Flip the odds. Scarcity of products has spurred trial of new brands, as customers trade up and down. Subscribed to {PRACTICE_NAME} email alerts. This calls for defining their role in the next normal, reevaluating financial health, segmenting the M&A market, and contemplating new deals and partnerships. For the most important product categories, category captains are holding daily meetings with strategic suppliers to work through the options for securing an adequate supply of essential high-demand items. Particular challenges have arisen in global retail supply chains, where the pandemic’s far-reaching effects have weighed heavily on the health and well-being of employees and jeopardized livelihoods and economic lifelines in many communities. McKinsey Global Institute. The longer the crisis lasts, the greater the likelihood that online and omnichannel purchasing will become the next normal. In the new COVID-19 context not all retailers will be equipped to pursue M&A. Defending Retail against Covid-19: From “Act Now” to “Plan Now” At a Glance. Retail. In the post-COVID-19 tight credit market, we expect that synergy capture expectations, and track record, will matter to investors, which makes it even more important to think through synergy ambitions and value-capture plans up front. Our mission is to help leaders in multiple sectors develop a deeper understanding of the global economy. Consumer confidence has considerably dropped as a result of the COVID-19 crisis, which is also impact- ing car-buying intent. 1 Retailers’ supply-chain difficulties have largely arisen as big shifts in consumer behavior and stepped-up health restrictions have rippled back through their operations. Please click "Accept" to help us improve its usefulness with additional cookies. The period of … We’re seeing retailers of nondiscretionary goods make these changes more successfully by adhering to several practices. With the COVID-19 pandemic dominating thoughts and minds, fashion executives are planning for a range of scenarios and hoping for a speedy global recovery. One fashion retailer’s response to the outbreak reflects all these moves. COVID˜19: The next normal for German retail banks 3 Changes today will become the “next normal” The financial crisis of 2008-2009 had a huge impact on the financial industry, businesses, and consumers around the globe. As the impact of the coronavirus outbreak continues to spread, McKinsey & Company has taken a look at how retailers can help communities and employees alike. Across both AF&L and food, drug, and mass-merchandise (FD&M) players, the shift in consumer spending to online will pose a question about the future—and purpose—of their brick-and-mortar locations. Shortlisting top-priority areas and securing executive and board commitment to M&A will accelerate decision making as markets thaw and potential targets are discovered. But, despite the difficult economic outlook, we expect retail M&A activity to accelerate as the crisis stabilizes, creating opportunities for financially sound players to acquire or partner with less advantaged players. Gli esperti di McKinsey hanno analizzato l'evolversi del Covid-19 nel mondo incrociando i dati economici con quelli scientifici più accreditati sulle caratteristiche della malattia. For me personally, juggling the joys of homeschooling my teenage boys with a packed work schedule has been a true personal test. Retailers should generate data-backed perspectives about market trajectory, new-normal scenarios postcrisis, and the risks of further disruption. Across the more than 600 (non-AF&L) deals we surveyed, TRS for archetype 1 deals increased 2 percent, and TRS for archetype 4 deals increased 6 percent post-announcement. tab, Engineering, Construction & Building Materials, Travel, Logistics & Transport Infrastructure, McKinsey Institute for Black Economic Mobility. Indian respondents share how their spending habits have changed since COVID-19 began, and how their behaviors could change once the crisis subsides. Change that Matters. The outbound-tender rate-reject index, which measures adherence to contracted rates for shipping, has also increased by 20 percent, indicating that carriers are rejecting contracted rates and instead selling capacity on the spot market. Interazione sicura, il negozio post Covid. Retailers can also raise cash by working with their distribution partners to sell off excess inventory. Anne Sraders, “Private equity firms are sitting on $1.5 trillion in unspent cash, and looking to raise more,” Fortune, January 25, 2020, fortune.com. Grocers, pharmacies, and e-commerce marketplaces are sustaining consumer access to essentials—food, medication, toiletries, and selected “at home” categories—while striving to protect customers, employees, and suppliers. cookies, US consumer sentiment during the coronavirus crisis, Spanish consumer sentiment during the coronavirus crisis, Italian consumer sentiment during the coronavirus crisis, UK consumer sentiment during the coronavirus crisis, McKinsey_Website_Accessibility@mckinsey.com. Only respondents in Italy and Spain said they were likely to increase their in-store spending on nondiscretionary goods, such as groceries and household supplies. Brands and multibrand players could also look to take smaller platforms in house to enhance consumer reach and digital capability. As the spread continues daily, retailers continue to look for new ways to provide consumers with essential and non-essential goods. We'll email you when new articles are published on this topic. Leads McKinsey’s Global Retail and Consumer Packaged Goods Practices and works with retail and consumer-goods companies to guide growth, commercial... Becca Coggins Senior Partner, Chicago. tab. McKinsey Global Institute Our mission is to help leaders in multiple sectors develop a deeper understanding of the global economy. Responding to the dip in on-shelf availability, retailers are working closely with companies across their supplier bases, including consumer-packaged-goods (CPG) makers, distributors, and co-manufacturers. This can take some creativity—not to mention additional expense. The contents of this site, including any statements, articles, graphics, charts, checklists, and other materials (“Content”) are for informational purposes only. Select topics and stay current with our latest insights, Five actions retail supply chains can take to navigate the coronavirus pandemic. These approaches include capping purchases of highly sought-after items, reserving certain periods of the day for shoppers at greatest risk of infection, and cleaning and sanitizing stores frequently. Please click "Accept" to help us improve its usefulness with additional cookies. Taking learnings from the last recession, retailers that can continue to make organic and inorganic investments through a down cycle typically outperform competitors over the long term. tab. Where are the growth spaces today and where will they be in the future? Practical resources to help leaders navigate to the next normal: guides, tools, checklists, interviews and more. To conserve cash, retailers can sell more merchandise they already own by reallocating inventory among geographies. 3 reasons why COVID has changed the way we shop, perhaps forever Retail is one of the sectors most affected by COVID-19, in both positive and negative ways. Please use UP and DOWN arrow keys to review autocomplete results. McKinsey Quarterly But, despite the difficult economic outlook, we expect retail M&A activity to accelerate as the crisis stabilizes, creating opportunities for financially sound players to acquire or partner with less advantaged players. From how we interact with our friends and family to working from home and so much more. One is simplifying their SKU profiles to reduce variety and boost quantities, which helps suppliers to accelerate the processing of orders. This article examines trends that are likely to create M&A and partnership opportunities that may enable retailers, brands, and investors to shape the next normal postcrisis. Learn about financial support resources available to small retail business owners, or view relevant webinars offering tips and information during COVID-19. How have their tastes, preferences, or concerns changed, driving new opportunities for differentiation or shaping new habits? Tactics include staggering shifts by short intervals, so that fewer people occupy locker rooms and break rooms at the same time, as well as installing partitions to separate workers physically. To move inventory around quickly, retailers might have to bypass or override their inventory-replenishment and inventory-allocation algorithms. These are not easy choices to make for either party and would require collaboration among retailers and vendors to benefit both sides. Shocks through the world economy their online spending on a new page reach. Working from home and so much more or distributor-consolidation facilities, facilitate the,! It says: “ Addressing the situation will require further global action and public–private coordination order deliveries with arrival... D ’ attirer de nouveaux clients dropped as a last resort, retailers continue to look new. Reconfigure their engagement strategy and operating model can excel during the COVID-19,! 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