Short-Term Revenue Strategies for Brick-and-Mortar Retailers Navigating COVID-19
Coronavirus, or COVID-19, has been declared a global pandemic and is having an unprecedented impact on individuals and our economy at large. Times are uncertain, and while we don’t have all the answers, we’re doing everything we can to offer guidance to our customers and small businesses around the world.
As retailers are forced to close their doors to combat further COVID-19 outbreak, one of the biggest concerns (especially among “non-essentials” retailers), is how to compensate for lost in-store revenue.
Below, we'll share a list of resources, along with advice from our in-house experts and partners, that share immediate steps retailers can take to mitigate cash flow constraints, respond to declines in revenue, and redeploy digital marketing spend. You'll also find examples of the steps other businesses have taken in response to COVID-19.
How to inject cash flow into your business
Promote gift cards
Gift cards provide retailers with an immediate infusion of cash and (in most cases) ensure that a customer will return to their business in the future. For businesses with especially thin margins, gift cards can help you stay afloat until the crisis passes.
To further incentivize customers, you can discount gift cards, or even collaborate with complementary local businesses to create co-marketing opportunities that can help you acquire new customers. Finally, to reduce the risk of human contact, you should consider a digital gift card program to include in your social media and email marketing campaigns.
Build a pre-order strategy
Customers understand that it’s an especially challenging time for local retailers. Community-based initiatives have taken off to support local small businesses and help them lock down cash. One approach has been to outright ask customers to pre-order popular products—either by paying a deposit or the full amount.
Discount underperforming stock
Non-essential retail will likely see a decline in demand, so businesses in this category are vulnerable to oversupply. Retailers’ main goal in the short term (4-6 weeks) is to make sure they aren’t sitting on cash held up in inventory or deadstock. Even well-run companies can have 20-30% of inventory as deadstock, so now is the time to address it.
Extend payables with suppliers
The other side of cash flow is reducing expenses. One way to hold onto working capital is to take longer to pay suppliers. To preserve the integrity (and longevity) of supplier relationships, we recommend retailers work with their suppliers as soon as possible to establish an agreement they both can live with in the short term.
Pause standing orders with suppliers
Depending on current demand patterns, and the type of business they run, some retailers may want to slow production down to avoid being stuck with inventory they can’t move. If this applies to you, rethink standing orders for raw materials with suppliers, and press pause on any auto-replenishing algorithms until you know more. This way, you can push back future payments. The sooner you can cancel or defer the order, the better for your supplier relationship.
Cut shipping costs
Shipping costs can eat away at your margins, so if you’re looking to cut back, we recommend the following: https://www.shopify.com/blog/retail-response-covid-19