In less than four months, the COVID-19 pandemic has turned Australia’s supply chain and business processes upside down. This comes as social distancing practices underpin an unprecedented shift towards online shopping – which has materially impacted retailers, but at what cost?
Bricks-and-mortar retail and Click & Collect: the profit margin saviour
While Australia is hit with the first wave of COVID-19, our retailers are dealing with an e-commerce crisis that no one saw coming. As trade shifts online, retailers without fast, robust and integrated business management systems are suffering. Many e-commerce channels cannot meet the current demand – meaning sales are lost and online profitability is low.
Fortunately, at this stage customers who normally fill shopping centres haven’t disappeared, they may be more conscious of their spending and trading down, but they’re still shopping.
While bricks-and-mortar retail remains the hero, Click & Collect sales are proving the profit margin saviour for retailers because it strips costs out of transactions, allowing for better stocking flexibility while landing footfall into bricks-and-mortar stores.
Although more profitable than home-delivery, Click & Collect can still result in higher labour costs to retailers associated with picking and packing. While convenient for the customer, the current model doesn’t recoup the additional labour costs that are required to fulfil these orders.