short-lived economic It is also worth highlighting automation as a major force
slowdowns, or light recessions from which economies of change in retail and manufacturing over the coming
would bounce back fast, are now looking out of reach as months. While the growing use of robots and algorithms
the first key markets – including France and Italy – have has been controversial and viewed as a threat to jobs in
announced extensions of existing lockdown policies well the past, going forward automation can play a crucial
into May. More countries are likely to follow this approach role in supporting social distancing on shop floors and in
in the coming days, sending GDP growth rates nosediving. factories, as well as speeding up processes in supply chains
The IMF now expects the US economy to contract by 5.9% under pressure. Suddenly, automation should be more
this year, the Euro area by 7.5%, and the UK by 6.5%. broadly accepted by the public, while human labour is re-
allocated to client-facing and safety-critical roles. However,
It is worth highlighting that the IMF forecasts have to take
the question is what happens to employees once demand
into account a high level of uncertainty but equally are
slows down at a time when stockpiling is over, around 170
not based on worst-case scenarios. The depth of impact
countries will enter recession, and their previous roles have
to retail, suppliers and consumers will now depend on
been taken by robots and self-scanning mobile apps.
how well the coronavirus spread can be contained and
how long lockdown measures will last; the effectiveness Obviously, with benchmarks already rising on rapid delivery
of government support schemes and how fast they will in grocery ecommerce, the impact of the coronavirus
reach businesses (the US is beginning to show worrying outbreak will be enormous on process and format
weaknesses here); and, related to this, how much existing innovation in retail. But as the industry looks set to
retail and foodservice infrastructure will be damaged, or emerge leaner and more efficient, societies will also lose
pushed out of the market, by the upcoming recession. one of the last industries providing opportunities of social
upward mobility to low-skilled workers. The answers that
In a globalised world, no-one is immune to the coronavirus
politics will find to more limited individual participation
effect now, and retailers as well as their suppliers must
in economic development will, in turn, define the future
now reasonably expect to operate in exceptional mode for
of demand – and with it the future of the retail, channel,
the next 12-24 months.
format, product and brand landscape.
Questions they will have to ask themselves relate to the
role of the store and the inclusion of bricks-and-mortar
Photo by Pablo García Saldaña on Unsplash
ISSUE 02 | 7
ANALYSIS
WE HAVE ALREADY SEEN RAPID EVOLUTION OF DIGITAL
CONSUMPTION THROUGH LOCKDOWN
Global Google Trends (Indexed, 40 Days Pre Lockdown = 100)
COPING IN LOCKDOWN ESTABLISHED LOCKDOWN
MOVING INTO LOCKDOWN Spend creeps up on home, Non-essential spend returns
Immediate focus on stocking
garden and hobbies in an effort (online) as consumers dare to
up consumables
to improve lockdown living treat themselves
2500 200 50
Online Grocery Gardening Beauty
2000 40
150
RETAIL’S KEY
Toys & Games Apparel
1500 30
100
Home
1000 Improvement 20
Exercise
PRIORITIES
Equipment
50
500 10 Footwear
Pet Food
0 0 0
-10 -5 0 5 10 15 -10 -5 0 5 10 15 -10 -5 0 5 10 15 20
By Tom Charlick By Katherine Fiander
The impact of COVID-19 on retail has been immediately process will be slow (many months) and bumpy, with
significant, and we suspect that the journey of industry reintroduction of lockdown measures a widely expected
change is only just beginning. fact of life over the coming months. And social distancing
will be a new norm.
In the here and now, there is massive variability across the
sector, with some categories and retailers experiencing Yet despite this uncertainty, we are starting to see some
unprecedented surges in demand and current success consistency in how retailers are setting themselves to
defined by the strength of the digital proposition, supply operate over the next few months and beyond. We believe
chain and ability to fulfil product rapidly. Even within the there are five priorities for any retailer’s ongoing strategy,
Across many markets, we are seeing consumer behaviour and demand patterns digital world we have seen some clear phases in customer and these should hold true in face of a range of possible
change as people adapt to lockdowns. For retailers, this new reality means a behaviour through the lockdown period as mindsets and external scenarios:
shopping needs have evolved rapidly.
completely new set of business priorities that will shape the post-pandemic retail 1. Develop a flexible operating approach that can
industry as Katherine Fiander, Associate Partner, and Tom Charlick, Partner, at As we look ahead, it is difficult to predict the exact operate at 30%, 50% or 70% socially-distant demand
nature of the longer-term impact. Consumer behaviours to survive a bumpy and uneven recovery
OC&C Strategy Consultants set out. are cementing as we speak, with consumers getting
2. Build supply chain flexibility to cope with uncertainty;
comfortable with digital purchasing, forming relationships
shortening the critical path as restrictions are likely to
with different retailers, and reassessing their attitude to
ebb and flow
waste, sustainability and value. Consumer confidence is
at an all-time low and the difficult-to-predict consumer is 3. Prepare for a post-lockdown recession, and a
trading off spending saved funds with future uncertainty. consumer pivot to value and thrift
But the most significant impact on our industry will 4. Re-enforce your customer relationships; lock in those
likely be that of supply. Some retailers won’t survive who have found you at a time of need and re-engage
the lockdown (c. 8% of stores are expected to remain the lapsers who are starting to re-emerge
closed), but many more won’t make the recovery climb.
