Covid-19: How Retailers Pivoted for 2020’s Demands

Before it became clear the pandemic would last months instead of weeks, retailers pulled the same switch: reallocating supply chain resources to emergency supplies.

Hands on

Hospitals reported a dire need for sanitation supplies as Covid-19 cases rose and traditional brands like Purell and Clorox ran out of inventory. So some of the largest brands in beauty retail—LVMH, L’Oréal, Coty—swapped perfume and personal care production for hand sanitizer. Many of their supplies were sent directly to health officials through the spring.

• Beauty brands already had the ingredients, machinery, and packaging to make the swap, so it wasn’t as costly converting to an entirely new category.
• Months later, it’s unclear how much of production is still dedicated to relief efforts.

What about consumers? Brands that already traded in clean hands (Bath & Body Works) had the supply to meet hygiene-driven demand. Then indie brands developed their own takes by May, anticipating lasting category demand.

It was a prescient move: Consumer hand sanitizer sales were projected to pass $1 billion in 2020, doubling 2019’s total, per Kline research.

Another entrant: 800+ U.S. distilleries repurposed machinery built for craft whiskey and bourbon for the hospital hand sanitizer surge. But the transformation was short-lived in many cases.

• Distillery owners told the NYT that demand from medical professionals was “frenetic” at the start of the pandemic, allowing some small businesses to recoup the revenue they lost from tours or drink sales.
• But demand dried up when the traditional players (Purell) rebounded from spring shortages to resupply hospitals. Some distilleries said they were left with thousands of gallons of excess inventory.

Heads up

We’re all too familiar with how masks went from an emergency room product to a fixture on every site’s accessories section. Since it’s 2021 and my leaving-the-house checklist still goes “keys, wallet, mask,” the product's ascent is worth revisiting.

At the start...retailers cut and sewed face masks to fill shortages for healthcare workers. But consumers needed them too—and a hybrid relief effort/cottage market was born. Most brands released their take on a face mask to stay afloat.

• From March to April, face mask listings at retailers jumped 400%, per retail analytics firm Edited.
• Rothy’s, the DTC footwear brand, allocated 30% of production to making masks. It also recruited 15+ brands to join an Open Innovation Coalition for making medical PPE.

In the present...mask mandates haven’t rolled back yet, to the potentially temporary benefit of two very different business models.

1. Mass retailers. One example: While Gap’s apparel sales have declined, its decision to product cloth face masks generated $130 million for the retailer in Q2.
2. The smallest of small businesses, Etsy sellers. Since the start of the pandemic, homemade mask makers have together raked in millions in revenue.

Looking ahead...with vaccinations making their way across the world, it’s unlikely that these side hustles will last until 2022. But these shifts demonstrated the importance of flexible supply chain operations, at least to keep the lights on.