The current outbreak is undoubtedly a major blow for brick-and-mortar retail businesses which require large footfall. Many retail enterprises are facing significant cash flow pressures and the related downturn in consumer confidence. So how do brands, distributors and retailers deal with the crisis and recover from it?

1. Companies must keep a tight control on costs. It is essential to control labour costs, rental costs and the non revenue -generating areas of the business. In addition, business hours can be shortened, which together with a commensurate reduction in salary costs, can keep cash flow at a reasonable level.
2. Proactively align with suppliers on the schedule of production and supply for the second half of the year. This may include planning with logistics partners to prepare for the rebound in consumption.
3. Establish risk prevention mechanisms. Companies need to collaborate with the government, communities, banks and hospitals to establish an emergency mechanism that can help protect people's livelihoods and reduce the inventory backlog caused by outbreak.

The impact of the coronavirus outbreak on different retail formats are quite different. Based on the latest KPMG China analysis on the one hand, retailers that rely on traditional shopping malls and department stores have taken a considerable hit. On the other hand, emerging community shops and online shops are increasing their trading volume and attracting a mass of new customers. You can find our recommendations how can retailers build long-term capabilities in our next article.

Do not hesitate to contact me in case of any questions about this topic  – Ivana Mazániková,  Partner responsible for retail and consumer markets.