New partnerships and affiliations will emerge, there will 5. Review your channel strategy and make aggressive
be renewed impetus for local, convenience and national investments to maximise exposure to growth in
champions, and many retailers will discover that a leaner digital/to-home channels.
and more agile operating model will suffice. The task for retail management teams is to define your
In the meantime, there remains significant uncertainty own flavour of each of the above, prepare the operational
around exactly when and how governments will start initiatives, and then identify the triggers and signals that
the process of lockdown exit. We can be sure that the will tell you when to hit go.
Photo by Macau Photo Agency on Unsplash
ISSUE 02 | 9
ANALYSIS
In responding to the global crisis, retailers are having to focus on short-term operational
issues whilst looking ahead to a very different retail landscape. It is a challenge never
experienced before, but there are already some impressive examples of innovation. In
the first of what will be a series of reports over forthcoming issues, AlixPartners will look
around the world and focus on those countries hardest hit by the crisis, see what lessons
INNOVATION have been learnt and highlight examples of best practice. To start the series, we focus on
Italy.
SPOTLIGHT: ITALY LOYALTY GETS TESTED… AND WINS
Despite severe restrictions on movement, Italian shoppers
stuck to tried and tested retailers and brands for their
grocery needs. Esselunga, whose superstores are mostly
located outside of city centres, initially saw hits to revenue
LUXURY WAKES UP TO ECOMMERCE
When it comes to luxury shopping, the experience is as
much of a commodity as the product. Consumers prefer
buying luxury goods in person – with the trip to the store,
engaging with salespeople, and walking out with a branded
Marco Eccheli Michele Paolo D’Angelo Lorenzo Novella because government recommendations asked that people shopping bag all factoring into the decision to shop at a
Managing Director Director, Director, limit visits to their most proximate store. However, the brand. With the in-person experience absent over the last
AlixPartners AlixPartners AlixPartners grocer was able to partially offset these declines by few weeks, luxury retail had to make rapid adjustments to
leveraging its customers’ strong loyalty. Most purchases continue one-on-one relationships with customers. Some
for the retailer during the period of closure occurred on its brands hastily developed social media campaigns, such as
loyalty card. Esselunga took measures to increase social Salvatore Ferragamo’s Instagram trivia game. Marketing
distancing and streamline the flow of shoppers in stores, and engagement aside, ecommerce remains a frontier
and many loyal consumers preferred waiting in long lines luxury is yet to conquer fully. This may be an opportunity
to going over to a different store. The lesson? Building to change that.
trust works even in a crisis, or maybe especially in one.
@ferragamo/instagram
FRAGILITY OF APPAREL BUSINESS COMES TO FORE
With the national lockdown in early March closing
apparel stores indefinitely and consumers diverting their
purchasing power to essentials such as food and cleaning
supplies, it was a rude reckoning for many specialty
apparel retailers. Within the first couple of weeks of the
lockdown, many specialty apparel retailers were facing
cash distress and had to take drastic measures to cut
expenses and save cash. The only exception was retailers
catering to do-it-yourself shopping with sales shooting
up as consumers tried to find ways to occupy themselves
while stuck at home.
columbo.photog / Shutterstock.com
columbo.photog / Shutterstock.com
ISSUE 02 | 11
VOICE
S
ixty-six days. About nine-and-a-half weeks. In the US today, across those millions of digital grocery
That’s how long – on average – it takes to form households, across those millions of retail subscription
a new habit, according to a highly-cited 2009 households, you’ll now find some 60 million US homes
PANDEMIC HELPS
behavioural study.¹ with smart speakers. And roughly 120 million monthly
active users of voice assistance.8
Let that sink in. Especially as pandemic-driven shelter-
in-place mandates are extended. And especially as we Remember: sixty-six days. New habits.
consider the present and future of new technologies, and
CONSUMERS FIND
In customer and patient service. You’re at home, and
especially voice assistance.
you want an answer. A trustworthy, credible answer. Yes,
It was 23 January when the city of Wuhan was locked you can go on the internet and attempt to wade through
down in response to COVID-19.² Nearly ten weeks later – 67 the thicket of truths, half-truths rumor, and outright
days, to be exact, on March 30 – stores in Wuhan began nonsense. Good luck.
THEIR VOICE
to open. Nearly eleven weeks later - 76 days, on April 8 -
You’d like to talk to someone, somewhere. But there aren’t
Wuhan residents are being allowed to leave the city if their
enough call centres to handle the demand. Not enough
smartphones show “green” on a special health app.³
call centre operators in enough remote, sheltered-in-place
Ask yourself what this may mean. Especially in how we locations to handle the demand.
communicate and transact after authorities tell us it’s ok
Not enough healthcare professionals to handle the demand.
By Jon Stine, Lead, Open Voice Network Research Affiliate, MIT Auto ID Laboratory to go back outside.
As exampled in China, and as discussed on Dr. Teri Fisher’s
Professor Scott Galloway of New York University tells us
that the pandemic is accelerating business and technology recent web forum conversational AI - either in its IVR form,
transitions already in work.4 Behavioural science may tell us or through an assistant – is an answer.
that the length of shelter-in-place restrictions may cement An answer to the common questions (and fears) so many
some of those accelerated transitions into permanent place. of us have. An answer to the spike in voice calls since
Into new habits. New, voice-based habits. mid-March. An answer to staffing challenges in a time of
Here are three places where the arrival of voice value are sheltering and sickness.
being accelerated. Right now. Remember: sixty-six days. New habits.
