As if the retail sector of the United States didn’t need any more challenges, the pandemic hits like a meteor in a bad science fiction movie.
Shopping malls seem, to some of us, a distant memory. Brooks Brothers is trying to sell its brick and mortar stores off piece-meal (thanks for that article, David). J Crew is in bankruptcy. Barnes & Noble has closed several hundred bookstores, which will most likely never reopen. The virus added what is probably the last nail in the coffin for Macy’s, which had been in decline anyway for years.
As we know, the aches and pains of brick and mortar retailers started with the transition to online shopping. The convenience of shopping online is tough to beat, especially if you, as a retailer, aren’t offering an experience in your store that makes the trip from home worthwhile.
So where do we go from here? What shape consumer behavior in the coming years? Which businesses will prosper, and which will disappear?
Very smart people are running the numbers and searching for answers. The mistake anyone can make is to think that the future will resemble the past. Laurie Garrett (read her New York Times interview) discusses how life changed after 9/11. Suddenly, daily routines were security heavy: metal detectors and searches at airports, limited access to skyscrapers and office buildings; background checks on job applications.
She encourages us to look not at ‘normal’ as a baseline, but events with global impact as transformational benchmarks. Things are going to be different going forward. She also discusses a 36 month ‘event horizon’ (her term) for us coming out of this particular transformation.
Her credentials are impressive. Her predictions are moderated, but not optimistic. She anticipates progress in terms of years, not months, and in uneven ‘two steps forward, one step back’ sequences. She is not alone.
I think we as a country, and perhaps as a global society, are going to have to rethink the concept that the ‘lead horse’ in our economic race is consumer spending. It’s not a philosophy that’s going to hold water. We’re going to have to make things, grow things, and invent things. Things of value. Services with substance. The Pet Rock is not going to cut it anymore. The idea that people are going to go out and spend in order to boost or sustain the economy is obsolete.
If this pandemic continues in fits and starts in the US (and it probably will, given our lack of leadership and self discipline with regards to quarantines, social distancing, and hygiene) and outbreaks globally continue for the next 3 years, consumer habits are going to be vaporized. Unemployment is expected to be at Depression-levels in coming months. People are already missing meals. They have to think about food, not fashion. It won’t matter if you can get it delivered or not: it’s not a priority.
My prediction is a return to ‘needs’ shopping where only the ‘top value’ retail brands survive. The majority of Americans will shop for products that endure, regardless of price. If you take the philosophy I articulate in Old Money Style – The Gentleman’s Edition and apply that to everything you buy, that’s what the new retail landscape is going to look like.
Consumers are in for a long, rough road with their household budgets. They’re going to buy what they need and maybe a little of what they want, but both categories are going to have to deliver value. Retailers would be wise to refine and reduce product lines, offer only their best products, and deliver customer service like a madman.
Only then will they have a chance to survive.