General

The Retail Business Strategy to Fight Coronavirus

Nora Setiawan

May 26, 2020

General

The Retail Business Strategy to Fight Coronavirus

Nora Setiawan

May 26, 2020

We have been dealing with COVID-19, since it was started in Indonesia, and it blows to regional economics, whether it is small or medium enterprises, like empty malls and factories disruptions. The situation will be going on and haven’t known yet when it is over. Meanwhile, the retail business needs to have the strategies to fight the outbreak.

There also needs a government to do a concrete action, so the economy can recover as fast as possible. However, In February, Indonesia announced a Rp10.3 trillion (US$742 million) incentive package to boost the tourism industry through tax incentives and fund transfers to the most-affected regions. While, the second stimulus package is for the manufacturing industry, importers, and exporters that faced supply chain disruption.

Furthermore, Micro, Small, and Medium Enterprises (MSME) are needed to supply domestic industries and consumers, such as local fruits and vegetables as potential substitutes as the scarcity of some imported products may have been sought by the customers.


The Worst Effect on Retail Business

The Jakarta Post reported, MSME Association (Akumindo) chairman, Ikhsan Ingratubun said that MSME sales dropped from 30% to 35% across Indonesia, from February until March 9. He also predicted, the sector would continue to feel the impact for the next three months.

Meanwhile, according to Law No. 20/2008, the small businesses are defined as having annual sales between Rp300 million and Rp2.5 billion, while medium businesses have sales of up to Rp50 billion.

The outbreak has shaved 0.6% points off this year’s economic growth rate in this country. A spa, massage, and reflexology center in Batam regularly would serve from 30 to 50 Singaporean or other foreign customers. But now is a lucky day, if they serve 1 or 2 customers per day.

Speaking more about the outbreak, the woodcarver in Blitar, Central Java, has seen his income drop more than half since last January as the drum workshop where he works is struggling to survive during this time. He used to carve a djembe drum and earned at least Rp900.000 (US$ 63.09) weekly, but now he is barely making Rp400.000 a week.

Their regular customers are mostly Chinese which accounted for more than 90% of their sales, and now they are operating at only 10% of their production capacity to meet local demands. Some woodcarvers chose to go back to their hometowns, because the drum workshop is unable to provide them with jobs.

Rubber factories in North Sumatra closed. Due to extremely low prices in the market, rubber businesses there are closing down as the demands from Japan and China have fallen down. Whereas, these 2 countries are the region’s top export destinations for the commodity.

Chairman of The Indonesian Rubber Producers Association’s (Gapkindo) North Sumatra, Setiawan Khoe mentioned that several rubber factories in Tebing Tinggi and Labuhan Batu are closing down as the outbreak has spread largely. As a result, many workers in the factories are losing their jobs.

Moreover, North Sumatra is well known as rubber exports for 410.000 tons back in 2019, 20% went to Japan, followed by 18% to the US, while 11% to China, and 7% to India.

While the outbreak may last for a while that we haven’t known yet when it’s over, it is time for the companies to step up. Some enterprises have had brilliant initiatives to help SMEs with grants and emergency loans to cope with the economic shocks. Meanwhile, some of them are educating consumers on the importance of self-quarantining to slow the virus spread.


The Measures Need To Fight The Coronavirus

The pandemic impact on the retail industry is undeniable, with stores and offices being closed, and the global supply chain disrupted. As the virus continues to spread, and the business cannot just go on hold, now it is time for the companies to take action and prepare themselves for its impact. 

According to retail data company Edited, have noted five strategies that the retail business can implement to minimize the virus effect on businesses.

  1. Maintain an aura of newness

Sourcing stock and generating newness are quite difficult as factories continue to be quarantined, but that will not interrupt consumer demand, so the retail business have to think outside the box.

Retailers can still create an aura of newness and excitement by promoting products they already have, but the customers may have not seen them yet. Retail business owners should be creative with their promo material, such as making the advertisement look more promising and tempting at once. They can also focus on drawing solutions to support work-from-home nowadays.

  1. Get your future assortment right

Getting an assortment right is key to any retailer’s strategy in any industry level scale. But, it is also important to avoid the wrong investment or deadstock,because its consequence could be severe for them in such a scenario.

They should tighten their operations and bring assortments to a minimum while the markets may cancel unnecessary orders. Retailers can rapidly downsize their orders and uplift them again once the market has recovered. If possible, retailers should consider domestic suppliers too.

  1. Reconsider your discounting strategy

Entering the Eid al-Fitr holiday is traditionally a period of heavy discounting, but it is so hard to predict an end date for the current pandemic, and with ongoing uncertainty or delays to supplies. However, retailers are less inclined to want to clear stock as usual.

Retailers also have an opportunity to align themselves more closely with their customer’s needs. Such as, in these conditions, people may need entertainment to cure boredom while staying at home. Retailers can provide things to entertain and support them.

  1. Maintain consumer engagement

During this time, it can be easy to disconnect with customers, whether it is due to tighten purse strings or lower stocks because of the supply chain disruption. But, it is essential in this period to keep your shoppers engaged.

If people have to self-quarantine, retailers can keep them engaged by increasing online activity, such as video sharing social networking service, Instagram and TikTok in which people check on them regularly though. Not to forget, retailers need to expect an increase in home deliveries, so they should promote shipping offers to stand out from competition.

  1. Be honest on your marketing strategy

Retailers should be transparent about the challenges they are facing and the impact that could have on shoppers. These things could maintain goodwill and minimize long-term damage to brand loyalty. Retail business owner should highlight potential delays to deliveries ahead of purchase and have extra customer service representatives if needed.

These strategies would work on minimizing the businesses disruptions and to survive during this pandemic. We don’t know yet when it’s gonna be over, but it’s better to apply these measures to fight a hard time together.

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