In commerce. As Jason Goldberg, Chief of Commerce In the home and in the factory and in the store – because
Strategy at Publicis, wrote recently5, the COVID-19 voice is hands-free (and touch-free). ABI Research just
pandemic is rapidly accelerating the transition to digital published a study9 that predicts that voice-control device
commerce. Indeed, for many, ecommerce for groceries and shipments will grow by nearly 30% year-on-year in 2020 – and
essentials is not a choice, but a survival tool. that’s despite the pandemic-driven economic turn-down.
Many US households are now trying digital grocery services In ABI’s announcement of the research, ABI Research
for the first time. Mobile downloads of popular digital Director Jonathan Collins noted that “voice has already
grocery apps such as Instacart, Walmart Grocery and Shipt made significant inroads into the smart home space”
have surged. And they – along with Amazon’s Whole Foods and that when combined with smart locks and delivery
grocery delivery – have been overwhelmed by demand.6 alerts, voice can significantly advance home security and
Meanwhile, and in parallel: we’re about to see the industry- convenience in a world of digital, ship-to-home commerce.
wide, mega-brand growth of membership/subscription But hands-free voice is not just for smart homes. As Lawrence
services. The leader, of course, is Amazon, with its 112 YongZhang Lin of the China Netcasting Services Association
million US Prime members. Coming soon: Walmart, which reported last month on LinkedIn, it’s being implemented
will expand its existing grocery-delivery service into a Prime- throughout China as a replacement interface for a button or a
like set of offerings to be branded as Walmart+.7 screen. Such as in elevators and public kiosks.
Yes, services like Prime provide free shipping, as well as Hands-free voice is also for front-line retail and service
a wide range of media services. But at the heart of Prime employees. The superb firm Theatro turns clipboards and
– and every subscription service – is the absolute ease of touch-screens into headset-received task instructions.
the transaction. No entry of credit card data. No entry of
shipping information. You’re a member. It’s all on file. All Remember: sixty-six days. New habits.
you have to do is say “yes.” The clock is ticking.
All of which creates a perfect opportunity - a perfect storm
- for the technology that makes it so easy to say yes: voice.
References
¹ Lally, van Jaarsveld, Potts, Wardle, “How are ³USA Today, 30 March 2020; BBC.com, 24 6
“Amazon’s Whole Foods Grocery Delivery Is 2020, citing NPR-Edison research.
habits formed: Modelling habit formation in the March 2020. Being Overwhelmed by Demand,” Motley Fool, 9
“COVID-19 Pandemic Impact: Germ Control
real world,” European Journal of Social Psychol- Galloway, “No Mercy / No Malice,” 3 April 2020.
4 19 March 2020. Over Shared Surfaces Will Help Push Near 30%
ogy, Vol. 40, Issue 6, 2009; Clear, “How Long 7
Statista, January 2020. “Walmart expands de- Growth in Smart Home Voice Control,” ABI Re-
Does it Actually Take to Form a New Habit,”
5
Goldberg, “The Impact Of COVID-19 on U.S.
Brands and Retailers,” Forbes.com, 29 March livery subscription program to take on Amazon search, 1 April 2020; Shein, “COVID-19 pandemic
jamesclear.com/new-habit, 2019. Prime,” Fortune, 27 February 2020. impact pushing smart home voice control
2020.
Photo by Drew Beamer on Unsplash ²New York Times, 31 March 2020. devices to predicted 30% growth,” techrepublic.
8
Statista, December 2019. Statista, January
com, 1 April 2020.
ISSUE 02 | 13
THE RETAIL ENTREPRENEUR
How are entrepreneurial ecommerce retailers and start-ups meeting the challenge of
consumers in lockdown? We asked Geoff van Sonsbeeck, CEO and Founder of The House
of Baukjen, to share his experiences.
ACCELERATING A
hundred years ago Vladimir Lenin said, “There resonates with customers. However, these cannot be just
are decades where nothing happens, and there words; more than ever, actions speak louder than words.
are weeks where decades happen.” I started to
In the last four weeks alone, our team has been more
recall this quote in the last few weeks as we all
energised, resourceful and effective than I can ever recall,
had to adapt to a new world fast, mitigate risks to our
CHANGE
despite largely having to work from home. To name a
teams and supply chain, cut costs, inevitably go to the
few, we: adjusted our collection and launched work from
bank for support and learn what ‘furloughing’ means.
home appropriate styles; launched ‘Zoom-shopping’ with
We should not lose perspective; these are tragic times, friends and our eStylist; made face masks for the NHS in
but I would not be an entrepreneur if I could not also see our office, then gave up our head office as an emergency
the opportunity in the change happening and a different space for the NHS; launched a ‘keyworkers’ gratitude offer;
By Geoff van Sonsbeeck, CEO and Founder of The House of Baukjen future with a new kind of consumer. Change was already put our weight behind the global movement #masks4all;
happening and inevitable. and are offering face masks at cost to customers, while
matching any purchase with complimentary masks to
We have two ethically and sustainably conscious
share with neighbours. Finally, we are working with a few
womenswear brands, Baukjen and Isabella Oliver, and
of our factories in Portugal to produce 10,000 hospital
spent 2019 becoming crystal-clear on our purpose. We are
gowns per day for the NHS.
