Guest Column | July 24, 2020

Digitalization: Retail's Secret To Overcoming The Long Shadow Of COVID-19

By Todd Hassell and Steve Mauchline

COVID Yes we are open

While retailers embrace a new normal, the industry is swiftly undergoing a fundamentally digital shift that demands a unique perspective on the supply chain, customer experience, operating model, and the role of digital transformation.

As futurist Nicholas Negroponte predicted back in 1995 in his bestseller Being Digital, retailers are transforming their consumer goods and services from physical things (“atoms”) to digital experiences (“bits”) across all categories. Products have become services, and services have become sustainable revenue streams and business models. 

But one thing is missing to make this transformation complete: supply chains that can keep up with shifts in consumer demand. According to recent research from McKinsey, COVID-19 has accelerated changes in consumer markets, positioning digital channels at the heart of every interaction and automated processes. This evolution is becoming the primary driver of productivity – the foundation of supply chains that are flexible, transparent, and, above all, stable. 

Connecting The Supply Chain To The Customer Experience

The concept of digital transformation is no longer an elusive specter of future possibilities. As consumers increasingly vote with their wallets in favor of services and experiences over owning “things,” businesses are now redefining their front-line, back office, and supply chain operations to deliver outcomes, rather than focusing primarily on designing and producing goods. Meanwhile, the retail landscape has completely evolved to the point where ideas from home-based startups to established adversaries can become competitors.

Fortunately, the latest technology capabilities can make such a transition practical and cost-effective for retailers, large and small. Digital components can be embedded into a physical product in a matter of minutes. Compared to the traditional timeline of weeks or even months, such acceleration of the design, forecasting, manufacturing, and delivery of highly specific add-ons to targeted locations can take supply chain effectiveness to an entirely new level.

But true digital transformation is more than just implementing new tools and technologies, especially as the threat of a second wave of COVID-19 increases. According to IDC, it’s also about adapting existing processes and adopting new ones to move to a “next normal” so businesses can emerge more resilient faster and soar above their peers.


Source: “COVID-19 Impact: Working Through the Crisis to Recovery,” IDC, April 2020.

Rethinking Operational Models For A Contactless Economy

The barriers of entering a new market, category, or region are lower, thanks to a growing abundance of products as a service, technology infrastructure options, and gig talent that can scale to match business conditions. More importantly, this reality can energize a retailer’s survival and possible growth in an increasingly stressful and uncertain economy.

As Bain revealed recently, companies that leverage digitalization to increase resilience, scale, and speed are best-positioned to accelerate their path to and through a recovery from the impacts of the COVID-19 pandemic.


Source: “COVID-19: Protect, Recover, and Retool,” Bain & Company, April 2020.

Gone are the days of reviewing standard reports and PowerPoint presentations during a Monday morning business review meeting and outsourcing critical functions to overseas workers. The learning curve moves too quickly for manual processes and complex organizational structures to adapt to ever-changing conditions.

Most employees – full-time and contingent – are ready to have their nonvalue-added, repetitive tasks mechanized by robotic process automation, artificial intelligence, and machine learning to handle most basic requests or activities. In most cases, this can be done without anyone noticing that these experiences are delivered without a person on the other side of the conversation.

As technologies proactively identify trends in rational and irrational consumer behavior and highlight potential opportunities for capitalizing on those trends, retailers can act quickly. This approach can be a dramatic improvement on the past practice of waiting weeks for trailing data before restocking inventory items, canceling orders, incorporating features of “hot” products into other lines, choosing to move forward or stop or adjust strategic initiatives.

While some may view this vision as a possibility or wishful thinking, business leaders in the retail industry are already on their way to making it a reality. And why not? It’s clear that consumers prefer brands that operate digitally, employees want their work to contribute to the bottom line, and everyone wants to avoid unnecessary waste and inefficiency.

Jettisoning Outdated Costs, Practices, And Inefficiencies

With competition coming in every direction from new market entrants, digital natives, and even established giants, retailers must ditch their pre-COVID-19 analog thinking. All those unwarranted costs, practices, and inefficiencies no longer have a place when vying for consumers' attention in such a highly diversified landscape.

To overcome the long shadow of COVID-19, retailers should examine their ways of working – from the supply chain and customer experience to the operating model. Such reflection calls for a sober assessment of existing processes and systems, single points of failure, and the need for relevant change. But most important, actions must be taken.

The old conundrum of waiting for perfection is countered by not remaining frozen until all the answers are acquired. This is retail’s moment of opportunity to kick off a transformation that establishes and maintains a lead over the competition – and those that grasp it will reap the rewards.

About The Authors

Todd Hassell is a value advisor for SAP's Midwest (US) Market Unit.

Steve Mauchline is a business architect for SAP’s North America Executive Advisory and Architecture Unit.