As the COVID-19 pandemic has swept across the world, it has impacted almost every aspect of the retail industry, accelerating existing trends and giving rise to new trends in the industry. These impacts can be divided into two categories: the point of sale and the underlying supply chain. We can think of the point of sale, whether it's a brick-and-mortar store or a website, as the front end of a retail operation, with the supply chain as the corresponding back end.

1. COVID 19: Retail Impacts
By ​Sachin Jain​ and ​Michael Tan
Introduction
As the COVID-19 pandemic has swept across the world, it has impacted almost every aspect of
the retail industry, accelerating existing trends and giving rise to new trends in the industry.
These impacts can be divided into two categories: the point of sale and the underlying supply
chain. We can think of the point of sale, whether it’s a brick-and-mortar store or a website, as the
front end​ of a retail operation, with the supply chain as the corresponding ​back end​.
The Front and Back Ends of Retail
The ​front end​ is changing faster than ever. While
the ​front end​ once exclusively meant
brick-and-mortar storefronts, e-commerce
penetration is now at an all time high. COVID-19
has supercharged the growth in e-commerce —
from 2019 to 2020, e-commerce’s share of total
retail sales grew from 11% to 14.5%, a 32%
change.
Meanwhile, the ​back end​ is more important than
ever as the digitalization of retail is accelerated by
COVID-19. Supply chain management
encompasses activities spanning from
manufacturing goods to customer delivery. Both
small businesses and large enterprises must source
raw materials and components, manufacture & deliver goods, and manage return and customer
service processes. Traditionally, operational efficiency comes from experience dealing with
trial-and-error. While this is still the case, technology is steadily automating away inefficiencies
in exchange for data-driven and robust components to growing supply chains.
As global retail grows from $25T and e-commerce rapidly increases its share of that market to
over 14%, both the ​front end​ and the ​back end​ are well positioned for innovation and
investment​[1]​
.

2. Overview of Problems Facing Retailers
In the next section, we detail six trends and business problems in the retail space that have gained
importance in our post-COVID world. We label each problem with:
1. A priority designation (low, medium, or high) depending on how critical it is to retailers
2. An estimation of the size of the problem in dollars
3. A stickiness designation (low, medium, or high) depending on how persistent the
problem will be after COVID-19 has run its course
4. An indication on whether the problem was caused directly by COVID (versus if it had
any significance before COVID)
Below is a chart that summarizes each problem along with their designations.

3. Pre-existing Trends & Business Problems (Before COVID)
Before the disruption of COVID-19, certain industry trends already existed. These trends were
selected and sorted by identifying the largest problems in retail and supply chain management
both by the cost of the problem and the stickiness of potential solutions.
P2: Retailers need efficient distribution channels robust to disruption both
between warehouses and to end-consumers
P3: Retailers need to maintain a brand image at each step of the customer
experience
P4: Retailers need properly stocked inventory and stores to avoid potential losses
or customer confusion
P5: Retailers need automated methods for projecting demand and profit
optimization models
Trends and Business Problems Emerging from COVID
Coronavirus revealed the inability of many retail stores to maintain advisable health practices,
and the inability of supply chains to handle disruption.
P1: Customers do not want to go into stores due to infection risk and other
potential factors
P6: Retailers need to ensure the safety of workers and employees
Trends P1 and P6 are new trends that arose amidst the current crisis. Additionally, Trends P2 and
P5 are existing trends that have been significantly accelerated due to COVID-19.
Moving forward, our analysis will be based on the rankings of problems, solutions, and startups
we identified and sorted using a variety of factors. As seen above, the number following P
represents the problem’s determined rank in importance (P1 is the most important problem, P6
the least). Solutions and startups will be similarly sorted and notated.

