After months of millions of dollars in losses, sharp salary cuts and significant job losses, retail reopened on Monday.
While the sector’s future still hangs in the balance due to lingering concerns about COVID-19, economist Dr Vanus James believes Government has to take the lead and play an active and anticipatory role.
He said the pandemic has made everyone aware that such risks are systemic and cannot be managed by individual businesses or even insurers alone.
“The reopening of retail is a roll of the dice, not a sure thing. We are still unsure about our ability to live easily with COVID, including with the increasing problem of long-term COVID,” James told the Business Guardian.
A collaborative social response, therefore, is needed that requires the participation and leadership of Government itself.
This, James explained, can be achieved by partnering with local businesses and the international insurance community to provide coverage for possible future pandemics.
A good approach, he suggested, is to initially target small and medium-sized retail enterprises that routinely deal in significant cash.
According to James, the design could include the self-employed, all of whom have been badly affected by COVID, noting that to achieve this most effectively, premiums would have to finance broad cover for businesses.
“But if the pandemic creates need in excess of the contracted sums, Government’s premiums, perhaps coming from the HSF (Heritage and Stabilisation Fund), would have to finance coverage of the excess,” James suggested, adding that as with many national insurance schemes, participation would have to be mandatory, much as now obtained with the Green Fund and Business Levy.
He said voluntary participation, however, would not allow achievement of the blanket coverage required, partly because premiums would be very high and unaffordable without the mandates.
“Just as is relevant to any scheme to protect jobs and development options, it would be important that benefits are triggered and paid based on clearly established accounting records that all participants must maintain with standards they must satisfy,” James also suggested.
He further said the insurance solution should also guarantee a simple, efficient and reliable claims handling and payment process.
And, together with the established accounting solutions, the strategy would provide customers with fast and meaningful support in the event of the next pandemic.
Additionally, as for most small businesses, James advised that it’s always a good step for retail businesses to self-insure against risk the old-fashioned way by creating a reserve with a fixed percentage of gross sales each period and running the business with the rest.
This, he said, would surely provide some cover against future lockdowns.
He noted that reasonable estimates suggest a target of at least 10 per cent, adding that generally, such self-insurance guarantees a rising savings pool, which increases the gross financing capacity on which to mount recovery and rebuilding.
Beyond being a good idea, the savings effort is perhaps now becoming an imperative since COVID lockdowns might not be behind T&T.
Additionally, the agile retailer would also be on the lookout for opportunity to diversify towards necessities— the elements of the local economy that cannot be closed for too long if the society is to survive, even in a pandemic, James said.
During the closure, many stores would have shifted their attention to e-commerce platforms to meet their needs.
But will this be enough to help in a meaningful financial revival of the sector?
ICT and digital economy strategist Tracy Hackshaw recommends that a cohesive and comprehensive digital and/or digital transformation strategy is required to ensure that technology is applied to the right areas of the business at the right time.
Hence, any investment that is made can have maximum effect and impact thereby, reducing cost profile and maximising revenue.
It is vitally important that retailers do not view technology as a panacea to the challenges they face as in several cases, the issues that are inherent in their business models cannot be fixed by simply “digitising away the problem.”
Critically, Hackshaw said, while standard e-commerce solutions like a website, online store and digital payments are normally highlighted as the key elements of a digital strategy, these cannot truly transform a business without also looking at all of the aspects that impact its cost and revenue profiles.
According to Hackshaw perhaps some of the lowest priority areas that should identify as being at the highest priority to be transformed would be those that can be impacted using supplier relationship management (SRM), logistics management and customer relationship management (CRM) solutions to better understand and respond to the requirements of all of the stakeholders in a business’ value chain.
He said engaging SRM and logistics management tools to streamline and synergise interactions and transactions on the supply side can potentially reduce its cost profile by several percentage points which not only affects the bottom line but can dramatically modernise and reform the way a business conducts its operations at an internal level including increasing employee productivity, performance and engagement.
Further, CRM solutions allow entities to address deficiencies regarding customer service delivery by better understanding their customer base, proactively dealing with any service problems that may arise and by improving their ability to more effectively communicate with them.
Equally and critically, CRM tools also provide businesses with the platform to capture the necessary data to enhance their products and services that would allow them to offer better targeted and more cost-effective marketing campaigns.
Traditional retailers, Hackshaw said, must also use this opportunity to move beyond the standard import, buy and sell approach and now skilfully use the available digital platforms—many of which are cloud-based and can be deployed on either an on-demand or pay-per-use basis—to enhance their value proposition to their existing and prospective clientèle.
“Ideally they would have been best served by using the previous few months to take a close, hard look at their business model and determine where and how they can improve their existing business processes throughout the supply and value chain, particularly in terms of acquiring goods and services, and in delivering those goods and services to customers,” Hackshaw advised.
