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Blog / Dec. 08

Lessons from the Philippines and Golden ABC: How retailers can thrive ‘in good and bad times’

Donald Felbaum

I recently had the pleasure of being the moderator of an Aptos virtual roundtable focused on how leading retailers can thrive in good and bad times. The event attracted delegates from leading retailers and brands operating across the Philippines.

By bringing industry peers and thought leaders together to openly share their experiences, the roundtable was a genuine and thought-provoking discussion on the key challenges that retailers are facing and the actions that need to be taken in order to succeed in current times and beyond.

Guest speakers of the event included my friend and colleague David Sheekey, an individual who is internationally recognized as an expert in retail planning, and Ms. Alice Liu, Chief Retail Officer at the multi-awarded fashion enterprise Golden ABC.

Founded in the Philippines in 1986, Golden ABC runs more than 1,000 shops throughout Asia and is home to top proprietary brands such as Penshoppe, Oxygen, Forme, Memo, Regatta and Tyler.

So, what did we hear from the companies attending the roundtable? And how can we emerge from the pandemic as stronger retail organizations?

Here are my five takeaways from the event:

No. 1: Recovery will come; meanwhile, we need to adjust as trends develop
Ms. Liu from Golden ABC kicked off the session with an accurate description of the main challenges that have been confronting Filipino retailers since the first lockdown over seven months ago, including supply chain disruption, excess inventory, lower traffic in stores, evolving customer behaviors and the need to accelerate digital growth.

“Recent studies predict that sales will go back to pre-pandemic levels, but recovery will be gradual, progressive, and is probably going to be more of a ‘swoosh’ sign rather than a ‘V’ shape,” commented Ms. Liu.

“We have to plan as if business is going to come back strong, but in the meantime, we need to be agile and continuously adjust to trends as they develop. At Golden ABC, we reinforced communication with our people, suppliers and business partners; we intensified the financial stress tests and merchandise assortment simulations; we adjust and recalibrate decisions on a weekly basis. Also, we continue to invest in strategic initiatives that help us pivot the business effectively and in a timely manner.”

No. 2: E-commerce keeps growing and the trend is here to stay
With the onset of the pandemic, consumers have become even more digitally connected, driving an acceleration of online retailing. Ms. Liu commented: “At Golden ABC, we are experiencing this trend as well. Our online sales have tripled on average during the outbreak, with our best-performing brand actually quadrupling its online revenues.”

Filipino retailers need to accelerate their ability to connect with consumers via web, apps and social accounts. For companies that have traditionally relied on physical retailing, digital maturity is in fact essential in order to gain higher business resilience.

“Customers make more mindful purchases, they are more informed, they browse the web for information before going to malls, and place a preference on companies that truly understand their wants,” noted Aptos’ David Sheekey. “Retailers need to deliver a continuous and consistent omnichannel experience across all touch points and points of engagement in order to gain trust. The experience you provide is what matters today,” said Sheekey.

No. 3: Planning for the new normal needs to be demand-centric
The pandemic is forcing retailers across the globe into a profound shift in the way they plan merchandise. “Planning has always been about products and ‘how many options do I need? How many volumes should I buy to serve my stores?’” explained Sheekey.

“Now, with volatility at the highest levels, stores subject to local restrictions, and the complexity derived from the acceleration of omnichannel, answering those questions is extremely difficult. Manual processes and gut feel are no longer valid options, and retailers are finding that traditional ‘like for like’ approaches (replicate decisions made in previous years) are looking insufficient.”

In order to thrive in the current scenario, retailers need to place greater emphasis than before on their “in-season” planning, with demand signals continuously feeding the process.

“Retailers will actually have to allocate less and replenish more, based on true demand. Planning has to start location up (because every store is in a different situation) and become more demand-driven, customer- rather than product-centric,” added Sheekey. “It is about managing uncertainty and it is a profound, long-term change,” he added.

No. 4: Managing excess inventory is the big issue; what to do depends on your cash position
A recurring theme of the seminar was how to manage the unsold inventory generated by lockdowns. Ms. Liu from Golden ABC noted that the approach to take depends essentially on the retailer’s cash position: “If you have the financial muscles, you might want to make the products last longer or ‘pack and hold.’ Freshness is about what people have seen, and a collection that didn’t make it to the store can actually be proposed in the future,” she explained.

If a retailer has cash flow issues, they might want to mark down excess inventory and make that inventory return to cash as soon as possible.

“In that case, liquidation might give you the opportunity to buy the right quantity of the right assortment for the current season,” added Ms. Liu. “Importantly, and no matter what your decision is, you need to be able to tell a strong story to your customers; you always have to be consistent; have a collection that is well balanced and well put together.”

No. 5: Collaborating with suppliers and franchisees is crucial
According to roundtable speakers, collaborating with suppliers and franchisees will be crucial in order to gain the level of flexibility and resilience supply chains need in current times.

Ms. Liu suggested that what should drive retailers in the selection of suppliers is their ability to be flexible to their needs: “You should look for vendors that can respect the lead times that you need with the kind of costs that you are targeting and the kind of margins that you hope to make from the products they supply. Those that are sourcing closer will probably have the best chance to provide that kind of flexibility.”

Downstream in the value chain, collaboration should also be extended to the franchisee network.

“If you have a franchisee network, you cannot just push inventory down to them; you need to understand their situation and collaborate. If they don’t sell the product, you have a re-collection risk, and you might lose as well,” noted Ms. Liu. “On their side, franchisees should timely communicate their struggles to brands. An open conversation needs to happen,” she added.

If you would like to continue the conversation on how resilient retail enterprises are preparing their businesses for 2021 – no matter what the future might bring – please reach out to me on LinkedIn. It would be great to hear from you.