What’s Changing as Retailers Deal with Store Closures?
March 20, 2020
By Stacy Berns
Originally published on LinkedIn
Retail Influencers (top left to right): Pano Anthos, Nicole Reyhle, Matt Rubel, Keval Desai, Dana Telsey, Oliver Chen, Melissa Gonzalez and Stephen Sadove
Top Takeaways from Our First Retail Influencer Network Insights Session
The coronavirus outbreak is impacting every business differently, but retailers of all stripes are innovating to deal with the situation as quickly as they can. This week, we got together via videoconference with some of the top minds in retail to hear their insights on how the industry is handling store closures and what shifts we’re likely to see in the coming weeks in terms of operations and consumer behavior. Here are some of their expert insights:
- Retailers are already sending online customers emails offering discounts, says Dana Telsey, CEO and Chief Research Officer of the Telsey Advisory Group. We can expect to see much more promotional activity, as well as deeper discounts, as retailers look to connect with shoppers stuck at home.
- Grocery e-commerce is accelerating, says Steve Sadove, Principal, Stephen Sadove and Associates and former CEO of Saks. Online sales of groceries have lagged those in many other categories, but that’s changing quickly. Even though grocery stores and other retailers of essentials, like drugstores and warehouse clubs, remain open across the country, more people are prioritizing safety by choosing to order food and staples online right now. As consumers become more accustomed to buying groceries online, that behavior is likely to stick, even after the coronavirus outbreak is over.
- Curbside pickup will be even more popular. Retailers like Walmart and Target were already seeing about 10% of their customers choosing curbside pickup, says Oliver Chen, Managing Director, Retail and Luxury Sector Head at Cowen and Company, and that rate will accelerate as people look to limit their time in stores right now.
Erica Palmieri, “Closed For Now” 2020
- Retailers will look for creative ways to deal with excess inventory. Retailers with excess spring inventory may opt to connect with shoppers in non-US markets where the outbreak appears to have waned and daily life is returning to normal. Tmall and other platforms could be an option for shifting consumer demand to markets that are already on the other side of the curve. Others may opt to store goods for spring/summer 2021.
- Discounters will continue to do well, as the off-price market will be flooded with product at a time when consumers will be focused on their budgets, says Pano Anthos, Founder and Managing Director of XRC Labs. Off-price has never been a big e-commerce play, but more sales will move online as consumers take their time getting back into stores after the outbreak.
- Some retail landlords are giving small businesses a longer runway by allowing them to postpone their rent, says Nicole Reyhle, Founder of Retail Minded. Commercial rents are likely to come down following the pandemic as retail tenants and landlords renegotiate.
- We’ll see the on-demand Netflix effect in retail health and wellness, according to Oliver Chen. Experiential fitness models like virtual group yoga classes and in-home cycling classes will become more popular as people look for ways to interact on their own schedules, even while they stay safe at home during coming weeks.
- Virtualization of the economy will accelerate. Retailers and brands dealing with store closures are quickly trying to re-create the in-store experience online, says Keval Desai, General Partner at InterWest Partners. There will be increased demand for technologies like Obsess, a platform that creates a virtual store experience for brands.
- We’ll see some brands and retailers come together to consolidate in a meaningful way. Mass retailers have been trying hard to tap into authentic audiences that DTC brands have been able to create. Some of the smaller brands are already making tough decisions to lay off workers, yet they have built powerful brand affinity. This may accelerate some of those partnerships, according to Melissa Gonzalez, CEO and Founder of The Lionesque Group and Principal and Shareholder of MG2 Design.
Learn more about the Retail Influencer Network here.