now proud to be part of the B Corp family and members
of the global Fashion Pact, seeking a more sustainable Our customers appreciate this and are supporting us
approach to the fashion sector. This has also profoundly through this pandemic. We see an increase in customer
impacted our strategy and we shifted our model towards engagement and acquisition, bucking the trend.
circular fashion, including recommerce, traceability of
Retail has always been about creative destruction and
garments, mechanical recycling of end-of-life garments
the question in my mind is how the sector as a whole
into new fabrics and more. We like to say we are ‘Designed
will adapt to this change. To close with another favourite
for Good’.
quote, this time by Charles Darwin, “It is not the strongest
The pandemic accelerated the speed of change, not the of species that survive, nor the most intelligent, but the
direction. It has amplified the opportunity and impact of one most responsive to change.”
authentic, ‘humanised marketing’. This is the language that
ISSUE 02 | 15
RETAIL INNOVATIONS RESPONDING NEW VIRTUAL STOREFRONT PLATFORM OFFERS FREE ACCESS
TO RETAILERS
TO CORONAVIRUS UK-based Streetify, a new ecommerce platform featuring virtual storefronts,
launched in late March, just in time to help businesses respond to the
By Justin Sablich, Editor, Springwise COVID-19 crisis.
Users of the app and website can choose an actual street they wish to visit
and can scroll left or right to “walk” up and down. They are shown virtual
storefronts and can click on any store to enter its Streetify website. Business
T
owners can put marketing messages in their virtual storefront windows,
hese are uncertain times, to say the least — priorities are shifting daily as a global health announcing deals, delivery options, in-stock goods and more.
emergency is being dealt with on a global scale. All the while, retailers have been forced to Find out more
act fast in response — to help others suffering through the crisis while attempting to stay
on solid ground financially. TAKEAWAY
If shoppers can’t visit the high street, why not bring the high street to shoppers?
The trends we’ve been tracking are a mix of brand-new approaches and the accelerated use of Even before COVID-19, traffic to bricks-and-mortar stores was on the decline.
emerging technologies and platforms. Live streaming has allowed brands to shift sales online, TAKEAWAY However, Streetify may be able to help businesses develop new markets, stay
agile and keep afloat. While Streetify was in the works long before COVID-19
promote new products and even host multi-day events. We’ve seen the Chinese mobile phone hit, the pandemic has added new urgency for shops to find ways to keep
maker Xiaomi stream a 72-hour product launch and, in Paris, Lanvin utilise virtual reality and customers buying when they can’t get out. In addition to providing the app free to
streaming technologies to put on a cloud fashion show. consumers, it is providing retailers with free access to the platform for one year in
the UK, US, Canada, India and Australia, and all store and restaurant advertising
Elsewhere, digital platforms that aim to enhance the consumer experience are being put to good Streetify on the app is free to businesses throughout 2020.
use by many retailers. We spotted a new virtual storefront platform helping retailers reach new
audiences despite depleted foot traffic.
Time will tell whether or not the following innovative business ideas will have staying power in
their respective industries once there is a return to relative normalcy, but it has been inspiring to
see so many creative solutions come to light.
A 72-HOUR PRODUCT LAUNCH, LIVE STREAMED
Chinese mobile phone maker Xiaomi collaborated with the video platform Bilibili
for a 72-hour live streamed launch event for its Mi 10 5G phone during the height
of China’s coronavirus lockdown. The event, dubbed “Life is Not Made for Defeat,”
pulled in around 12 million viewers and 2.6 million comments on Bilibili’s trademark
“bullet chat” format, which streams user comments across the screen in real time.
Find out more
Streetify
TAKEAWAY
While COVID-19 has caused disruptions for many planned product launches,
Xiaomi decided to push ahead. Part of its success had to do with using a
significant portion of the event focusing on the health crisis and attempting to
take a positive approach. The event featured a two-hour press conference with
an emotional Lei Jun, Xiaomi’s founder, who in addition to unveiling the new
phone and product giveaways, also shared uplifting, user-generated content
and educational material. It also helped that live-streaming is much more a
part of everyday life in China compared to the rest of the world.
mi.com
Photo by Ross Findon on Unsplash
ISSUE 02 | 17
VR USED TO CREATE CLOUD FASHION SHOW CAPTURED CO2 USED TO MAKE HAND SANITISER
During Paris Fashion Week, Lanvin collaborated with video platforms Douyin, Air Co., a New York-based company that launched a carbon-negative vodka last
Yizhibo, iQiyi and luxury e-tailer Secoo to create a cloud fashion show. The year, is using the same approach to make hand sanitiser during the coronavirus
brand also invited fashion bloggers and boyband UNINE’s Jiayi (嘉羿) to live- outbreak. It captures CO2 pollution, combines it with water to make alcohol and
stream the show’s behind-the-scenes action under the hashtag #lanvin云秀场 then distils the final product using solar-powered equipment.
(#lanvinCloudBasedRunway), resulting in over 5 million views.
Find out more
Find out more
TAKEAWAY
TAKEAWAY We’ve seen several examples of alcohol producers shifting to the production
The COVID-19 epidemic is truly testing a brand’s ability to respond, especially of hand sanitiser in response to the coronavirus pandemic, but this is the first
in the luxury industry. Beyond using this event to promote its new clothing, carbon-negative approach. Air Co.’s methods are unique, not only because of
Lanvin’s latest handbags – which are inspired by everyday objects like takeaway the environmental benefits of removing pollution from the air but also because
boxes for cakes – peaked on Chinese social media, starting conversations they save water, time and other agricultural-related expenditures. The company
and helping direct a younger audience to the brand. Like Lanvin, the key for aims to produce “goods that do good”, and so, in response to the current health
many designers has been to increase human interaction through harnessing crisis, is working with local officials to donate its bottles of hand sanitiser to
technology. This creative spark to provide innovative ways of connecting with Air Company the industries most in need of it.
consumers is drastically pushing the development of live-streaming, VR and
new social media tools in a way that will change approaches to marketing for
Flaunter on Unsplash the foreseeable future.
