For many retailers around the world, the COVID-19 outbreak is now a reality rather than a looming threat. Having watched Chinese retailers striving to meet the needs of both their workers and their customers in the early stages of what has become a pandemic, executives in a host of countries find themselves stepping up to the same challenge. South Korea, Japan, Australia, Italy, France, the US, the UK—the list grows.
Bain & Company’s Situational Threat Report Index, which combines official data with our own modeling, is continuing to evaluate the coronavirus’s effect on global business, grading it from 0 (a negligible threat) to 10 (severe global recessionary conditions). As of March 12, the index stood at 6, with markets and the public in multiple major nations reacting strongly (see Figure 1).
At that level of threat, leadership teams should be focused on activating first-level contingency procedures, such as mitigating health threats to their workers, restricting nonessential travel to avoid stranding employees in quarantine, reviewing and even deferring nonstrategic investments, and planning for a three-month recession.
Few businesses could hope to predict the course of the pandemic with any accuracy. However, retailers do have the power to quickly develop and roll out contingency plans to address the crisis head-on and ensure business continuity, while playing their role in minimizing the virus’s spread. We’ve put together the following operational checklist to help with that task.
The challenge will vary by sector. In the grocery sector, for instance, many chains already have to cope with a surge of traffic at both physical and online stores, as customers stockpile and panic-buy. Scaling up online operations to serve that demand is likely to be particularly hard, given the difficulty of rapidly finding enough personnel with the right skills. Meanwhile, the concept of the shopping journey in physical stores is taking on a new meaning and importance, given the potential for transmitting the virus at each interaction.
In most other segments, the outbreak will probably reduce traffic and revenue. Retailers of all types must be prepared to act quickly to mitigate the impact of such turbulence, while also learning from the experience of their counterparts in China and other hard-hit countries. And even as they strain every sinew to address short-term disruption, retail executives also need to begin medium-term planning for an eventual recovery.