4.
Problems
P1: Retailers must adjust in-store offerings to adapt to customers avoiding stores due to
infection risk
Priority: HIGH Size: $10B - $100B Stickiness: LOW
One of the most immediate and apparent impacts of the COVID-19 pandemic is that
brick-and-mortar stores have become no-go zones for customers seeking to minimize infection
risk. Customers seek to minimize contact and proximity with other people, and as a result
brick-and-mortar stores have gone from busy hubs where hundreds of people can congregate at a
time to places to be avoided. In a survey of over 1,000 U.S. consumers in March, 57% said they
are doing more shopping online as opposed to in-store because of COVID-19.​[2]
While retailers’ immediate responses have been to increase their online, delivery, and in-store
pickup offerings, in the long term, retailers will also need to adjust their in-store offerings in a
post-pandemic world. Customers will become more health-conscious, as COVID-19 has shown
that indoor places with high densities of people are ideal settings for disease to propagate.
To identify the opportunities for investment into startups solving this problem, we looked into
the tailwinds that existed both before and after COVID-19. First, stores will increasingly adopt
contactless payment methods to increase customer convenience and decrease infection risk.
Second, retailers can adopt robot/autonomous sanitation solutions to increase cleanliness and free
up time for human workers. Third, stores can implement in-store traffic monitoring platforms
that can help inform both health and shelf stocking decisions.
Solutions
S1: Contactless Payments and Autonomous Stores ​(Market Size: $4.0 bn)
View:​ Retailers are looking to improve the customer experience, decrease costs,
and mitigate infection risk for shoppers. Contactless payment systems and
autonomous stores effectively address all three of these needs.
Strengths:​ Contactless payment systems reduce points of contact between people
to decrease infection risk while also increasing convenience for shoppers. A truly
autonomous store (such as Amazon Go), where shoppers can make purchases by
simply walking out of the store with an item in hand, have even more benefits. In
this case, retailers can also save on the cost of operations (decreased wage
expense from having to hire fewer checkout personnel). Contactless stores can

5. also bring in more revenue — “Amazon's cashierless concept brings in about 50
percent more revenue on average than typical convenience stores.”​[3]
Weaknesses​: Installing contactless systems is expensive (barrier to adoption), and
creating a contactless store generally requires a wholesale shift in operations for a
given store. This solution only addresses infection risk at the checkout stage, but
many customers can still be together in the store at the same time.
Relevant Startups:
Inokyo​: uses ceiling
cameras to create an
autonomous store
AIFI​: uses RGB
cameras to create an
autonomous store
Standard Cognition​:
uses cameras to create
an autonomous store
S2: Robot Sanitation ​(Market Size: $2.5 bn)
View:​ Robots offer an effective solution for sanitizing germ-filled surfaces,
making in-store shopping more hygienic and freeing up time for employees.
Strengths:​ Robot sanitation ameliorates the health situation in a store and reduces
the cost of operations (less money spent on wages as robots can replace workers).
Employees can be more efficient if menial cleaning tasks are handled by robots.
Robot cleaning has already seen adoption in the home space already (Roomba).
Weaknesses​: Implementing a robot sanitation system requires significant capital
expenditure and behavior change.
Relevant Startups:
Xenex​: robot uses pulsed xenon UV
to kill germs
Brain Corp​:robot navigates stores
and cleans surfaces

6.
S3: Monitoring In-Store Traffic ​(Market Size: $3.0 bn)
View:​ Many stores that are open restrict the number of people who can be in the
store at the same time for the sake of public safety — rather than relying on
employees to manually count how many people have entered and exited and make
sure people aren't too close together, technology can be used.
Strengths:​ In addition to helping to monitor customer density, having a real-time
traffic monitoring system has the added benefit of allowing for optimization of
shelf placement based on foot traffic.
Weaknesses​: The need for monitoring customer density for health reasons may
fade post-COVID, and tracking foot traffic can come with privacy concerns.
Relevant Startups:
Indyme​: provides retail companies
with sensing devices and software that
help sense customer inactions and
prevent shrinkage
Density​:Accurately measure & monitor the
density of people in a space without
violating privacy
P2: Retailers need efficient distribution channels robust to disruption both between
warehouses and to end-consumers
Priority: HIGH Size: $10B - $100B Stickiness: HIGH
Customers are beginning to rely more heavily on
e-commerce for both one-off purchases and weekly grocery
runs. Retailers and grocers need to ensure their customers
can pick up their goods or have them delivered quickly.
With recent and persistent demand spikes, delivery slots
become congested and limited work staff constrain delivery
both between warehouses and to end-consumers.
Additionally, companies compete with each other to bring