BEAUTY RETAILER MOVES IN-STORE ADVISORS ONLINE
DURING COVID-19
COSMETICS BRAND REMIXES TIKTOK VIDEO TO RAISE In China, Lin Qingxuan was able to successfully pivot during the COVID-19
COVID-19 AWARENESS outbreak by hosting livestreaming sessions to recommend its products on
ecommerce channels. At the heart of the effort were the retailer’s in-store
In partnership with Mobile Marketer, E.l.f. Cosmetics remixed the song “Eyes. shopping advisors, who were re-trained to offer personalised customer service
Lips. Face.”, which appeared as a branded video on TikTok last autumn and was online. Lin Qingxuan used Alibaba’s Ecommerce Solution for Retail, which can
written by Grammy-Award-winning songwriter iLL Wayno, to “Eyes. Lips. Face. help retailers launch a B2C ecommerce platform in as little as five days.
Safe.” In the new version, singer Holla FyeSixWun washes her hands and sings
Find out more
about social distancing.
Find out more TAKEAWAY
Using Alibaba Cloud’s ecommerce solutions, Lin Qingxuan was able to
TAKEAWAY
transform its business model. One live-streamed session on Valentine’s Day
This TikTok remix is just another example of the way advertising is reacting in attracted more than 60,000 people and, as a result, the retailer sold over
innovative ways to the COVID-19 pandemic. The video had over 4.7 billion views, 400,000 bottles of their camellia oil. In addition, by leveraging collaboration
and TikTok users are able to create their own remixes of the song, spreading tools like DingTalk, Lin Qingxuan’s shopping advisors were able to offer
the message even further amongst the young people who make up the vast personalised customer service online. The company has reported that the sales
Element5 Digital on Unsplash
majority of TikTok users. In February 2020, downloads of the app were almost from one shopping advisor in two hours have equalled that of four retail stores.
double that of a year earlier, bringing the total number of users to 1.9 billion.
The global reach available from the app is vast, especially as it only continues to
grow during this period of social isolation. A positive video such as this will not
only promote what customers really need to know about the coronavirus — to
simply wash their hands and social-distance — but also generate a feeling of
elfyeah on TikTok positivity around the brand itself, amid much scaremongering and negativity.
A call for innovative ideas in response to COVID-19. Now
Justin Sablich, Editor,
more than ever, Springwise are looking to track the
Springwise
innovations that matter most. Send us your spottings to
Springwise spots and analyses
be considered for publication by emailing Springwise at
the latest innovations
info@springwise.com
that promote positive and
sustainable change from
around the globe
18 | ISSUE 02 ISSUE 02 | 19GLOBAL | WALGREENS BOOTS ALLIANCE
A
ccording to a recent study, 71% of consumers commitment to address health disparity, Walgreens
around the world say they will lose trust in a recently helped found the Illinois COVID-19 Response Fund,
By Richard Ellis brand if they perceive it is putting profit over which ensures that financial resources are deployed to
people during this crisis. The same study also local community foundations and nonprofits working to
found that 62% of survey respondents say their country support vulnerable populations.
ISSUE 02
will not make it through the pandemic without brands
We are leaning into our roles as healthcare experts,
playing a critical role in addressing challenges1.
leveraging in-store and digital platforms to disseminate
These data points represent a defining moment for accurate information to consumers, through public
the business sector at-large, and particularly brands. education campaigns and social media videos with our
Consumers will remember brands that step up in this top health experts, so they can care for themselves and
crisis. Fortunately, I believe private industry is well- their families. We’re connecting customers through
PANDEMIC CHALLENGES THE positioned to demonstrate the important role business
plays in this unprecedented crisis, and beyond.
digital services, such as Walgreens 24/7 Pharmacy Chat
and leveraging technology such as Walgreens Find Care™
program, which connects customers to local healthcare
providers across a variety of services.
ROLE OF BUSINESS IN SOCIETY This crisis is deeply connected to our company’s purpose,
so it’s not surprising that many of our employees have
joined volunteer efforts to support their colleagues and
their communities. In the UK, Boots employees have
signed up for training, so they can support Boots-operated
testing sites for National Health Service (NHS) employees.
