I’ve spoken to dozens of retail execs in the last two weeks. Here’s what I learned
I’ve been speaking with dozens of retail executives over the last two weeks and I thought it was worth sharing some of the learnings around how people will navigate the COVID-19 journey.
I will group the thinking into three stages because each has different characteristics and opportunities.
Stage 1: The Freefall
The Freefall Stage is characterised by rapid change. And for the vast majority of retailers it’s in the wrong direction.
There are no case studies for this. Massive falls in revenue overnight. Government regulations changing daily. Anxious teams waiting for answers you don’t have. And all this has to be solved over Zoom calls with the angsty kids in the background. It is, dare I say it, unprecedented.
It’s a confusing time but there are two fundamental objectives retailers are focusing on:
1. Stabilising the business: to minimise the financial and human impact
2. Preserving the cash: so it can be used to drive growth on the other side
How these objectives can be achieved are varied (shutting stores, standing down staff, pay cuts, rent negotiations, adjusting marketing spend to capitalise on niche opportunities, etc). To be honest, the options available are reasonably narrow, and largely mathematical. But the big surprise from retailers I’ve spoken with is how supportive the labour force has been.
Stage 2: The Twilight Zone
This stage is a bit like when the safety car comes out and pauses the race at the Formula 1. It bunches up the pack. Businesses that had momentum will lose it. And businesses that were floundering will be given a fresh start.
For retailers, this will be a surreal time. It will be one of the rarest moments in our lives, let alone our careers. No revenue, no costs, no meetings, no emails, no socialising, no Saturday sports, no parents-in-law, no nothin’. And most retail execs I’ve spoken to intend to make the most of it.
The Twilight Zone will force retail execs to think about the future, free from the distraction of daily admin. The types of questions they will be asking are:
1. What will the new reality be?
- Will the size, shape and direction of our category fundamentally shift?
- Will our competitor landscape change? And will that open up new opportunities?
- Will our customer segmentation change (by size, priority, shopping modes)?
- Are there any new customer opportunities we should pursue?
2. What will my business look like in the future?
- How can our business be more focused on driving long term growth
- Which products / categories will be winners and why? And what can I do about the dogs?
- What new products / services / platforms could we take to market
- What does the customer experience of the future look like across every touch point?
- How can our brand platform be more inspiring / memorable / consistent?
- How can we optimise our structure to better deliver on high priorities?
- How can we better engage our team?
3. What will our relaunch plan look like?
- Will we pull key teams back early to invest in key initiatives that we can launch on the other side?
- Will we sprint out of the gate? Or will we emerge cautiously?
4. How will I approach my role?
- How can I optimise the way I work to dedicate more time to the high priorities?
- How can I maintain balance and headspace?
If necessity is the mother of all invention, the Twilight Zone could be the most creative time of our careers.
- Sydney’s Pitt Street Mall is uncharacteristically empty.
Stage 3: The New Dawn
The New Dawn will emerge gradually. It’s impossible to predict exactly the what new reality for retail will look like. But COVID-19 will offer up some macro lessons to humanity that might help shape the thinking.
1. It will make people reassess their approach to personal and community hygiene. Customers will have higher expectations around cleanliness and contactless service (no cash). And team members will want to know what you are doing to keep them safe.
2. It will get employers and employees more comfortable with a decentralised work force. It will significantly reduce our reliance on travel for “meetings”. Turns out this video conferencing thing is way better than we all remembered.
3. It will rapidly accelerate the adoption of online shopping and subscription retail (like meal kits, toilet paper, pet food, etc).
4. It will increase our sensitivity towards data sharing and data security as governments take more liberties to track movements.
5. It will increase cautiousness around debt and financial exposure.
6. It will remind us of the importance of health and the economic impact of not looking after it.
7. It will shift priorities towards simplicity, like time with loved ones and decluttering the home.
8. It will deprioritise disposable / seasonal consumption, which will have a negative impact discretionary retail, like fashion.
9. It will reenergise people around creative pursuits like craft, music, home DIY, car DIY, coding, painting, gaming, etc.
10. It will elevate an awareness that the forces of nature are much stronger than our own abilities to overcome them. And it will highlight the negative impact humans are having on the planet (particularly as we see images of blue skies over Shanghai and clear water in Venice).
11. It will showcase the extreme levels of human interconnectivity (remember this all happened because some guy ate a bat in China!). This might increase people’s sense of connection to humanitarian issues in the supply chain.
12. It will, more than ever, make us see our homes as our refuge. Our home is our safe space, and we’ll be investing more time, energy and money in making our homes the best they possibly can be.
It’s hard to predict the extent to which macro learnings from COVID-19 will impact different categories. But what is certain is that they will enter the zeitgeist more quickly than they otherwise would have. And reflecting on them could help retail executives optimise for the New Dawn.
These are challenging times but the best retail executives I’ve spoken with are focused bringing a sense of calm, compassion and optimism to the process. This is not the end for retail, but perhaps it is the new beginning.
Matt Newell is partner and CEO at retail strategy and innovation firm, The General Store.