The emergence of the Omicron variant has thrown the world into a tailspin since it was first identified in South Africa last week. While little is known about the severity of Omicron compared to previous variants, or the efficacy of existing Covid vaccines against it, it has already been found in Europe, the UK, US, Japan, Australia, and Brazil, stoking fears that it could cause the return of international border closures and national lockdowns. With so much uncertainty about what the futu
uture holds, we asked retail experts Adam Schwab, CEO of online travel retailer Luxury Escapes, Travis Erridge, CEO of supply chain firm TMX, and Paul Zahra, CEO of the Australian Retailers Association, what they think Omicron could mean for the industry, and the steps retailers should be taking to prepare.
What Omicron means for retail
Adam Schwab: The variant itself isn’t a concern given symptoms appear extremely mild and no one has yet died from it globally. However, what is concerning is the hyperbolic reaction from both inept governments and grossly conflicted media organisations addicted to clickbait, who continue to massively exacerbate the threat from what is becoming an endemic virus.
Paul Zahra: The severity of this new strain is still unknown, so we shouldn’t be jumping to conclusions about what may or may not occur. Retailers should remain alert but not be alarmed.
Travis Erridge: It’s still early days, but the Omicron variant could impact retail supply chains in a number ways, just like the first wave of Covid-19. From an international perspective, depending on the global spread of the variant, it could impact a retailer’s ability to source their products. From a domestic perspective, fulfilment workers contracting the variant or retail store closures from lockdowns could shut down operations impacting sale volumes, operations and inventory levels.
How consumers are reacting
AS: In terms of sales, we have seen a softening in demand, albeit there is still a degree of strength in the market, and our revenues have dropped to levels of September, but remained above the lows of July and August. We haven’t seen an increase in cancellations (in fact, cancellation requests continue to drop), indicating consumers are far more shrewd and less prone to panic than governments.
PZ: The situation now is very different to the beginning of the pandemic and when the Delta outbreaks occurred earlier this year. The big difference is that the vast bulk of the population is now fully vaccinated, which is our primary weapon to stop the spread of the virus.
How it could impact Christmas
TE: The Omicron variant could make the current supply chain situation leading up to Christmas worse. Fulfilment workers contracting the variant could shut down operations. We have seen important distribution centres shut down in the past due to Covid-19 cases, but being this close to Christmas it could have a severe impact on retailer’s supply chain.
AS: There was simply no need to prevent travel to and from Africa (especially in light of recent news that it appears the variant originated in Europe), nor require an utterly ridiculous 72-hour quarantine period. We are hoping that the government winds back these unnecessary restrictions in mid-December, and confidence returns to the market by late December when travel buying peaks.
What retailers should do to prepare
PZ: Hygiene and safety remain important protocols for retailers and that will continue for the foreseeable future.
It’s important that state governments remain committed to their reopening roadmaps and that we don’t see any kneejerk reactions that decimate businesses and livelihoods. We have to learn to live with the virus, and its variants, and manage things in a responsible way.
AS: At this stage, we’re waiting to see what transpires, but we expect the panic to subside as governments, especially those in Europe, are simply unable to whip up more fear for a variant that appears to be far more benign than Delta or Alpha.
TE: The positive news is that retailers have done all of this before and have learnt a lot along the way. From hygiene-centric operations in their distribution centres to being able to quickly shift inventory from stores to online, retailers are much more prepared this time.
Retailers need to be flexible and agile in their operations, which can be unlocked through having visibility in their supply chains through digitalisation.
Retailers must have all their internal and external supply chain systems interconnected to provide visibility in their whole value chain to provide real-time analytics for smarter decision-making, data-backed predictions and more dynamic processes.