Other employees across our global business have joined
warehouse colleagues to help manage the high volume of
customer orders and deliveries. We’ve also seen employees
take up sewing in their spare time to make personal
At Walgreens Boots Alliance (WBA), we’ve always believed protective equipment for frontline workers.
that business is a force for good. Our company purpose is
It is humbling to witness the commitment across WBA and
to help people live healthier and happier lives. From a CSR
the efforts across the private sector. Done right, I believe
perspective, we are focused on four key areas in this crisis:
brands can demonstrate the positive and powerful impact
1. Collaborating with partners they have on people’s lives in times of crisis and beyond.
2. Supporting vulnerable populations
3. Educating communities
4. Empowering our employees to support others
Partnerships have always been critical to WBA’s corporate
social responsibility strategy. And in this crisis, we are
working with our partners to address urgent needs
around the globe. For example, we are supporting the CDC
Foundation’s Emergency Response Fund in the US. In the
UK, our Boots business has teamed up with The Hygiene
Bank nonprofit to provide 200,000 toiletries to National
Health Service hospital staff across the UK, so they can
have access to hand cream, toothpaste and shower gel
between shifts. Nonprofits will feel the long-term impact
of this crisis, and we believe it’s critically important to
continue to support them, so they can sustain their Richard Ellis, Vice
missions, from addressing childhood poverty to supporting President, Corporate Social
people with cancer. Responsibility, Walgreens
We are also exploring ways to address the needs of people Boots Alliance
who rely on regular medical care and support. In the US,
Walgreens is working closely with health plans, physicians
and governments to ensure our customers and patients
maintain access to medications they need. Adherence
is critical to health and wellbeing. Also, as part of our
References
¹ Edelman Trust Barometer Special Report on COVID-19
https://www.edelman.com/research/covid-19-brand-trust-report
ISSUE 02 | 21T
he escalation of the COVID-19 outbreak is being Sundays to provide an opportunity to store colleagues to
GLOBAL | SPAR INTERNATIONAL felt by SPAR country operations in the 48 markets
we trade in worldwide. A key SPAR strength is this
global network and, during this crisis, we have been
recover. It is interesting to note that these sales have now
spread over the remaining six days, as customers have
revised their shopping patterns. Elsewhere, particularly SPAR
By Tobias Wasmuht able to quickly learn from SPAR markets that were first to city-centre convenience stores and forecourts have been
face the outbreak, such as SPAR in China and Italy. Practical negatively impacted; to circumvent sales decline, a strong
and decisive information has been rapidly shared via our focus has been placed on offering alternative solutions.
central international SPAR online resource centre. This ‘early This move to facilitate online orders combined with home
warning’ resource has allowed our country teams to prepare delivery or click-and-collect continues to gather pace across
and scale-up their mitigation strategies. The number-one SPAR. Prior to the COVID-19 crisis, SPAR had online grocery
ISSUE 02
priority has been to protect the health of our people and platforms in 12 countries. Within only four weeks, this
the communities we serve. To that effect, we implemented has almost doubled. There has been a series of innovative
the issuance of full PPE to our colleagues, including face solutions developed and adopted by SPAR country operations
masks, gloves and face shields, as well as installed plexiglass including online/click-and-collect and drive-in pick-up
screens in stores to protect colleagues and customers, solutions from forecourts, WhatsApp orders and, home
whilst undertaking precautionary disinfecting of stores. In delivery via shop-for-a-friend apps, as well as the creation of
the most affected regions, store-wide deep cleanings are essential grocery boxes/care hampers for home delivery to
being carried out multiple times a day. In Italy, SPAR moved those most in need.
quickly to purchase supplementary health insurance for their
For many countries entering the second month of at least a
employees, which, in addition to the provision of PPE, has
partial lockdown, there is a growing focus on also addressing
given our teams greater confidence in undertaking their vital
the needs of the more vulnerable in society impacted by
role in contact with customers.
the current situation. Globally, SPAR is scaling up donations
The international procurement of essential protective of finances and resources to those most in need, including
clothing, such as disposable face masks and gloves, is monetary contributions, provision of vouchers for poverty
becoming increasingly vital as a growing number of countries relief for low-income families, delivering groceries to food
adopt mandatory regulations of wearing masks and gloves banks and more. SPAR is also supporting medical services
for everyone in our stores. Within the past eight weeks, and frontline staff by donating protective clothing as well
SPAR International has procured, on behalf of our European as ventilators to hospices and hospitals, and offering free
operations, over 9.5 million disposable face masks and 10.2 lunches and essential grocery items to healthcare workers.
million gloves for our stores. Our SPAR China colleagues and
As we look to the future, we can be sure that there shall be
our strong presence in China have been invaluable in this
no such thing as returning to normality, only the redefinition
process with SPAR employees visiting the PPE factories
of what the ‘new normal’ shall be. Customer behaviour has
producing for us to supervise production and ensure that the
changed - not only during this crisis but for the long term.
much-needed PPE is airfreighted as quickly as possible to
Health and hygiene are firmly placed as being of the utmost
where it is needed most.
importance. Social distancing is becoming the norm and we
As measures to combat the spread of the coronavirus seek to serve our customers in a fast, efficient and, most
cascade, SPAR International supports our partners through of all, safe manner. The economic uncertainty and financial
the analysis of sales data to identify trends which have insecurity for many is placing an ever-growing importance
occurred in markets that have entered into lockdown at on low prices, offering consistent and long-term value. The
an earlier phase, and the impact this has had on the sales COVID-19 crisis is challenging us all in the grocery sector to
patterns and supply chains of key categories. fundamentally review our strategies and models. A new
form of transformation is ongoing and at pace, and at SPAR,
For example, lessons from a panel of clustered SPAR
we have in the last eight weeks seen an unprecedented
countries are used to help forecast the waves of demand
amount of innovation and coming together of the SPAR
and changes in buying behaviour post-lockdown on a weekly
worldwide organisation, which instils me with confidence and
basis. Across Europe, SPAR country teams have reported
the unwavering belief that we shall come out of this crisis
challenges in procuring grocery items such as pasta, tomato
stronger and better together.
products and other tinned goods. SPAR International has
adopted a marketplace approach of utilising our strong global
sourcing network to purchase from both own-brand and A
brand suppliers. The bitter reality of the COVID-19 outbreak Tobias Wasmuht, Managing
has seen the best-laid category plans uprooted and replaced Director, Spar International
with traditional trading, where speed and agility outweigh
perfection and detailed planning.
