Any more retakes for retail?

Running a retail business has never been easy, but 2020 has presented retailers with their biggest hurdle yet. The slow but certain demise of traditional retail has been discussed for quite a few years now, but the Covid-19 pandemic may just prove to be the final blow to the struggling industry. To tackle the financial toll of these unprecedented times, major clothing retailers such as Ascena Retail Group (owner of popular brands like Ann Taylor and Lane Bryant), Brooks Brothers, J. Crew, and Neiman Marcus have had to resort to filing for bankruptcy, laying off their retail workforce, and closing stores around the country.

For the first time in almost five months, I visited an outlet mall this past weekend, and I was ready to be either pleasantly surprised or highly disappointed by the efforts to adapt to the needs of the current situation. But, the amount of care and precautions taken at all stores was nothing but praiseworthy. Everyone was wearing masks – employees as well as shoppers. Staff and patrons were following social distancing guidelines. All stores had set up sanitizing stations at their entrances. People waited patiently in lines outside as stores observed limited occupancy guidelines. All these efforts calmed my apprehensions. What I hadn’t expected though were the numerous store closing sales. Even stores that didn’t seem to be closing, nonetheless, had huge discounts – almost all upwards of 50%. This seems to be the current situation across the country as most retailers are struggling to stay afloat.

The future of the traditional retail model was already in jeopardy due to the growing prevalence of e-commerce. A shift in consumer preferences towards online shopping and a demand for a kind of one-stop-shop online access to retail products had led to the disappearance of several well-known chains. The current pandemic situation seems to have just speeded up the inevitable. Following major economic growth and high consumer spending over the past decade, Covid-19 has thrown a wrench in the consumption habits of the population. Due to rising unemployment, the means and inclination for retail shopping has rapidly dwindled. Unlike any previous recessions, the lockdown and other social distancing rules have directly impacted foot traffic to retail stores, further impacting retail business. Serious cost-cutting measures by retail store owners have manifested in the form of store closures to eliminate costs such as rent and employee wages. So, what comes next?

The options for different retailers vary, but the entire industry is up for a massive overhaul. Larger retail chains will redirect their funds towards strengthening their online presence. The role that diversification plays in the viability of retail brands will be worth watching. Target Corp stands as testament to the upside of providing a wide variety of retail products, while still customizing as per the needs of the local population. Even smaller, specialty retail stores may have to rethink their business model and act in ways that best fit their bottom line. To avoid having to merge with bigger chains, smaller businesses can survive in the long run by focusing on providing better customer experience, catering to individual needs, and building loyalty.

While prioritizing the safety and well-being of their customers and employees, it may be in the best interest of all retailers to use technological advances to develop efficiencies and eliminate the chances of lost revenue. Processes such as marketing, inventory management, checkout, delivery, and even timely alternatives such as curbside pickup can be streamlined by capitalizing on pattern and trend recognition using data on customer behavior, both past and present.

At one of the popular stores I visited, one of the employees shared that after having no business for almost three months, the store saw a heavy influx of visitors for the first two weeks once the lockdown restrictions were lifted. But soon enough business started to decline and has not picked up ever since. Retail as an industry will recover once the recession effects subside, but the brick-and-mortar stores model of the industry may never fully recuperate, at least in its current form. The fact that ‘Back-to-School’ signs prevalent during this time of the year have been replaced by ‘Store Closing’ signs may be a stark indication that the traditional ways of the retail industry are no longer feasible, and a major revamp is unavoidable.