Please click "Accept" to help us improve its usefulness with additional cookies. In the United States, trucking demand increased by 150 percent, year over year, in March. The contents of this site, including any statements, articles, graphics, charts, checklists, and other materials (“Content”) are for informational purposes only. Korean respondents share how their food-consumption habits have changed since COVID-19 began, and how their behaviors could change in the pandemic’s aftermath. These are not easy choices to make for either party and would require collaboration among retailers and vendors to benefit both sides. Please email us at: McKinsey Insights - Get our latest thinking on your iPhone, iPad, or Android device. Other opportunities in food service may also materialize, as some food service players (for example, quick-service-restaurant players) face financial difficulties. As supply chains for nondiscretionary goods have ramped up activity, companies have had to balance the surge in demand while also prioritizing the protection of their employees’ health and well-being across the supply chain. With most retailers now in the second phase of their coronavirus response, we’ve updated our guidance for leadership teams. Retail. Learn more . Another leading producer of canned goods is holding daily “stand-up” meetings with a regional grocer to foster transparency and open communication. Over 75% of U.S. consumers have changed shopping behavior and changed to new brands during the COVID-19 pandemic. Maintaining good workplace hygiene is also important. tab. In the United Kingdom, competition laws are being relaxed so that supermarket chains can cooperate and share transportation resources and depots—and get essential products on store shelves more readily. cookies, global survey of consumer sentiment during the coronavirus crisis, in the retail sector that will have lasting impact, our recent article on the impact of COVID-19 on the sector demonstrates, In Asia and the United States, but less so in Europe, McKinsey_Website_Accessibility@mckinsey.com, Most AF&L companies (62 percent) saw negative TRS (versus 21 percent of the S&P 500), and only 15 percent of AF&L companies achieved TRS greater than 10 percent (versus 46 percent of the S&P 500), our latest State of Fashion outlook beyond COVID-19. Key to retailers’ success post-COVID-19: 4 necessary customer experience practices. We focus in this article on the five actions retailers are taking to resolve the immediate challenges that COVID-19 presents to supply-chain workers, business partners, and operations. As the novel coronavirus (COVID-19) spreads across the globe, we're monitoring key consumer behavior thresholds to help fast-moving consumer goods (FMCG) brands and retailers understand the status of each market, as well as how to best respond. According to McKinsey & Company—which has been surveying 1,000-plus U.S. consumers ages 18 and up on a weekly, ongoing basis since March 16—while discretionary spending categories including travel, out-of-home entertainment, apparel and footwear, and home furnishings are down, shelter-in-place directives and social distancing have caused American buyers to spend more in a … Responding to the dip in on-shelf availability, retailers are working closely with companies across their supplier bases, including consumer-packaged-goods (CPG) makers, distributors, and co-manufacturers. It is less likely this will occur in the short term as nearly all grocers have seen a spike in sales that is expected to persist through the end of 2020; potential sales declines driven by pantry unloading may not occur until 2021 depending on how long COVID-19 crisis lasts. We'll email you when new articles are published on this topic. For more detail analysis of consumer sentiment, please see McKinsey’s global survey of consumer sentiment during the coronavirus crisis. E hanno delineato tre scenari possibili di recupero nelle varie aree geografiche. With creative, resourceful responses to the pandemic, retail-supply-chain leaders can make sure that consumers are able to buy the goods they need while also maintaining the health and safety of both consumers and supply-chain workers. As retailers recalibrate their product orders to line up with consumer demand, they will need to cascade the changes across purchasing, planning, and inventory-management operations. Learn more about cookies, Opens in new Acquisitions to expand into new categories or channels (archetype 2) may be smart plays for FD&M retailers, especially as they prepare for the next normal postcrisis and face lower in-store traffic. From how we interact with our friends and family to working from home and so much more. We strive to provide individuals with disabilities equal access to our website. Only respondents in Italy and Spain said they were likely to increase their in-store spending on nondiscretionary goods, such as groceries and household supplies. Retail in the time of COVID-19. Our mission is to help leaders in multiple sectors develop a deeper understanding of the global economy. The retail sector cannot escape the economic impact of COVID-19. Please click "Accept" to help us improve its usefulness with additional cookies. It’s a tough challenge, but their priorities are clear. To move inventory around quickly, retailers might have to bypass or override their inventory-replenishment and inventory-allocation algorithms. For example, a regional grocery retailer has been hiring fulfillment specialists from other retail sectors, including fashion and home furnishings, which have been hard hit by the crisis. As the impact of the coronavirus outbreak continues to spread, McKinsey & Company has taken a look at how retailers can