A few years before the pandemic struck, World Economic Forum founder and executive chairman Klaus Schwab observed that competition no longer consisted of big fish eating smaller fish. Instead, he said it was now a matter of fast fish outperforming the slow fish.
Like other major crises before it, COVID-19 hastened several pre-existing business trends, including those disrupting the retail industry: empowered consumers, digitally-enabled omnichannel options, supply chain upheaval, as well as a shift toward increased sales tax regulation and enforcement. Due to this, it’s more important than ever to be the fast fish.
In retail, that means finding new ways to become more flexible, agile and innovative. The pandemic’s numerous impacts have driven retailers to devise new ways to serve consumers, track down new sources of supply and manage the supply chain workforce. Since the pandemic began, we’ve seen vivid examples of companies benefitting from changing directions quickly through an innovative mix of strategic and tactical on-the-fly adjustments:
- A varied collection of organizations – including sportwear manufacturers, luxury apparel and marching band uniform makers – pivoted rapidly to making masks in the early days of the pandemic; chemical manufacturers and distilleries shifted production lines to produce hand sanitizer.
- Other companies with advanced omnichannel capabilities were able to pivot their fulfillment and move their inventory to other channels, thanks to technology and process investments that made that flexibility possible. Some retailers were even nimble enough to start fulfilling online orders from their shuttered store locations.
- As demand for personal protective equipment (PPE) spiked in France, the government quickly developed a marketplace that healthcare facilities used to source essential supplies from new producers (e.g., cosmetic and chemical companies). Those new PPE producers did not have established distribution channels to reach hospitals, pharmacies and other health professionals before the launch of the marketplace. The French government shipped 20,000 masks within five days of the new platform’s launch.
To navigate the remainder of the pandemic, as well as future crises, retailers will need to rapidly test, refine and execute. Doing so requires much more than a pretty web site. It also necessitates foundational technology that leverage advanced analytics, artificial intelligence (AI) and seamless integration with other powerful tools (e.g., tax engines). These capabilities help retailers continually recalibrate the importance of factors such as supply chain length, cost of labor and the implications of taxes and trade restrictions, to make informed decisions about suppliers and supply chains. A new e-book, Reimagining Supply Chains in the Wake of Disruption, details how retailers can deploy these proficiencies to out-swim competitors.
Please remember that the Tax Matters provides information for educational purposes, not specific tax or legal advice. Always consult a qualified tax or legal advisor before taking any action based on this information. The views and opinions expressed in Tax Matters are those of the authors and do not necessarily reflect the official policy, position, or opinion of Vertex Inc.