7. down shipping time for customers, ultimately moving towards same-day shipping.
“Unless a retailer has its own last-mile delivery capability, I don't see it being able
to do much other than setting expectations with its customers that delivery times
will be longer. Even a company like Amazon can't keep up—and it owns
thousands of last-mile delivery trucks.”
- James Thomson, partner at Buy Box Experts and former business
head of Amazon Services​[4]
Retailers will move in the following directions as a result of this shock. First, supply chains are
going to become more localized so supply chains can function independently. Second, rail and
road freight shipping will become even more integral to transportation than before. Lastly, the
pace of automation is going to quickly pick up as automated vehicles result in faster shipping
times and less potential for accidents or disruption.
Solutions
S1: Autonomous and Smart Vehicles ​(Market Size: $54.23 bn)
View​: Retailers are looking to pay less and provide faster delivery times, so
autonomous and smart vehicles provide the best opportunities to do so. Last-mile
and freight delivery have seen significant attention before COVID-19.
Strengths​: Retailers save money on drivers and insurance because of reduced
chance for mistakes and drivers getting sleepy or sick. Also, faster delivery times
are facilitated because shipments can be made at any time, in any condition.
Weaknesses​: There are still regulatory concerns about whether self-driving
technology will be immediately adopted across the country or world.
Additionally, it presents a much higher barrier to entry and adoption than other
non-hardware solutions.
Relevant Startups​:
Nuro​: using autonomous vehicles to
deliver goods to consumers
​Embark Trucks​: self-driving truck
technology to move freight

8. S2: Return Management Platform​ (Market Size: $8.00 bn)
View​: One bad return experience can convert a loyal customer to another brand,
and churn kills businesses. A streamlined returned management platform that
enables consolidation, refurbishment, local redistribution, etc. strengthens a
brand’s appeal and removes operational inefficiencies.
Strengths​: Increased customer satisfaction results in more repeat customers that
brands can upsell and cross sell similar to B2B SaaS platforms. Additionally, a
return management platform significantly reduces lead time.
Weaknesses​: Replacing and transferring any existing infrastructure (texting,
Excel, etc.) is difficult across multiple departments and locations.
Relevant Startups​:
ZigZag Global​: retail and return
management software platform
Narvar​: leader in customer
experience and return delivery
management
S3: Predictive Analytics & Shipping​ (Market Size: $10.95 bn)
View​: Predictive analytics can consider variables like weather, social media
trends, sensor data, etc. to more accurately determine supply and demand.
Retailers can use this information to design more advanced pricing models to
maximize profit throughout the year and not be dependent on cycles. Predictive
shipping enables retailers to move stock towards where it will be needed the most
based on historical data, bringing down storage cost and delivery time.
Strengths​: More focused statistic-driven decision making allows for retailers to
account for a variety of possible situations and prepare accordingly. Increased
demand accuracy drives profit in addition to minimizing inventory storage costs
of excess stock.

9.
Weaknesses​:Predictive analytics must be integrated heavily into existing
infrastructure to deliver accurate predictions. Additionally, some industries
experience unpredictable demand or supply shifts that cannot be reasonably
predicted.
Relevant Startups​:
Krunchbox​: point-of-sale
data analytics for wholesalers
Alloy​: supply chain and
sales visibility for consumer
goods brands
Unioncrate​: AI supply
chain platform &
predictive analytics
P3: Retailers need to maintain a brand image at each step of the customer experience
Priority: HIGH Size: > $100B Stickiness: HIGH
Retailers spend millions of dollars to craft
well-defined brand images that effectively reflect the
wants and needs of their consumer base. However,
one bad experience or a handful of bad reviews can
both lose highly valuable loyal customers as well as
drive away new customers. According to Accenture
Strategy, $1.6 trillion is lost due to customer
switching due to poor customer service.​[5]
Brand image begins at a customer’s first interaction
with a retailer, such as a targeted YouTube ad, and
can end with the delivery of the good or service, such
as the installation of a piece of furniture. Physical retailers must also manage the large amounts
of front-line workers that interact with customers daily.
Today, consumers want to be tailored to and expect frictionless experiences when interacting
with a business both online and in-person. This means quality advertising, ease of acquiring
information about products, transparency about shipments and service, positive delivery and/or
installation experience, and finally high quality customer service at each step of the way. These
expectations are met through the integration of technology within front-line workforce
operations and persistent performance evaluations to identity points of friction.

10. Solutions
S1: Performance Management ​(Market Size: $7.22 bn)
View​: Granular data can be collected at each step of the supply chain, so KPIs can
similarly become more specific. The performance evaluation process can become
more frequent. Such analysis can identify disruptions in a supply chain quickly
and root causes for such disruptions can be found and solved faster.
Strengths​: Retailers can identity and fix any friction in the supply chain
distribution quickly. Also, performance management enables retailers to optimize
for and reward good metrics and behaviors of their frontline operations.
Weaknesses​: Successful performance management will track KPIs at each stage
of the supply chain. However, if this process of collecting data produces
inefficiencies such as having to fill out a form each time or large infrastructural
changes, the cost of implementation can rise.
Relevant Startups​:
Lattice​: leading people
management platform
Ally​: OKR software
designed for remote teams
Betterworks​: OKR
software focused on
alignment and transparency
S2: Operations & Workflow Platforms​ (Market Size: $7.83 bn)
View​: Frontline workers can often spend over three hours each week looking for
information. Operations platforms would benefit non-desk workforce personnel
stay connected to operations systems with daily communication channels for
updates, questions, etc.
Strengths​: Less time looking for information about products, time-sheets, events,
etc. means more time being productive and aware. Additionally, when
information is clear, both employee and customer satisfaction increases.