help communities and employees alike. Something went wrong. We use cookies essential for this site to function well. The best that retailers can hope for in this tightened environment is to secure enough capacity to get essential items on store shelves reliably and swiftly. Private equity (PE) may also play a key role in accelerating M&A activity postcrisis. Please note that McKinsey & Company does not endorse any of the listed websites or their sponsors. This is already happening in essential categories, as private-label sales at grocers and pharmacies are increasing, and pricing and promotion strategies are emphasizing value. Subscribed to {PRACTICE_NAME} email alerts. Retailers have been making sure they are protecting their employees’ lives and livelihoods. With the COVID-19 pandemic dominating thoughts and minds, fashion executives are planning for a range of scenarios and hoping for a speedy global recovery. The economic impact of the crisis is far reaching and profound, and presents challenges to the financial services industry and its institutions at levels reminiscent of the worst crises of the last 100 years. And respondents in all four countries said they were likely to increase their online spending on a wider variety of items. To meet the surge in demand, some grocery retailers are also hiring more full-service shoppers, temporarily shifting in-store employees to delivery jobs, or expanding partnerships with gig-economy delivery services. McKinsey Quarterly McKinsey Global Institute. Analysis of more than 900 global retail M&A deals over the last ten years suggested the following archetypes (Exhibit 1): Historically, archetype 1 (in which the retailer or brand buys a like business, usually to gain scale or share) drove most of the deal value. Build conviction through identification of key areas of exploration within the M&A and partnership market and think through value creation up front. The outbound-tender rate-reject index, which measures adherence to contracted rates for shipping, has also increased by 20 percent, indicating that carriers are rejecting contracted rates and instead selling capacity on the spot market. The period of … A special issue of McKinsey on Risk offering our global perspective on the COVID-19 crisis, including understanding the crisis, resiliency through crisis, industry perspectives and social and environmental leadership in the next normal. Other downstream opportunities in food service may materialize as some players face financial pressures. In addition, several retailers are easing payment terms, widening delivery-appointment windows, and relaxing on-time, in-full (OTIF) requirements. Learn about our use of cookies, and collaboration with select social media and trusted analytics partners here Learn more about cookies, Opens in new tab. The new reality will depend largely on how core consumer segments, including behaviors and spending habits, have been impacted by COVID-19. How COVID-19 is changing consumer behavior –now and forever As the world begins its slow pivot from managing the COVID-19 crisis to recovery and the reopening of economies, it’s clear that the period of lockdown has had a profound impact on how people live. COVID Response Center McKinsey & Company Small-Business Resources The retailers with the highest degree of touchless automation, both in stores and in warehouses, may enjoy a clear competitive advantage, as they face lower risk to consumers, employees, and their overall operations. People create and sustain change. As the novel coronavirus (COVID-19) spreads across the globe, we're monitoring key consumer behavior thresholds to help fast-moving consumer goods (FMCG) brands and retailers understand the status of each market, as well as how to best respond. The past five years have favored a few AF&L success stories and left a long tail of lower-performing companies. Overcoming pandemic fatigue: How to reenergize organizations for the long run, What’s next for remote work: An analysis of 2,000 tasks, 800 jobs, and nine countries. Salesforce BrandVoice | Paid ... McKinsey And Lean In - Covid Threatening Women’s Recent Workplace Gains . “And when consumers couldn’t find their preferred product at their preferred retailer, … However, amid increasing pressure on performance, shifting consumer behaviors, and accelerating demand for digital, there is an imperative to act decisively to prepare for the next normal. Find services at little or no cost, as well as local, industry, and community support and information for business owners nationwide during COVID-19. According to McKinsey & Company—which has been surveying 1,000-plus U.S. consumers ages 18 and up on a weekly, ongoing basis since March 16—while discretionary spending categories including travel, out-of-home entertainment, apparel and footwear, and home furnishings are down, shelter-in-place directives and social distancing have caused American buyers to spend more in a … Surging demand for nondiscretionary goods has created network-wide stockouts for some retailers. Australian respondents share how their food-consumption habits have changed since COVID-19 began, and how their behaviors could change in the pandemic’s aftermath. Before COVID-19, we observed four primary deal archetypes, though this sector did not see as much deal activity as other sectors. Between shifts, retailers can suspend operations at their distribution centers so that cleaning crews can sanitize equipment. As the coronavirus pandemic disrupts the lives and livelihood of millions, retailers are working to understand what changes will be needed once the outbreak subsides and stores can reopen. For nondiscretionary goods, retailers are revising their purchasing plans to favor items