Impact of COVID-19 on Retail Industry

The World is Closed sign due to Covid 19

Photo by Edwin Hooper on Unsplash

The ongoing coronavirus pandemic has posed some severe impacts on almost every functional industry on a global level. Moreover, when we analyze the situation on a broad spectrum level, it becomes evident that this pandemic will inevitably change the modern world. Interestingly, this global pandemic has negative and positive impacts at the same time in some industries.

As of now, we are discussing the retail industry and the problems and impacts that are being imposed by the coronavirus pandemic on this industry. When we get down into the retail industry, two major sections are most productive, and these two sections are categorized as essential and non-essential goods.

Essential Retail Industry

Essential retail products include grocery, food items, pharmaceutical products, and general store products. Regarding the current critical situation of the pandemic, the retail industry that is dealing with the essential goods is experiencing a positive growth that is, too, unpredictably.

Grocers have experienced having a prime time out there because of the constricted situations in most parts of the world. The behavior of the consumers is tilted towards the stoking of the essential goods, and it is directly related to the beneficiary of the essential-goods retailers. When the data of the essential goods retailers were collected, this section growth rate became obvious.

Data was collected through the process of the growth of one week was compared with the second week; this is indicated as W/W comparison. Furthermore, this comparison showed that there is, on average, a 23-29% increase in growth rates. Moreover, this growth surpasses the statistical data analysis of last year’s growth rates, and this seems to be an absolute satisfactory time for the retailers of this section.

Non-essential Retail Industry

On the contrary, the section dealing with non-essential goods like apparel, home goods, bricks & mortar retailers are having a difficult time. The growth of this section is continuously experiencing negative growth.

Data analysis regarding the growth rates of this section clarifies that there is a noticeable decline in this sector’s growth. The growth is continuously decreasing, on average, from -11 to -14%, which is a significant threat to economic stability in different regions of the world.

Non-essential goods manufacturing companies are on restrictions because there is, on average, more human resources in the production units of these industries. Unfortunately, for their good, most of these industries are closed.

By discussing this, the fact that it becomes clear is that these two major retail sectors are experiencing opposite growth results and that as a whole is not going to contribute towards the betterment of any particular country for sure.

This mixed growth that is positive for a particular retail group and is harmful to the other has already alarmed the world economically; there, we are going towards the verge of a more difficult time after this pandemic comes to an end.

COVID-19 Outbreak and Production Units

When the coronavirus situation got worse and was declared a pandemic, manufacturing, and production units of industries worldwide were running as per their respective schedules. Manufacturing firms and retailers were not aware that what is about to come and not just them; no one thought they were going to face havoc in the form of a coronavirus outbreak.

Industrial Lockdown and Supply Chain

When governments of different countries started to impose lockdowns and enforce restrictions on their industrial states, there were no pre-planned alternative ideas upon which the industries would have acted to meet the consumers’ requirements. After the sudden closure of the industries, the local retailers somehow maintained the markets for a while, but global supply chains were profoundly affected.

Estimates indicate that when we compare the current situation of the global supply chain with past years, it is worse. This situation has jeopardized the economic structure of almost all nations in the world. Import and export sectors all over the world scrambled badly.

Supply Chain Disruption in the United States of America

Even economically stable countries like the U.S are facing problems regarding supply chains. In the U.S, there are several consumer products like apparel, footwear, and furniture, with more than 40-50% sources outside of the United States. With the delayed or postponed flight and cargo schedules, the global supply chains are disrupted, and the countries that have goods sources outside of their territories are profoundly affected.

Supply Chain Disruption in China

As the virus started spreading from China first and faced severe impacts from this virus, we cannot ignore the fact that retailers worldwide are engaged with the manufacturing units in China. According to a report, seventy percent of the footwear in the U.S. comes from China. As a whole, approximately 20% of the U.S retailers also rely on Chinese manufacturers.

Not only the U.S, but almost all the countries are interconnected regarding supply chains on a global level. Furthermore, the global supply chain is not as intact as it would have been in the absence of this pandemic. As discussed above, the only retailers that are experiencing exceptional growth outcomes are essential goods retailers.

Online Delivery Services

Because of an apparent increase in the online purchasing of the grocery/food products, the companies dealing with online delivery services are experiencing positive outcomes. Because of this, the local supply chains in different countries are not much at risk. Global supply chains are wrecked in the current situation of emergency, and this remains a perplexing situation at present. Losses for retailers, merchandisers, transporters, and production units are exceeding in billions all over the world.