A further development enforced by lockdowns, curfews
and additional legislation has been the impact of restrictive
trading hours and/or the (part) closure of certain outlets.
SPAR in Italy has taken the voluntary step to close on
ISSUE 02 | 23GLOBAL | IKEA RETAIL
By Tolga Öncü, IKEA Retail (Ingka Group)
ISSUE 02 Ikea’s blue box store in Haarlem in the Netherlands
converted to a fulfillment centre
F
or IKEA, being purpose-led means contributing REASSURING OUR SUPPLIERS
positively to society and business in a balanced and We are working together with the most vital and vulnerable
meaningful way. It is not a matter of profit versus small and medium-sized suppliers and service providers,
purpose, it’s about combining both elements and supporting them with a set of proactive measures, including
balancing short- and long-term needs of both people and cash flow relief. By doing this, we can also ensure the
business. That’s why we are strengthening our foundation continuity of vital business processes and services for when
and preparing ourselves for the new normal as we continue the crisis subdues.
to make IKEA more affordable, accessible and sustainable,
SECURING OUR LONG-TERM GROWTH AND
for generations to come.
PROFITABILITY
CARING FOR OUR 166,000+ CO-WORKERS We are leading ourselves through this crisis with healthy and
A main priority is to secure the livelihoods for as many co- safe routines. The health and wellbeing of our co-workers
workers as possible for as long as possible. This is one of the and customers is our number-one priority. The situation
reasons for keeping some of our operations open in a safe has also meant a further development and investment in
manner through ecommerce and click and collect. We are our capabilities in ecommerce, customer fulfilment, skills
also offering additional parental leave for those at home with development of co-workers, and a solid and long-term
children, providing more flexible work arrangements, and approach to our financial and strategic planning. The current
enabling training and competence development. situation has allowed us greater focus on transforming how
we operate digitally with new capabilities and the launch of
SUPPORTING THE COMMUNITIES MOST IN NEED
our new IKEA app, but also physically in turning our stores
Ingka Group has established a community relief approach
into fulfilment units and testing contactless drive-thrus at a
with €26m of in-kind donations, allowing our 30 countries
pace we didn’t think possible.
to prioritise the needs of high-risk groups and those leading
relief efforts. This will focus on providing necessities such as Being purpose-led is not new to IKEA. We have been
beds, bedding, food and toys to hospitals, medical centres delivering our vision of creating a better everyday life for
and shelters. many people for decades, and this way of working serves as
the foundation of our business. We recently reinforced our
HELPING PEOPLE ENJOY A BETTER LIFE AT HOME
commitment to lead IKEA Retail in a purpose-led way and, by
People depend on IKEA for affordable, good-quality furniture
doing so, it is my belief that we have created a springboard for
that improves their homes and quality of life. To continue
us to show up and make a meaningful difference as a global
to meet these needs, we are taking immediate steps to
company in a time of crisis. This is also how we sustain our
improve ecommerce, safely convert many stores to fulfilment
business and come back to a new normal.
units and introduce new services, such as drive-thru click
and collect and contactless deliveries. In-store, customers
and co-workers are being protected with increased hygiene
practices, new routines and physical distancing. As part of Tolga Öncü, Retail Operations
our reactivation plans, we are putting sustainability and Manager at IKEA Retail
affordability in focus. Our efforts to enable the many people (Ingka Group)
to live more sustainably at home, and our commitment to
support a more equal world, will remain strong.
Ikea’s blue store in Haarlem in the Netherlands
converted to a fulfillment centre
ISSUE 02 | 25T
he outbreak of COVID-19 in China brought
ASIA | CHINA widespread challenges to businesses across
the country. We had to face this head-on,
guaranteeing regular order placement and timely
by Ella Kidron and Yuchuan Wang, JD.COM delivery services across China’s nearly 300 cities. The
company has delivered 120 million products including
160,000 tons of rice, grains, meat and vegetables to its
ISSUE 02
consumers during the outbreak.
Shen Zuojun (Max Shen), JD’s chief scientist for supply
chain management, explains: “The sudden outbreak of
COVID-19 presented four key challenges for JD’s supply
chain to overcome:
THE SUPPLY CHAIN LESSONS 1.
2.
A sudden change in product demand resulting in a
structural imbalance between supply and demand
A smaller logistics team than usual due to the
SEIR model
FROM CHINA
Spring Festival holiday, as well as the pressure of
Following the outbreak, the demand for these products
closed roads across China
skyrocketed, and people attempted to stockpile. If JD were
3. How to ensure merchant credibility and prevent to allow people to stockpile freely, then these supplies
rising prices of epidemic control supplies wouldn’t be allocated sufficiently to meet the real
demand. For example, if we were to allow just a few people
4. How to manage the challenges brought by the
in a province with a relatively low number of COVID-19
virus’ overall pressure on the economy and
cases to stockpile all available masks in the market,
insufficient production capacity.
then those masks might go unused sitting in people’s
homes, while the epicentre in Hubei province remained in
desperate need of these supplies.
