What is the Future of Retail?
Chicxulub, Yucatan, Mexico- 66 million years ago- An Asteroid, known as the Chicxulub Impactor, of between 11-81 kilometers in size, hits this area at 20 miles/second. This Event caused ecological collapse, notably the acidification of the oceans, which resulted in the extinction of 75 per cent of all species on earth. The most famous effect of this cataclysmic event is the extinction of all non-avian dinosaurs.
Slowly, eventually, the earth regenerated new species which may have been related to the dinosaurs, but were more resilient and capable of evolution, many of whom survive today.
What does this have to do with retail? Let’s focus on COVID-19 as the Impactor. And the extinction of a long schedule of retailers, which is not over yet. Let’s call them 21st Century Dinosaurs.
Sears, Penneys, JCrew, Brooks Brothers, Neiman Marcus, now Ascena, parent company of Ann Taylor. With more to come (can Macy’s be far behind?). These are some of our dinosaurs.
What? How can I call them dinosaurs? Of all that went Chapter 11 or belly up, is there one you can point out that was in the prime of its existence? Or could we rather say that most had lost ground and their fastball anyway?
COVID-19 was the final impactor. But there were many more, persistent influences in the world of retail that had been growing, like a cancer on those who were sedentary:
Amazon- Founded 1994
Walmart- Founded 1962
Inditex (Zara, etc.)- Founded 1963
Trader Joe’s- Founded 1958
Aldi- Founded 1946
Dollar General- Founded 1939
Target- Founded 1902
So here’s my point about what happened: COVID-19 was just the final impactor; the above retailers and those like them, combined with the development of the Internet, evolved into relevance with the theme of life today. Those who we are saying goodbye to, didn’t.
One main reason for their death can be found in the word “sedentary.” In the heyday of the department store and shopping mall, customers were bound by geography. Now they are totally free to shop globally and geography is not an issue- except if somebody nearby (like TJX) gives you a great reason to go there in person.
Conclusion: They were bound for extinction sooner or later. COVID-19 was the euthanasia.
So back to Title: What is the Future?
Those who are “scared” by the events described above are either generally scared or not seeing the future clearly. Let me help.
First: People will never stop shopping; on the contrary, shopping is easier and more vibrant than ever before.
Second: the retail landscape, while it will still be dominated by the major players, has vast blue oceans for startup retailers who provide a relevant product and/or business model.
Third: Omnichannel, and the ability to keep in touch with your Customer Community 24/7, will enhance the shopping experience and promote impulse buying (Neiman Marcus has this concept clearly in their plans, which is why they may very well be the one dinosaur to survive). That being said, omnichannel won’t do you any good if people don’t want to buy what you are selling.
Fourth: Retailers like Amazon and Etsy will continue to provide a global platform, which will promote sales never possible before. This has the advantage of helping to build economies in developing countries like Ukraine and puts local retailers on notice that they better compete, because there’s a big world of good stuff out there, and it can be bought from your smartphone.
So, who will be the survivors?
1. Those new and nascent companies that catch the attention of those with the pocketbooks, such as Millenials and Gen-Z; example is Lululemon;
2. The Major Shopping Destinations- the Go-To Retailers: Amazon (in a world by itself), Walmart, Target, Alibaba, Tencent;
3. The Category Killers like Trader Joe’s, Aldi, Lidl, maybe Best Buy if they don’t lost their fastball.
4. The Mass Market Treasure Islands like TJX, Ross, Dollar General, Dollar Tree etc. who provide the price/value alternative for those who are inclined that way;
5. All of those, including the above, who provide a great Customer Experience, BOTH virtually and personally;
6. Those who don’t fail to customize and personalize such experience.
7. Those brands who Represent the lifestyle of its customers, producing an empathetic reaction, such as Glossier;
8. Brands and Retailers that actually practice sustainability, not just talk about it;
9. Local shops that find a captive geographic customer base with the relevance of their product and service.
Who won’t be?
1. Not that I want to wish them any bad business, but I believe that if the Fast Fashion Disposable Clothing purveyors like Zara and H&M don’t improve their quality and the life of their product, they will NOT be part of the future.
2. Department stores like Macy’s who fail to provide great merchandise at moderate prices, who don’t cull their merchandise to represent their CHOICES of what the customer should want to buy, and don’t compete well or credibly on price with the Mass Market and Treasure Island retailers;
3. Specialty Chains that don’t evolve their Brand Persona and Customer Experience (like JCrew, Victoria’s Secret).
The fatality list is not over, by any means. At some point, COVID-19 will not be able to be blamed anymore. So let’s call the Cause of Death: Failure to Evolve.
On the other hand, I see a bright and RELEVANT future for Retail once the dinosaurs pass on and move out of the way. The above possibilities set the stage for Better Than It Ever Was. Technology provides the evolved with unprecedented opportunity.
As with the dinosaurs, the retail casualties will be remembered, but not missed.
So, for those who are panicking and scaring the snot out of the otherwise ignorant and skittish stock market, please read the above and present facts before you cry the sky is falling. OR tell me where I am wrong.