The projections of recovery were made as of April 22, 2020, and are part of the retail-focused insights provided in our free COVID-19 Retail Tracker, a dashboard to help businesses prepare for upcoming quarters. Projections are to be updated regularly.
At this point in time, there is no denying that the coronavirus outbreak has greatly impacted the global economy, with expectations that it will shrink by 1% in 2020. With roughly 650,000 stores expected to close in the US alone, and the rate of unemployment skyrocketing – a reported 22 million Americans now unemployed – the business world has woken up to the rude reality that dire changes need to be made. This has been especially evident for the supply chain and retailers at large.
Whether its the way we work or how consumers shop, life has been deeply disrupted and there is no doubt that this will leave an indelible mark on how retailers operate going forward.
Predicting the start of the ‘Recovery’ phase
Many businesses continue to sit at a standstill. Retailers remain on edge, wondering what to do next. In efforts to better understand the coming retail landscape and provide insight to companies looking to see how far away ‘normalcy’ is, our Data Science team leveraged previous experience in tracking SARS to predict when the number of daily new confirmed cases – or the rate of infection – would reach zero. This analysis was done for eight severely hit countries.
Based on our forecasted rate of infection and analyses of dozens of other factors, we predicted when the virus would be contained and when these select countries could realistically begin to reopen and enter the ‘recovery phase’.
The main objective of these predictions is to help businesses make more informed decisions in these uncertain times, even plan for worst-case scenarios. That is why our models were designed to produce a conservative estimate of the latest dates from the predicted range.
In some densely populated states in the US such as California and New York, recovery was projected to settle around the Fall. But, with the rate of infection continuing to escalate, whether this will truly be the case is yet to be determined.
We also look at how different regions are coping by performing predictions on major countries within those regions. A key indicator of how severe the situation is and will be in a country is whether its rate of infection is decelerating or accelerating. The rate of infection refers to the percentage increase of new infections the next day. In other words, if the infection points to 0.3, that implies that the number of infected people in any given population will increase by 30% the next day.
In the below graphs, a downward trend represents a decelerating rate of infection, and an upward trend represents an accelerating rate of infection.
Key takeaways from our forecasts
Although the total number of confirmed cases is still very alarming in many other countries, exponential growth has slowed. From the major countries and regions that we are tracking, we can see that:
- Infection rates have been declining to near 0 for major Asian countries
- Infection rates in the US and Italy are decelerating but are still high
- Spain is improving but UK’s infection rates continue to accelerate
In countries where the rate of infection continues to sharply rise, there are two possible scenarios that are likely to occur:
- There is a complete nation-wide mandatory lockdown, where citizens are placed in a 14 to 21-day incubation period since the last infected person. Here, we can assume that most major services have closed. It is only once this period passes; can the spread of infection be presumed to have stopped.
- Since it is highly unlikely for scenario 1 to play out, we may also see the entire population get infected or build antibodies, which then implies the virus has become part of the community.
How the US can proceed to phase comeback
According to the US White House’s Opening America plan, state governments are expected to report a downward trajectory of COVID-like syndromic cases within a
14-day period and demonstrate a lack of influenza-like illnesses within the same timeframe before they can start with opening America again in phases.
How data is helping retailers and the supply chain
There is an overwhelming number of devices out in the world today, with each one of these serving as a way for consumers to collect and share information. This has allowed retailers access to a treasure trove of data available to study and better understand their consumers.
In today’s post-pandemic world, retailers and brands can no longer depend on traditional methods to create demand plans. They must begin tracking, absorbing, and analyzing data to make more holistic informed decisions, and accelerate digital transformation with their supply chains.
With sociopolitical changes and economic instability at every corner, learning how to manage inventory, along with cashflow has become the primary concern for retailers. For retailers, some options they can consider include:
- What orders can be put away for next season?
- Can the garment be altered so that it could be sold during a different season?
- Can any evergreen product lines be expanded?
- Is it possible to create a brand diffusion line?
- What data points can help me plan inventory that will be required for the next 3 quarters?
Questions like these are what have become top-of-mind for retailers and brands in these post-pandemic times. Knowing exactly what merchandise can be salvaged and knowing what customers want to buy are problems that can be solved with the help of AI.
Making mistakes during the buying process will result in wasted cashflow. To help buyers and planners build assortment plans that will sell through, leveraging the right data to build powerful predictive models will become essential. Products like our Pre-Season Model can help retailers and brands buy more accurately upfront, with sales predictions and recommended order levels by SKU.
Looking at the big picture
There will undoubtedly be a retail recovery. Knowing whether it will be u-shaped or v-shaped (revenge-spending) only time will tell.
What we do know, is that agility in adapting to fast-changing consumer demands and unforeseen events is going to be what will separate long-lasting businesses to those who eventually die out.
AI-driven solutions can help brands stay alert of the many different changes in trends, macroeconomics, spending behavior, climate, and the competitive landscape. Analyzing large volumes of data, along with resulting insights and recommendations help brands buy smarter, tighten up cash flow, reduce excess stock, and improve margins.
Gone are the days where retailers buy and sell their inventory as they did in the past. The dependence on data is now; and with AI, it’s about time retailers start to make more informed strategic decisions to not only stay afloat but run ahead.
Preparing for the long-term
The important thing to note is that the COVID-19 will not be a one-off challenge. Much like previous pandemics, there is a possibility that this current situation is merely just the first wave, and if we are not careful, the next wave of cases may occur.
While businesses cannot control the way an outbreak turns, one thing that they can do is to respond swiftly. If the COVID-19 crisis has taught retailers anything, it is that the approach to retail must be reimagined and prepared for a post–pandemic future.
We can expect the COVID-19 crisis to change the way we shop, with more attention being added to the digital world, from e-commerce to online education. Companies will need to rethink their supply chains and will have to look closer at the vast amount of data accessible. While no one can say with full certainty when the virus will completely be gone, one thing that is for certain is that retail will no longer be the same. So, the best thing for any retailer or brand to do is to start adapting to the future by leveraging their data.
In the meantime, retailers can take advantage of useful resources like our Chain of Demand’s free COVID-19 Retail Tracker. This will help businesses make smarter retailing decisions and prepare for the upcoming quarters.