After COVID-19: Opportunity looms for Chinese retailers

Despite the damaging impact caused by the COVID-19 to China’s retail industry, insights from Nielsen, a global measurement and data analytics company, reveal opportunities as well as challenges once the epidemic is over. The report called "COVID-19 is a Challenge, but also an Opportunity, for China's Retail Industry,” showed that while the outbreak of the novel coronavirus epidemic at the beginning of 2020 has adversely influenced China's retail industry, several retailers managed to respond quickly and turned the crisis into an opportunity. The research involved key retail companies and over 10,000 traditional grocery stores and offers in-depth analysis of the retailers' challenges and responses to the outbreak, as well as the changes and opportunities the sector will face once the epidemic is over.
Justin Sargent, president of Nielsen China, said: "The sudden COVID-19 outbreak is a huge test for China's retail industry. However retailers generally have shown great flexibility and resilience in a very volatile environment. Many retailers have quickly organised resources, responded actively to a rapidly changing situation and adjusted their business strategy. Many retailers are telling us that they see opportunity arising out of this crisis and that the epidemic will accelerate the future development of the retail sector."
Nielsen research showed three significant challenges facing retailers in light of the COVID-19 outbreak. These are insufficient inventory of some categories, difficulty in logistics and distribution, and inadequate staff to deliver orders.
About 62% of the surveyed retail companies believed that they had an insufficient inventory of some categories in the early stage of the outbreak and that their emergency organisation mechanism failed to make a quick response. Meanwhile, 59% believed that the procurement costs of specific categories rose, logistics and distribution became difficult, and the supply chain put under pressure. Lastly, 48% of them said their hands are too short of delivering the surging online orders.

Changes and opportunities for the retail industry
Nielsen said similar to the retail industry's changes which occurred during the SARS period, the consumption related to the industry is likely to rebound once the COVID-19 outbreak is over. The retail sector, which has been tested by the epidemic, is going to face changes and opportunities, the research firm added.
The report showed that 46% of the surveyed retailers were optimistic about the business prospect over the next half of the year. Meanwhile, 8% believed that the business situation would be excellent, that the epidemic was both a challenge and an opportunity, and that they can outperform others in the very period. On the other hand, 36% of the retailers worried about the future and believed the operating pressure would increase.
In terms of the industry's opportunities and business strategies in the upcoming year, 67% said they would make efforts to expand online channels and accelerate home-based business/retail warehouse layout. Meanwhile, 53% said they would change their product mix according to the shopping habits of consumers and increase the inventory and on-shelf number of health, disinfection, and protection products.
Lastly, 43% of the retailers said that they would deeply work on the supply chain, especially the supply chain for fresh food, strengthen the ties with various brands and enhance communication efficiency. (Image from Pixabay)