Traditional retail brick-and-mortar wasn’t exactly flourishing before the pandemic hit. In 2019, 9,300 stores shut down, including household brands like Forever 21, Walgreens, Payless and Gap. Those closures represented a 60% increase over the year before. Then COVID-19 threw a wrench into things. As 2020 continues to stress-test the economy, the list of retail chain and store closures shows no signs of letting up. Coresight Research has tracked more than 8,000 store closures in 2020, estimating that total closures will hit 25,000 by the end of the year.
That doesn’t mean that retail is dead. But with a dramatically different consumer landscape than 12 months ago, it is very likely that pureplay brick-and-mortar retail is a relic of the past. Simply look at new spending patterns and it is clear that consumers are adapting, in many cases much faster than the brands to which they have historically been loyal to.
The desire to shop in-store is still very much alive. From mobile-native Gen Z and millennial shoppers to those with a few more decades under their belts, the in-store shopping experience satisfies in ways that digital commerce does not measure up; the smell, the touch and feel, the sizing. But nine out of 10 retailers understand that status quo is not an option if they want to survive. Retailers clinging to the notion that their performance will rebound without proactively taking action are running out of time. And yes, this is alarmist. But also, look at the 2020 Chapter 11 filings. In some cases, inaction is causing preventable corporate casualties.
Any retailer that is looking at its profit and loss statement (P/L) and hoping that ‘things will get back to normal’ soon to make up lost ground is passively allowing a new breed of retail to choke them out. To be clear, the retail tapestry is complex, and there are myriad factors that contribute to a retail chain’s performance, and there is simply no silver bullet for retail plight. But one area that is often overlooked is how customers are engaging with your brand differently than the era of single-channel shopping.
Brands that are serious about surviving the months and years ahead need to look at how their customers actually want to shop now and into the future. From that standpoint, it’s not actually very complicated. Consumers prefer flexibility; flexible in how they browse, how they transact and how they get their purchases. Retailers that are able to adapt to different preferences and conditions will do better than those who passively tell their customers that it’s their way or the highway.
The physical spaces where we shop are due for an overhaul. In the U.S., retail space per capita is five times that of the U.K. and is simply not used as judiciously or strategically as other parts of the world. It’s clear that retailers who run a tight ship are better able to navigate these waters, and that usually means that they have a well-defined and enacted physical and digital supply chain strategy.
In my role at Tecsys, knowing what this company does and how our software creates resilience in the face of this massive global retail disruption, I am disheartened when I see the headline of a retailer that has been forced to close shop, either temporarily or permanently. Our Sales team works every day to sniff out organizations that see the omnichannel wave coming — or are already teetering — and are ready to pivot to a blended digital and physical brand experience. But, while sometimes it’s because of organizational obstinacy, I believe there are really good brands out there that will shut their doors because they didn’t take that small leap of faith to offer consumers the customer experience that they expect in 2020.
In this vein, now more than ever, the supply chain is a strategic asset. It can be designed to meet your customers where and how they shop. It can offer your customers endless aisle shopping, pandemic-resistant e-commerce, pickup, delivery and return options, and basically conform to the dynamics at play as retail evolves over the next several years.
If your role is in any way connected to delivering on your brand’s promise, whether that’s through the shopping experience, the fulfillment process or the digital ecosystem, I encourage you to lean in — not stand by. I have seen retail brands launch multi-channel fulfillment with Tecsys’ software, and the resulting jump in topline performance. If your retail operation is going to be in a headline, better it be for omnichannel growth than Chapter 11.