ADDRESSING THE IMBALANCE
The first problem was in how to address the imbalance JD’s supply chain scientists used the SEIR model to
between supply and demand. Normally, JD would predict forecast demand for epidemic supplies to prevent this
sales and prepare inventory based on historical sales so from happening. The SEIR model assumes that people
that inventory would be available where the predicted carry lifelong immunity to a disease upon recovery, and
historical demand is. In general, the demand of masks and is used to estimate the number of patients, expected
other epidemic supplies such as disinfectant and liquid patients and transmission path of a disease in order to
soap is typically low, so inventory in warehouses was also be able to forecast the demand for epidemic supplies
low. Therefore, upstream suppliers maintained a relatively according to regional population size, and to control the
low level of production. demand to ensure that limited materials are distributed to
the areas where they are most needed. At the same time,
JD’s procurement team mobilised upstream manufacturers
to increase production capacity and accelerate supply.
JD couriers and drivers
ISSUE 02 | 27JD couriers: our heroes in red delivering trust across the city of Wuhan
used to cover, resulting in numerous delays in fulfilment. A CEMENTED MUTUAL TRUST
It is also challenging to transport goods from JD’s large Chen Lin, Vice President of JD, said, “As the leading supply
regional warehouses to lower-level warehouses, such chain platform in China, JD will continue to open its
as front warehouses close to cities with limited human resources and technical capacity to society to ensure the
resources. supply of commodities. We will also work together with
the entire industry to support economic development and
JD-Y’s smart warehouse network platform addressed this
the resumption of production.”
issue. “Multi-echelon network hierarchical optimisation”
was used to analyse the status of JD’s warehousing “During the epidemic, we have further cemented mutual
network with the updated epidemic information in real trust and cooperation with our partners. We believe that
time to calculate and reallocate inventory distribution the concerted efforts across upstream and downstream
across the network between cities and provinces. The industry players will certainly help us collectively overcome
platform also enables JD’s suppliers to deliver directly the difficulties and usher in a new wave of development,”
to JD’s front warehouses. During the epidemic period, he added.
hundreds of supplies have been delivered directly to JD’s
front warehouses instead of going through the entire
regional system. As a result, the online availability rate
across the country was stabilised at over 95%.
JD couriers: our heroes in red delivering trust across the city of Wuhan
EARLY-WARNING MODEL
Another issue was merchant management. With the
skyrocketing demand for masks, alcohol and other
epidemic materials, some merchants took the opportunity
OMNICHANNEL FULFILMENT bricks-and-mortar store nearest to the customer has the to substantially increase commodity prices, while others
In addition, normally demand for products like rice, flour, items in stock, and then source the inventory from there attempted to provide false inventory quantities and were
oil, etc. is generally higher offline. With the number of instead. During the epidemic, tens of thousands of offline therefore unable to distribute products on time after
people remaining in their homes rapidly increasing due to stores in hundreds of cities have worked with JD to fulfil customers purchased them, impacting user experience
the epidemic, this demand moved online. Relying solely customers’ orders, and the daily number of orders fulfilled as well as the reputation of the credible merchants on
on the inventory in JD’s warehouses to manage the sudden through the programme is nearly five times that of a the platform. It is extremely difficult to discover this type
increase in ecommerce demand of these products would normal day prior to the virus. of speculative behaviour manually. Based on intelligent JD delivery
certainly not be sufficient. forecasting and abnormal data detection algorithms,
When Mr. Li came back to Beijing after the Spring Festival
To address this, JD-Y (JD’s smart supply chain solutions holiday and had to stay under quarantine in his home our supply chain scientists launched a risk early-warning
division) turned to its Omnichannel Fulfilment supply at the Xinkangjiayuan residential compound in Beijing’s model, which identified more than 200 suspected
chain innovation programme When a consumer places an Daxing district for 14 days, he was faced with the challenge abnormal price rises and overselling actions that the
order online, the platform matches the order with offline of how to buy daily necessities during the period. JD’s company was then able to address.
supply closest to the consumer in real time, and then Omnichannel Fulfilment programme enabled Mr. Li to Finally, there are the challenges brought by economic
arranges for a courier to deliver to the consumer along the place orders on JD for snacks and drinks, which were then pressure and insufficient industrial production capacity at
most efficient route. sourced from the Watsons store near his compound and a certain time in the future. During the epidemic, JD.com’s
delivered to him in just 30 minutes. supply chain scientists are studying data on the impact
For example, if a consumer in Beijing places an order
for two large 5L bottles of cooking oil and a bag of rice NETWORK OPTIMISATION of historical epidemic events, combined with the data
in ordinary times, the products would come from a JD The second problem is logistics capacity. The epidemic during the novel coronavirus, in order to forecast the future
warehouse and then go to a JD delivery station near occurred during the Spring Festival when some logistics trends of various industries. JD is using this information to
the customer’s home, from where they would then workers were still on holiday. At the same time there were actively communicate with suppliers and partners about Yuchuan Wang, Senior Ella Kidron, International
be delivered to the customer. With COVID-19, instead transportation restrictions and road closures, which made the future situation, difficulties encountered, and planning Manager, International Communications, JD.com
of relying solely on the stock in JD’s warehouses, the transportation and distribution challenging. As a result, and deployment, in order to develop the most effective Communications, JD.com
omnichannel fulfilment platform will calculate which some warehouses were unable to supply the cities they recovery plan.
28 | ISSUE 02 ISSUE 02 | 29You can also read
