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By Diane Ellis and Monica Woo

Seven Minute Read

States and cities are gradually reopening amidst volatility of COVID-19, a faltering economy and reduced consumer confidence. In reopening physical stores, Apparel & Footwear (“A&F”) retailers not only need to navigate operational and financial challenges, but also, shape the strategy to win in an unpredictable future. It’s the proverbial running the train while constructing the tracks.

Diane Ellis and Monica Woo have led practical strategies on how to flourish amidst crises, such as 9/11 and the Great Recession of 2008, based on A&F retail and digital commerce careers spanning four decades. They are also gaining insights from successful, non-A&F retailers that have remained open throughout COVID-19. In fiscal Q1 2021, Walmart USA lifted comp sales 10%, and operating income 3.9%, despite the significant incremental expenses required to operate in a pandemic environment. Most impressive!

Three guiding principles on how to thrive during and post the pandemic.

1- The Safety of Associates and Customers is Job #1

Job #1 for A&F retailers is to support the well-being of associates and customers. We need to enforce safety procedures, such as PPEs for associates, adjusting store hours for additional sanitizing, clear postings of social distancing guidelines, temperature checks for associates and customers, metering the number of customers in store at any one time, and sneeze guards at checkout. In addition, setting by appointment only hours for vulnerable customers, virtual styling and curb-side pickup are fast becoming table stakes for most in this sector. Augmenting the health plan, paid time off and emergency leave policy will go a long way to win associates’ loyalty.

A&F retailers need to alter processes to quarantine and sanitize returned merchandises from physical and online channels and address the challenge of how to make the fitting room experience safe for customers and associates alike. Supporting these health measures require new operational procedures and space reconfiguration in the stores and fulfillment centers.

2- Omni-channel Selling and Fulfillment is Mandatory

Accelerating the seamless integration of physical stores with digital channels is a must-have. For A&F in North America and Europe, online share is expected to increase by 20% to 40% in the next six to twelve months.[1]

Customers expect an easy and flawless experience to buy online and choose between home delivery, in-store and curbside pickup. To attract and retain customers, omni-channel fulfillment is as critical as strong brand equity and value for the money.

Merchants will need to continuously optimize in-stock positions for high demand items and adjust order volume and markdowns for slow movers – across physical and digital channels, fulfillment centers, as well as upstream in the supply chain. Optimizing inventory will be even more challenging as consumer purchase behavior shifts with economic uncertainty. A daunting task that can only be achieved with real-time shopper insights, actionable data and predictive analytics.

3- Capture Savings Throughout the Value Chain

New measures to support associates and customers in a pandemic environment will require significant incremental expenses. The migration of sales from physical stores to the lower margin eCommerce channel can further reduce profitability. For instance, if online penetration increases by ten percentage points, and gross margin decreases by one percentage point due to promotional and competitive pricing pressure, store profitability could decline by up to five percentage points. [2]

Now, more than ever before, A&F retailers must capture savings throughout the value chain.

As most A&F retailers lack the capability and resources to analyze complex data at scale, we recommend relying on an external service provider like VIPER, a leader in retail analytics.

VIPER collects and integrates massive volume of data across physical and digital channels, POS, inventory management, supply chain, financial and human resources systems. By combining extensive data science and retail operating expertise, as well as the computational power of proprietary Machine Learning models, VIPER can swiftly isolate and quantify systemic problems and operational deficiencies hurting profit. With VIPER Rapid Assessment, retailers can uncover savings within weeks.

VIPER can determine not only incremental profit, but also, practical actions to improve performance by store — with full drill down to the location, personnel and item level.

Applying VIPER’s hyperlocal analytics and actionable recommendations, field and corporate management can make sound decisions on which stores to reopen or close, and how store fleet can be optimized amidst field personnel cutback during an economic downturn.

During these challenging times, VIPER is offering a $1 million Profit Improvement Guarantee™ to support retailers. VIPER will achieve a minimum of $1 million in quantifiable profit increase or pay the difference. It is most refreshing to see a service provider putting skin in the game!

With the power of Artificial Intelligence and predictive analytics, A&F retailers can maximize topline and bottom-line growth, customer loyalty and supply chain productivity to not just survive, but thrive, during and post pandemic.

Diane Ellis is a board director and CEO of DME Advisory Group LLC. Previously, she was Brand President of Chico’s at Chico’s FAS, Inc., CEO of The Limited, and President of Brooks Brothers. She is an advisor to the Board of VIPER EA LLC. 

Monica Woo is the CEO of WooWorks, which invests in and advises Digital Commerce, AI and Food & Beverage companies. Previously , she was President of and Chief Revenue Officer of FreshDirect. She is an advisor to the Board of VIPER EA LLC. 

[1]Source: McKinsey and Company, “Fashion’s Digital Transformation Now or Never”, May 2020

[2]Source: McKinsey and Company, “Reimagining Stores for Retail’s Next Normal”, April 2020

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VIPER has created a proven, proprietary Enterprise Acceleration (EA) methodology - which gathers data from throughout the retailer client’s enterprise; then feeds this data into our NV® AI system, leveraging Machine Learning to identify leading performance indicators and predictive models. These models isolate and quantify systemic problems, operational deficiencies, breakdowns in training, and/or execution failures which lead to gaps between business expectations and actual outcomes. Throughout the engagement, VIPER does the heavy lifting; partnering with the client throughout the engagement to determine the root causes of these issues, and to implement best practice solutions. The result is a return of 1%-3% of yearly revenue delivered to bottom line of the P&L.  VIPER’s profit improvements are measurable and isolatable from other company initiatives.

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