by Anh H. Nguyen
Coronavirus disease (CoV), officially known as COVID-19, has cast a gloomy shadow on the world's economy since the beginning of this year. As of now, the disease has spread to 42 countries and territories around the world. As the number of people affected keeps going up and has now climbed to a staggering 81,133, not only is CoV threatening to become a global pandemic, concerns are also mounting that it will tank the economy worldwide. Shares tumble, tourists stay home, supply bottlenecks worsen, retail chain stores cannot weather the desertion of customers, schools are closed from fear of virus spreading among children, to name a few of the direct impacts. With the end of this calamity nowhere in sight, experts estimate that the damage to the global economy will be the worst since the financial crisis of 2007-2008.
A common sight in major cities in South Asia these days: face masks have become a hot commodity.
Coronavirus economic toll snowballing in Asia and Europe
In Europe, Italy struggles with the worst outburst outside of Asia. Conflicting accounts about the true number of cases in Iran spark concern of censorship, but then it emerged that the deputy Health Minister, who had previously vehemently denied the death toll of 12, has now contracted the virus. In Asia, the three commercial powerhouses, China, Japan, and South Korea are suffering badly in the midst of massive viral outbreaks in Hubei, Daegu, and the mishandled fiasco of the Diamond Princess cruise ship. Big cities like Beijing and Milan which used to bustle with travelers and locals now look akin to the aftermath of a zombie apocalypse. A mixture of quarantine, travel restriction, and anxiety causes the global airline industry 29 billion US dollars in a mere two months. The domino effects on countries depending on China, Japan, and South Korea for trade and travel like Vietnam, Cambodia, and Singapore deepen. As global independence becomes more and more predominant, so does the possibility of imminent recession.
So far 2618 people have perished, but the loss of lives alone could not account for the rising cost of the CoV virus for business and the world economy. The Great Sichuan earthquake of 2008 killed 69,000 people, but China, and by extension the rest of the world, barely felt a blow in their economic growth. The culprit here is the rampant panic that spread even more quickly than the virus itself. In Vietnam in particular, aside from the healthcare and travel sectors, retailers have perhaps the hardest time grappling with the effects of CoV outbreak. CoV is a novel disease, little is known about it, and contradictory evidence seems to pop up everyday. The incubation period, for example, could be between 14 days or 28 days according to various sources. Health specialists still debate on whether it could be transmitted during that time, many people who contract it are asymptomatic, and its symptoms could be mistaken for those of the common flu. Vietnam's proximity to the three countries with surging numbers of infected people does not help. Uncertainty begets unease, which quickly turns into fear. The WHO's advice to the public is to distance themselves from anyone coughing or sneezing. But ever since the outset of the epidemic, many people in Vietnam tend to avoid all crowded places in general, and some stop going out altogether save for the most pressing errands. People stock up on kitchen staples and essentials like face masks and hand sanitizer, but the loss of income and time allocated to child-sitting (schools in Vietnam have been shut down since the end of January and are slated to be closed for another month) means less money and fewer spare moments for shopping. Above all, fear has always been a crippling influence on the economy. People who live in a constant state of dread tend to spend less and save more.
A once-packed shopping mall in Pudong, Shanghai, now empty.
A similarly vacant shopping place in Ho Chi Minh city, Vietnam.
AI-aided retailers in Vietnam rising to the occasion
Faced with such unique challenges, retailers in Vietnam are preoccupied with maintaining revenue, a tricky endeavor at the best of times and nearly impossible currently. Drawing more traffic to the stores is now more difficult than ever due to circumstances completely out of the retailers' control: disease phobia keeps people at bay and the constant stream of bad news does not help matters. Retailers could run new marketing campaigns or offer discounts but those strategies can cut into their already-thin bottom line. It is not hopeless, however. It makes more sense from the retailers' perspective to maximize the traffic that they do have, no matter how reduced it may be. There is one parameter that they could control to successfully revive their business: conversion rate. The maths check out: even if the number of visitors drop by 30%, if somehow retailers could raise the conversion rate (the number of sales divided by the total number of visitors) by 40% or more, all would be well with the world.
Sale assistant interacting with customers during Fortune's Day despite wearing face masks.
This is where AI in-store analytics comes into play. It has been established that the in-store conversion rate greatly hinges on the interaction rate of sales staff: the duration and intensity of their interaction with customers. The more helpful and proactive sales staff are, the greater their chance of closing sales becomes. During trying times, it is even more crucial for sales staff to relentlessly pursue customers' interest. To achieve optimization in that area, AI softwares using computer vision could monitor the stores' staff performance, compare it to other stores' or other retailers' in the same vertical, and suggest improvement as needed. One such example is a clothing retailer in Vietnam: by setting interaction rate as the new KPI and employing Palexy In-store Customer Analytics software during this slump, they manage to pull through with an 31% increase in conversion rate and keep their revenue stable.
Coronavirus outbreak is not the first economic hiccup the world endures, and it surely will not be the last. How retailers prepare themselves, however, could make all the difference between survival and abject failure. To not make use of one of the most powerful technology tools would be a heavy mistake, one that many retailers, to their chagrin, have found out. In light of recent compelling events, retailers would do well to weigh their options and invest in a suitable AI solution for their business. Not only is it wise to gain an edge over their competitors, it could be their lifeline when push comes to shove.