11. Weaknesses​: Replacing and transferring any existing infrastructure (texting,
Excel, etc.) is difficult across multiple departments and locations. Additionally,
such a platform would have to operate on the expectation that each employee has
a WiFi-enabled device available at any time, which may not always be the case.
Relevant Startups​:
Beekeeper​: workplace app that
connects the non-desk workforce to
operational systems and
communication channels
15Five​: cloud-based software
designed to evaluate and improve
employee performance
S3: Learning Management Systems ​(Market Size: $3.73 bn)
View​: Retailers should have consistent LMS to train employees or contractors.
For example, customer service representatives should have guides for how to
manage phone calls from customers about their order, different product lines, etc.
Delivery and installation personnel should have a protocol for handling different
situations (customer isn't home, entering households, etc.).
Strengths​: Employees, contractors, and customer service representatives
following the same protocol encourages repeat customers and boosts customer
satisfaction which heavily drive revenue. Additionally, LMS systems tend to be
easily to integrate into existing workflows.
Weaknesses​: LMS systems can have low information retention without repetition,
which may cause drop offs in quality of customer service. Additionally, LMS
service companies have high competition due to a low barrier of entry.
Relevant Startups​:
Looop​: tailored LMS
platform reducing
redundancies
TalentLMS​: affordable LMS
with ready-to-use modules
Lessonly​: modern LMS
systems for each company
segment

12.
P4: Retailers need properly stocked inventory in stores to avoid potential losses or
customer confusion
Priority: MEDIUM Size: > $100B Stickiness: MEDIUM
Mismanagement of inventory and product can lead to significant loss of potential sales,
especially during demand spikes. Just-in-time manufacturing is dependent on knowing exactly
how much inventory is being produced, stocked, and purchased simultaneously. Technology can
be used to solve the "stocked" part. Warehouses and stores should be able to inform retailers
about current inventory volumes without hassle. The economic cost is huge. Misplaced,
understocked, and mispriced shelves cost retailers $920 billion per year.​[6] ​
Additionally, for a
store’s inventory needs to be fulfilled, warehousing solutions are required even before the
product reaches the shelves,
The potential solutions outlined address the problem at two points in the supply chain — the
point of sale (e.g. in stores), and in warehouses. Corresponding to the former, robot shelf
analytics offers a promising way to efficiently ensure that shelves are stocked correctly.
Addressing the latter, warehouses are slowly becoming automated and are implementing new
technologies that allow for better inventory management and more transparency for the retailer
whose products are being stored.
Solutions
S1: Robot Shelf Analytics ​(Market Size: $20.0 bn)
View​: Shelving errors cost retailers hundreds of billions of dollars every year.
Additionally, shelving is traditionally labor intensive and requires many
man-hours. Robots provide an accurate and labor-free solution to these problems.
Strengths​: Robots patrolling and scanning the shelves can ensure that retailers do
not lose money due to misstocked items. It can also reduce the cost of operations
(less money spent on wages as robots can replace workers). Employees can be
more time-efficient if menial shelf stocking tasks are handled by robots. Also,
having a robot handling these tasks keeps workers out of store aisles and makes it
easier for supermarkets to maintain social distancing measures.
Weaknesses​: Implementing a robot shelving system requires significant capital
expenditure and behavior change.

13. Relevant Startups​:
Simbe Robotics​: Robot scans through
shelves in-store to ensure proper
stocking and labeling
​FellowAI​: real-time visibility with
computer vision into inventory and
warehouses
S2: Automation of Warehousing ​(Market Size: $7.1 bn)
View​: Transparency into the warehouse is a major key for effective inventory
management. Robot process automation (RPA) in warehouses can present
opportunities to save on labor costs, reduce errors, and speed up fulfilment
processes.
Strengths​: In addition to the strengths stated in the previous sentence, an
automated warehouse system has the added benefit of allowing for better
projections and optimization of inventory.
Weaknesses​: There is a high barrier to adoption as most warehouses don't have
the infrastructure to enable IoT or robotic devices. Additionally, good
record-keeping is a cheaper alternative that addresses the same problem.
Relevant Startups​:
Fetch Robotics​:
automated material
transport and data
collection
​Locus Robotics​: uses
robots to automate pick and
putaway operations
Vecna Robotics​: automated
material handling in
warehouses

