Clearly, the Covid-19 pandemic has impacted the retail sector more severely than any other. Many major retailers are halving their 2021 forecasts and closing store locations at a record pace. Those who have attempted to persevere have found fewer and fewer customers patronizing their stores.
The actual number of retail locations closed during 2020 will likely not be known for some time. Every publication reports a different number ranging from a low in the 8,000s to more than 25,000. More reports come out almost daily.
Where Do We Go from Here?
The obvious alternative is to join the ranks of those companies who have launched ecommerce sites on the world wide web. Again, the total number of new sites is a moving target but it's also in the tens of thousands. It is altogether possible that the real impact of the pandemic has been to accelerate the migration from storefront to website that would inevitably have occurred anyway.
For large businesses accelerating their shift from the real world to cyberspace the core concern is capacity. As they build a larger and larger number of shoppers the one thing to avoid is having anyone experience serious delay in accessing the website or, worse, failure to connect. Proactive traffic monitoring and a rapid process for provisioning additional capacity will be critical.
As they close locations, these same large businesses will be best served by having someone assigned to assure that all telecom and datacom circuits serving those closed locations are also shut down and no longer incurring any billing.
Businesses who have yet to do so should consider developing mobile apps. Customers can use them to not just connect to their shopping engine, but also to make interactions with their company effortless. Since customers are no longer visiting them in their stores there is danger of a loss of customer intimacy. By operating their affinity programs, customer service operations, and other customer-facing processes to interface with customers via an app literally puts them in their customers’ pockets.
Smaller and mid-market businesses are more likely to have not yet even begun building an ecommerce presence. There are many pre-built ecommerce engines that can quickly be developed into respectable websites that storeowners can take pride in. Here too the issue will be matching capacity to utilization. Since the volume of users will be variable and difficult to forecast agility is an important element. The ability to quickly and responsively provision more available bandwidth to accommodate more customers is the start. Processor power, operating memory, and longer-term storage must also be easy to flex as the customer base grows and recedes based on seasonality, sales programs, and other elements that significantly impact all retail operations, real-world or virtual.
Making All the Connections
When planning for the migration to online operations be sure to include considerations for back-end operations. If you haven’t made digital connections with your suppliers already, this is an excellent opportunity to remedy that. From the moment you’ve made the decision to select a front-end ecommerce interface keep backend integration and interoperation with suppliers in mind. That includes capacity planning for bandwidth, storage, and facilities for operating your backend interface.
Telecom: It’s the New Rent
While you will still need physical space for inventory, shipping & receiving, and other operations, those will not require premium space that commands premium rents. You can naturally expect to see physical plant expense significantly reduce as you close store locations and leases elapse.
Both fortuitously and unfortunately, it is also likely that your payroll will decrease as you move to an online operation. Not only will you no longer need store staff, you’ll be leveraging more and more automation as you proceed through your digital transformation.
Many of the people who remain will no longer need an office or store to come to. Many of these will be working from home which also requires your attention. You want to retain as much control over your environment as possible to keep costs down, so focus in on managed mobile services that enable your people to connect to your resources and each other in as cost-effective manner as possible.
As your leasehold and rental costs tumble, expect your telecom and datacom costs to increase somewhat. With physical and human resource expenses lower, these communication costs will now represent a much larger proportion of your overall operating expenses. These will be the bills you’ll most want to pay close attention to, making certain they are accurate and that they are paid on time. You can’t afford to have them cut off for any reason, especially lack of payment.
Outsourcing Expense Management
As an online operation, technology expense management (TEM) becomes more critical than ever. The right TEM provider, delivering the right diligence and vigilance over your incoming telecom bills to assure accuracy, can save far more than they cost to engage. Not only will the right TEM assure that you are only paying for services you use, they will also help you maintain control over your total technology deployment, making sure all investments are appropriate and best fit to support your needs. They will help you select the best vendors, the best service types, the right configurations, negotiate the best rates on your behalf, and protect the profitability of your new virtual adventure.
If you’re moving from less bricks-and-mortar to more clicks-and-hits, from real to virtual, from on the street to online you need experts “minding the store” when it comes to expense. Talk to Calero today and find out the many ways we can save your budget and improve your bottom line.