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December 1, 2023

How to Adapt to Shifting Customer Behavior

Arjun Shivanna, VP of Merchandising and Planning at The Bay, explores the challenges of—and strategies for adapting to—shifting customer behavior.

The Challenges of Meeting Holiday Demand During a Pandemic

The holiday season has always been a challenging time for retailers, with the surge in demand and the need to line up inventory. However, the COVID-19 pandemic and preceding supply chain disruptions have created a unique situation where retailers are facing both excess inventory and out-of-stocks in the same channels at the same time. According to Arjun Shivanna, this is a challenge that is unique to retail and requires innovative solutions to overcome.

"We have too much stuff, and not enough of the right stuff"

Arjun Shivanna -
VP of Merchandising and Planning at The Bay

While the holiday season has always been challenging, the COVID-19 pandemic has made it uniquely different. Shivanna notes that the pandemic has created an asymmetry between supply and demand, resulting in excess inventory and out-of-stocks in the same channels. Retailers are struggling to keep up with shifting customer demand and supply chain disruptions, which have made it difficult to maintain the right inventory levels. According to Shivanna, it's a unique situation where "we have too much stuff, and not enough of the right stuff."

The Proliferation of Business Models and Shifting Consumer Behavior

The pandemic has accelerated the shift towards e-commerce and changed consumer shopping behaviors. Retailers need to adapt to these changes and evolve their capabilities to remain competitive. Shivanna notes that one of the challenges is the proliferation of business models, which has created new challenges for retailers. Retailers need to go beyond pre-pandemic capabilities and evolve to meet the new demands of their customers.

Strategies for Adapting to Shifting Customer Behavior

To remain competitive in the evolving retail landscape, supply chain leaders need to adapt and transform their operations. Shivanna shares some strategies for adapting to shifting customer behavior:

1. Embrace Technology, but Be Mindful of its Limitations

Shivanna notes that technology is both an enabler and a challenge. While technology can help mitigate supply chain disruptions and improve assortment visibility and planning, it can also create its own set of challenges. Retailers need to be mindful of the limitations of technology and its impact on people and processes. Shivanna advises retailers to choose technology that is agile and can adapt to changing demands quickly.

"For every dollar you spend on enterprise software, you spend up to $8, trying to fix things that never got implemented. On one hand, we have enterprise software that often is out of date, the moment you deploy it, because your business is constantly moving. But at the same time, some of the challenges are self-inflicted. So think proliferation of visualization tools in every enterprise. Each of those essentially creates their own version of truth or their own lens that we will look at the truth. Those are some of the technology creative problems, those are in people a process. That's just because you have so many tools deployed."

2. Focus on Omni-Channel Capabilities

Shivanna notes that the concept of "omni-channel" has evolved over the years and has become more complex. Retailers need to focus on building omni-channel capabilities that are agile and can adapt to changing consumer behavior. Shivanna advises retailers to focus on localizing inventory and predicting demand in a more efficient way to meet the challenges of the evolving retail landscape.

"Digital could be in our case, we have our own brands that we keep inventory for that we sell on our own website, but at the same time, we also have a marketplace, which is akin to when Amazon within the Bay. That is also e-commerce. Now, those are very, very different ways of running the business. And not to mention the unification of bricks and digital. So there's a lot of interplay between how we run the stores that is dependent on e-commerce, and how we run the e-commerce that's dependent on how the stores are performing. So there's that interplay that has really upped the game in terms of what omni means."

3. Elevate Your Game in People, Process, and Technology

Shivanna advises supply chain leaders to focus on elevating their game in people, process, and technology. While it's important to be good at all three, Shivanna notes that the key is to choose one area that you're really good at and excel in that area. Retailers need to focus on building their strengths and elevating their game to remain competitive.

"So when we talk about future roadmaps and evolutionary goals for these for company Nice as a whole, it is to elevate your game so that you are at least good, or at least good enough on people, process, and technology.”

The Takeaways

  • 1.

    The COVID-19 pandemic has drastically changed the retail landscape, accelerating the shift towards e-commerce and changing consumer shopping behaviors.

  • 2.

    Meeting holiday demand during a pandemic is uniquely challenging, with retailers facing both excess inventory and out-of-stocks in the same channels at the same time.

  • 3.

    The pandemic has created an asymmetry between supply and demand, resulting in excess inventory and out-of-stocks in the same channels.

  • 4.

    Retailers need to go beyond pre-pandemic capabilities and evolve to meet the new demands of their customers.

  • 5.

    Supply chain leaders need to adapt and transform their operations to remain competitive.

  • 6.

    Technology is both an enabler and a challenge. Retailers need to be mindful of the limitations of technology and its impact on people and processes.

  • 7.

    Retailers need to focus on building omni-channel capabilities that are agile and can adapt to changing consumer behavior.

  • 8.

    Retailers need to focus on elevating their game in people, process, and technology.
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