14.
P5: Retailers need automated methods for projecting demand and profit optimization
models
Priority: MEDIUM Size: $10B - $100B Stickiness: MEDIUM
Supply chain planning benefits from advanced analytics and the automation of "knowledge
work". Currently retailers only use historical purchase data to determine demand, but various
other variables can be integrated to more accurately project profits. According to the 2020 MHI
Annual Industry Report, the reported number of supply chain managers using predictive
analytics grew from 17% in 2017 to 30% in 2019. Additionally, 57% of companies not using
predictive analytics plan to start doing so within the next five years​[7]​
.
Given that predictive analytics is going to see major adoption, there is significant space for
different companies in different niches to excel. For example, the analytics that go into making
predictions for the fashion industry are very different than those tailored for groceries. While an
all-purpose analysis platform may emerge, specialized niche players will perform well as they
settle into strong relationships with the major players in their respective industries. Additionally,
the network effects that arise from presenting a high quality analytics product scale far more
easily within one vertical than across verticals. Both the collection of data and analysis of data
will see major growth in the next decade as hardware IOT devices and software analytics toolkits
mature.
Solutions
S1: Predictive Analytics & Shipping ​(Market Size: $10.95 bn)
See ​P2-S3
S2: Automation of Warehousing​ (Market Size: $7.13 bn)
See ​P4-S2
S3: Performance Management ​(Market Size: $7.22 bn)
See ​P3-S1
S4: Collaborative Logistics Platform
View​: Friction in supply chains results in lost value, and a lot of friction can arise
from poor supplier-retailer relationships. Poor communication, bookkeeping,
administrative procedures, etc. leads to mishandled inventory and loss of value. A

15.
collaborative platform to manage communication and inventory management
would allow for both the supplier and retailer to maximize value.
Strengths​: Joint supply chain platforms between customers, retailers, and
suppliers thrive in noncompetitive relationships. Each party saves administrative
costs and is able to capture the maximum value from a supply chain. The
exchange transparent inventories for reliable planning data allows for better and
faster reactions to any changes in the supply chain.
Weaknesses​: Collaborative logistics platforms can only succeed in low or
non-competitive environments. Additionally, other platforms that connect
producers and suppliers may be more effective alternatives.
Relevant Startups​:
Turvo​: collaborative supply chain
logistics platform
P6: Retailers need to ensure the safety of workers and employees
Priority: LOW Size: $100M - $1B Stickiness: LOW
Worker safety has seen significantly more focus due to COVID as more workers are willing to
report their employers given the more dangerous working conditions, especially for frontline
workers. Mistreatment and employee churn hurts productivity and profitability.
Putting workers out of harm’s way is a priority for employers, and robotics presents a long-term
solution to do just that. Robots can handle menial, time-consuming, and dangerous tasks for
human workers, freeing them up to be more productive and safe as they perform other tasks.
Solutions
S1: Robot Shelf Analytics ​(Market Size: $20.00 bn)
See ​P4-S1
S2: Robot Sanitation​ (Market Size: $2.5 bn)
See ​P1-S2

16. Conclusion
COVID-19 both introduced and accelerated trends in both the front-end and back-end of the
retail industry. In physical stores, robotics and autonomous systems can help to improve safety
and convenience for both workers and customers, and also can lead to significant cost savings
and revenue growth for businesses. Additionally, technology will enable transparency into
supply chains to better weather the storm of any disruption in the future. As customers demand
better experiences and faster delivery times, retailers will begin adopting these new technologies
to beat competition both in terms of operational efficiency and brand image.
Sources
[1]​
https://www.emarketer.com/content/global-ecommerce-2019
[2]​
https://blog.blueyonder.com/covid-19-survey-consumer-trends-and-their-impact-on-retail-supp
ly-chains/
[3]​
https://www.vox.com/2019/1/4/18166934/amazon-go-stores-revenue-estimates-cashierless
[4]​
https://www.emarketer.com/content/supply-chains-are-strained-as-the-pandemic-causes-a-surg
e-in-online-orders
[5]​
https://newsroom.accenture.com/news/us-companies-losing-customers-as-consumers-demand-
more-human-interaction-accenture-strategy-study-finds.htm
[6]​
https://www.simberobotics.com/
[7]​
https://www.mhi.org/publications/report