Is now the time for retailers to invest in Direct-To-Consumer operations?

The current COVID-19 pandemic is causing something of a catch-22 for retailers. On one hand, the pandemic is prompting rapid evolution of infrastructure and processes as the majority of customers are purchasing products online. On the other, widespread uncertainty may be causing retailers to rethink investing any money until operations begin to normalize.  

This leaves retailers left to wonder which is the best tactic. Should retailers invest in strategic objectives or wait until the pandemic has subsided? 

Lessons learned from the 2008 recession 

The  pandemic presents a similar economic climate many of us experienced during the 2008 recession. Which made us ask the question, what tactics did companies who survived the 2008 recession deploy?  

Harvard Business Review launched a study to understand which companies survived (and thrived) after the 2008 recession. The study reported the following information: 

  • Businesses that cut costs faster and deeper than their competition have the lowest probability (21%) of pulling ahead when times get better. 
  • Businesses that boldly invest more than their competition do slightly better, with a 26% chance of becoming leaders after a downturn. 
  • Businesses that deploy a combination of defensive and offensive moves have the highest probability (37%) of leading the pack post recession. 

This study shows that companies who mastered the balance between “cutting costs to survive today” and “investing to grow tomorrow” do the best after a recession. Therefore if businesses want to put their best foot forward, they must make strategic investments that guarantee their future success.   

What does this mean for retailers? 

As physical retail stores begin to close doors to comply with statewide “safer-at-home” orders, retailers now must shift focus, and invest in direct-to-consumer operations. This investment can be financial, or simply investing more time to optimize current operations. Investing in the right technology, team, and partners now will help maintain and scale direct-to-consumer operations, ultimately setting retailers up for continued success once the economic climate normalizes.  

For retailers, and businesses from every sector, now is the time to make long-term decisions for your business strategy.  

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