in high demand and to direct more of their inventories toward locations where sales are especially brisk. How the COVID-19 crisis may affect electronic payments in Africa. Change that Matters. Distribution is the supply-chain segment where demand trends for nondiscretionary and discretionary goods begin to overlap significantly. The retailer is also adjusting its longer-term purchases, in the expectation that the pandemic will accelerate the adoption of e-commerce. Please use UP and DOWN arrow keys to review autocomplete results. “For certain products and brands, COVID-19 caused supply-chain disruptions,” says the McKinsey report. This could also manifest via collaborations with logistics providers. Businesses that act now, plan now can minimize the economic damage that the virus is causing. This allows retailers to rationalize the scheduling and routing of deliveries, so that deliveries in the same area can be grouped together and sent out in one round of drop-offs by the same driver, saving time and mileage. They can also dial down purchasing plans for the near term. Learn about Taking learnings from the last recession, retailers that can continue to make organic and inorganic investments through a down cycle typically outperform competitors over the long term. Dive Brief: Automotive, consumer goods and retail supply chains are in danger of stock-outs by the end of March, late April and May, respectively, due to COVID-19 related supplier delays in China, according to a report McKinsey released this month. Analysis of the financial crisis in 2008 also indicates that companies that take M&A action early may also benefit from more favorable valuations at first (Exhibit 2). Reinvent your business. Shift to value for money. Chinese respondents share how their spending habits have changed since COVID-19 began, and how their behaviors could change once the crisis subsides. This could accelerate the move toward more agile and dynamic resourcing from stores to distribution centers to corporate offices. COVID-19 has introduced new operational risks, humanitarian impacts, and more. The surge in demand across nondiscretionary product categories is slowly eating away at excess capacity. But, despite the difficult economic outlook, we expect retail M&A activity to accelerate as the crisis stabilizes, creating opportunities for financially sound players to acquire or partner with less advantaged players. Defending Retail against Covid-19: From “Act Now” to “Plan Now” At a Glance. Loyalty shock. Opinions expressed by … COVID Response Center Practical resources to help leaders navigate to the next normal: guides, tools, checklists, interviews and more. McKinsey Global Institute. Digital upends old models. Please click "Accept" to help us improve its usefulness with additional cookies. Manik Aryapadi is an associate partner in McKinsey’s Cleveland office; Vishwa Chandra is a partner in the San Francisco office; Ashutosh Dekhne is a partner in the Dallas office; Kenza Haddioui is a partner in the Paris office; Tim Lange is a partner in the Cologne office; and Kumar Venkataraman is a partner in the Chicago office. tab. COVID-19 and the onset of an economic slowdown may well reshape the landscape of retail deals and partnerships. 09.07.2020. Learn about financial support resources available to small retail business owners, or view relevant webinars offering tips and information during COVID-19. These players may become targets for more resilient competitors. Keeping distribution-center workers healthy during the pandemic requires taking added and necessary precautions. McKinsey Quarterly Our mission is to help leaders in multiple sectors develop a deeper understanding of the global economy. Interazione sicura, il negozio post Covid. On the other hand, supply chains supporting discretionary goods have redeployed resources to support online orders or selectively ramped down operations to deal with the drop in demand. Shift to online and digital purchasing. We’re seeing retailers of nondiscretionary goods make these changes more successfully by adhering to several practices. Having taken steps to protect employees and customers, retailers increasingly need to plan for the recovery ahead—and for a much swifter transition to profitable e-commerce. 1 However, since the 2008 recession, we have seen “new business model” acquisitions (archetype 3) gradually increase over time. Multiple suppliers in Asia are shutting down operations as purchase orders are being canceled or pushed out. Moreover, the lessons from this challenging time can help retailers make their supply chains more resilient. As the spread continues daily, retailers continue to look for new ways to provide consumers with essential and non-essential goods. People create and sustain change. We explore these changes in detail below. Supply-chain leaders are creating transparency and building rapid-response capabilities to mitigate the short-term fallout from the crisis. McKinsey Institute for Black Economic Mobility McKinsey’s Daniel Zipser: Well, I put myself back into my shoes back in November 2019. It could drive new models of collaboration between retailers and their stakeholders to address scarce capabilities and enable the labor pool to move more fluidly in order to meet demand across priority activities. McKinsey is tracking US consumer financial-services sentiment on a weekly basis to understand how financial decision makers are reacting to the COVID-19 crisis. Some retailers are counseling their suppliers to improve their management of inventory (including commodity products), advising suppliers not to buy raw materials, so they can avoid deepening their cash deficits. 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