The Bright Side

There is somehow good news in this scenario, and the news is that in countries like China, factories and production units are becoming operational, and people are going to work. In some other parts of the world, different production sectors are becoming functional, which may move things towards the betterment.

Increased Production Demand

Nevertheless, on the other hand, now, with the continuation of the production of different products, one more problem is added in, that the production units are required to produce more than 25% percent of what they were producing before this pandemic.

This extensive production requires more labor, more fuel, more time, and trucks and drivers for supplying large quantities of consumer products more than ever. The supply-demand seems to be an additional problem in the supply chain if there is enough production of the consumer’s products and not enough sources for supplying these products.

Experts have an opinion that the supply chain all over the world is going to face much worse time for a while before it moves towards betterment. A shortage of transport resources may further delay the supplies of products, which again increases the problems for the global supply chain.

This increased disruption will increase the adverse effects on consumer’s demands, labor, materials, and delivery based business because these have sourced all over the world. With the disruption in the supply chains, this issue leaves the whole world’s economy in jeopardy.

Adaptations in Supply Chains and Priority Areas

The intense economic situations and executives worldwide are forcing some adaptations to avoid any further adversities. Executives are revising their purchasing orders and merchandising plans; they are doing this by reallocation of their resources like working on a larger space for more production, increasing time spans of working by paying extra to the laborers, increasing employees, and increasing the transport sources.

Food Pharmaceutical Products

For the retailers involved with food pharmaceutical products, the critical priority is to increase the effectiveness and speed of their supply. Productivity can be achieved by reducing the variety of products and increasing consumer products. With an increased speed in the supply of the products, some retailers are already taking initiatives one step ahead by easing the suppliers’ payment conditions so that the supply of the products comes first.

Digital Supply Chain

Digitalizing the processes is also essentially beneficent for the supply chain, according to the Boston Consulting Group (2016) study, when retailers adopt digital supply chain technologies. It has significant positive effects on supply chains, and some companies have achieved, on average, 15% more product availability and 25% faster supply responses.

A different approach can also be applied to collect data from the applied digital systems and then formulate supply chain risk management teams. These supply chain teams should monitor disruption in supply chains and report every 24 hours to avoid further disruptions.

Australian Government to Cater Supply Chain

During the corona crisis, the Australian government has made important decisions regarding the disruption of supply chain issues.

Logistics and Transport Operations

The government has decided that the logistics and transport operators will continue to deliver food and products during this pandemic until the state of emergency is called off. The transport operators must increase their effectiveness so that the supply of the products is fast and reliable; that can help avoid disruption in local supply chains. As the borders are closed, reduced international shipping is expected to delay the supply of domestic products. To overcome this, production units need to enhance their manufacturing capacities to meet the consumers’ requirements.

Supply chain operators are subjected to follow short and long term strategies concerning their business. The organizations that are struggling can collaborate with other companies for their ease. Moreover, if someone cannot supply products to the market, they can shift and try new markets and supply their products. Retailers should analyze and keep alternative suppliers’ insight so that the supply chain is not affected in case of any inconvenience.

We know that unlike other sectors, the essential goods sector is going well, so the retailers should be ready for the changes in the demands of the household products. Although, they should communicate with their contractors to keep the production operational so that there may not be a shortage of the products in any case.

Retailers must be aware of the uncertified supply services providers. They must carefully contract with certified logistic operators to ensure that the products are supplied through the service providers having skills for handling the food goods. Supply chain management personnel should make and follow long term strategies so that they may keep benefiting market goals even after the crisis is gone.

In this view, they can reshape the supply chains and re-locate their exploited resources during this coronavirus pandemic. Another essential aspect is that the retailers must keep an eye on the pricing of the products. The products should have checked and balanced pricing because, in case of even short-term price changes, the consumer’s requirements, trust, and loyalty may suddenly change, which will ultimately affect the markets and economy.

Executives of the manufacturing companies should prepare for long shifts to achieve the requirements; moreover, the retailers that have international sources for their products may consider giving local manufacturing firms a chance to enhance their production. The increased production will have a positive impact on economic stability ultimately.


An important factor that plays a role in situations like this has excellent leadership. The leadership not only handles the situation well but also motivates the retailers, suppliers, and manufacturers to enhance their efficiency during crises. Good leadership collaborates with other industries for their supply chain resources and fast and reliable supply of the products to meet the consumers’ requirements. This mixture of long term and short term strategies, if followed, may help us encounter the supply chain disruption in case of further escalation of the current crisis.

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